Social Security Strangeness
This will be the first time since 1975 that there's no cost-of-living adjustment for Social Security. The reason? The cost of living hasn't gone up. In fact, it's probably gone down. As the Center for Budget and Policy Priorities explains, "overall consumer prices have fallen significantly in the past year and are not expected to return to their earlier peak until mid-2011." The Obama administration, however, will not let that stand, and so they're encouraging Congress to give seniors a check for $250 this year.
So far as policy ideas go, this isn't particularly objectionable. The economy needs more stimulus and this is good stimulus. So far as politics go, it's a necessity: Seniors have come to expect the increase in their checks, and they dominate midterm elections. Obama lost that group in 2008, and he can't afford to be the first president in history who didn't deliver their yearly increase in Social Security benefits, even if it's not his decision. But as Kevin Drum says, this exposes some serious deficiencies in the way seniors understand that yearly hike:
[T]his does go to show the power that sustained inflation holds on our imaginations. Technical arguments about CPI calculations aside, the fact is that seniors haven't gotten a benefit increase for decades. It's just not the way the program works. But the fact that their checks keep going up makes it seem like they have. So now, despite the fact that the huge benefit increase of last January combined with the deflation of the past 12 months means seniors really are getting higher benefits for the first time in recent memory, it doesn't seem like it. So adjustments must be made and appearances kept up.
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