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Posted at 12:41 PM ET, 12/ 8/2010

Nothing is agreed to until everything is agreed to

By Ezra Klein

Tim Fernholz comes up with four ways the tax deal could be improved.

By Ezra Klein  | December 8, 2010; 12:41 PM ET
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A Social Security cost of living adjustment is intended to scale Social Security benefits for changes in the cost of living. If the cost of living is not changing, not getting a cost of living adjustment is not "problematic." In fact, given the fact that a large part of the COLA is to adjust Social Security income for things that are simply not part of the cost of living for most seniors (like, for example, the cost of buying a new house for people who have paid off their houses), a significant number of seniors have for years been getting adjustments that actually outpace by a significant amount the real changes in their actual cost of living.

It might qualify as a good stimulus. That is a separate argument. But a COLA is not something you are entitled to. It isn't a raise. It is intended to prevent the recipient from falling behind and being driven into poverty due to inflation. But if the economy is static, and there is no inflation, then you aren't falling behind. Then receiving a fake COLA amounts to a benefit increase, and a one time payment in place of a COLA amounts to a bonus, and neither of those are justified by the economics of the situation.

They may or may not be justified on other grounds but you have not fallen behind if your purchasing power has not changed.

Posted by: pj_camp | December 8, 2010 12:59 PM | Report abuse

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