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Views Sought on Proposed $250 for Seniors

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Sunday, October 18, 2009

The Post asked economists, pollsters and politicians whether Congress should fulfill President Obama's request that it provide a one-time payment of $250 to Social Security recipients to offset the absence of a cost-of-living adjustment this year. Below are contributions from Rudolph Penner, Harry Reid, Diane Lim Rogers, Douglas E. Schoen, Mark Zandi, John Boehner, Newt Gingrich, Douglas Holtz-Eakin and Diana Zuckerman.

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RUDOLPH PENNER

Institute Fellow at the Urban Institute; director of the Congressional Budget Office from 1983 to 1987

The Great Panderer strikes again. It is outrageous to give seniors "emergency" aid when so many in our society suffered far more during the recession than the lack of a cost-of-living adjustment. Even if the cost of the proposed handout is paid for with tax increases or cuts in other spending programs, it would be much better to preserve such measures for deficit reduction.

Irresponsible proposals of this type will probably hasten the day when foreigners stop lending us money. Then, seniors may suffer an economic collapse along with everyone else. At that point, there won't be any money available to help them.

Some day we may get serious about the deficit, but there is no sign of it yet. The Senate Finance Committee's health reform is partially paid for by a cut in physician reimbursements that will never occur. Various components of the stimulus program will probably be extended. And if the administration has a long-run plan, it is keeping it secret.

On the other hand, perhaps I should reconsider. My wife and I appreciated the $500 we got earlier this year. The boat needed fixing, and that was a real emergency. This time, a good dinner at Citronelle would be nice.

HARRY REID

Senate majority leader (D-Nev.)

Providing an additional economic recovery payment to seniors, veterans and disabled Americans won't only provide helpful relief, it also makes sense as a matter of fairness and economics.

Older Americans on fixed incomes are being squeezed by rising health costs, even while retirement savings and home values have plummeted. Next year, without a Social Security cost-of-living adjustment and with few jobs available for those able to and needing to work, many will face real economic pressures.

To respond to such pressures and help strengthen the economy, Congress provided two years of tax relief to working Americans through the Recovery Act's "Make Work Pay" credit. But we provided only a single, smaller companion benefit for those who already have spent a lifetime contributing to their community. Extending that benefit another year provides some measure of equity, along with a very modest boost to the economy.

At a time when so many Americans are struggling, I hope we can put aside partisan bickering to help struggling seniors, veterans and disabled Americans. It's the right thing to do, and I will be doing all I can to make it happen.

DIANE LIM ROGERS

Chief economist at the Concord Coalition and blogger at EconomistMom.com

Congress and the administration are calling for a $250 payment to seniors to make up for the lack of a cost-of-living adjustment (COLA) to Social Security benefits in the coming year. But the purpose of a COLA is to help incomes keep pace with inflation, which means when there's no inflation, there's no adjustment in benefits needed. President Obama claims that this "emergency" aid is justified because seniors' wealth has declined in this recession. But, of course, all kinds of Americans have suffered.

This is not about making seniors "whole." Because seniors are guaranteed to receive Social Security benefits regardless of the strength or weakness of the economy, they more than others have had a significant part of their income protected in this recession, and they received special aid in the last stimulus package, too. This is about taking from one generation and giving to another. By choosing to finance the provision by borrowing, our politicians hope the beneficiaries (seniors) will notice -- while those most heavily penalized (our kids and grandkids) are thankfully not old enough to vote. This seems to be a purely political strategy to pander to seniors (once again) over other groups.

DOUGLAS E. SCHOEN

Democratic pollster and author

Seniors should get the emergency $250 payments President Obama proposed Wednesday for political reasons that go well beyond the relatively straightforward reasons most commentators have cited.

It is important to note that the timing of this proposal almost certainly has as much to do with pending health-care legislation as it does with providing an additional benefit to hard-pressed senior citizens; Obama and the Democrats desperately need the support of seniors if legislation is going to pass by Jan. 1, 2010. By announcing the additional benefit this week in lieu of cost-of-living adjustments, the president will no doubt generate additional goodwill among the voters who so far have shown the greatest inclination to most assertively oppose his health-care reform initiative. With Medicare Part D premiums slated to rise next year and some seniors fearing that their Medicare benefits are likely to be reduced as a result of health-care reform, the president needs to blunt Republican criticism that he is asking the oldest Americans to pay for health care for the youngest.

Because of this, the additional $250 benefit, on top of the supplement provided in the stimulus bill, will go a long way toward holding on to a voting bloc that will be critical in next year's midterm elections. This relatively inexpensive $13 billion proposal could well make a difference in both the next round of polling on attitudes toward health-care reform and, ultimately, in the midterm elections -- especially if Congress approves it.

REP. JOHN BOEHNER

House minority leader (R-Ohio)

President Obama's proposal for additional relief to seniors and veterans is similar to several bills already being looked at in Congress, including one authored by Rep. Ginny Brown-Waite (R-Fla.). But Brown-Waite's plan is better.

Her proposal -- H.R. 3691, the SAVES Act -- helps provide relief to our seniors and veterans by using unspent funds from the Democrats' trillion-dollar "stimulus" plan, which clearly isn't working. The Obama administration, on the other hand, has already indicated it supports borrowing the money needed to fund these payments.

The federal government's balance sheet is in dire straits. Under the Obama administration's budget, our country is set to rack up $9 trillion in red ink over the next 10 years, more than the sum of all previous deficits in our nation's history. More borrowing just means piling up more debt on the backs of our children and grandchildren.

Let's help our struggling seniors and veterans without causing further damage to the future they have worked so hard to build.

MARK ZANDI

Chief economist of Moody's Economy.com

Cutting another check to senior citizens isn't at the top of my economic policy priority list, but it is on it. The economy needs more temporary help to ensure that it does not unravel back into recession. Giving hard-pressed seniors a bit more cash will provide a measurable boost to their spending, just about when they realize that there won't be a cost-of-living increase to their Social Security payment.

If the checks are mailed, say, next January, the annualized increase in real GDP during the quarter would be about 0.2 percentage points. This is small but meaningful. Most importantly, it signals policymakers' willingness to remain aggressive in responding to the economy's ongoing ills.

The stimulus has been effective in bringing an end to the recession, but important parts of it will soon expire before a self-sustaining expansion takes hold. It also makes sense to extend benefits to unemployed workers who lose their jobs next year when the unemployment rate will be in double digits; so does extending the first-time homebuyer tax credit and certain tax cuts for businesses. Taxpayers have reason to worry about the costs of all this, but the price tag for not doing these things would be greater.

NEWT GINGRICH

Speaker of the House from 1995 to 1999; co-author of "To Try Men's Souls"

"Let's run up the debt and taxes on our grandchildren!"

That could be the slogan of the Obama administration and the liberal Democrats who control Congress. On every front they are increasing spending, increasing taxes, or both.

The latest idea is to throw away $13 billion on a one-time $250 check per senior citizen. Someone should calculate the interest on the additional debt their grandchildren will pay over their lifetimes for this "free" gift.

We need a national debate on priorities and honesty. Young people will have a hard time finding jobs this year. Increasing the deficit will weaken the dollar and make job creation even harder. The Bush one-time check in 2008 did not help the economy. An Obama gift of our grandchildren's money to their grandparents won't, either.

Will no one in Washington learn the lesson that we need to control spending, cut taxes, keep interest rates low and create jobs? That is the Christmas gift every American needs.

DOUGLAS HOLTZ-EAKIN

Director of the Congressional Budget Office from 2003 to 2005; senior economic adviser to Sen. John McCain's presidential campaign

No. Social Security benefits are indexed to ensure that benefits keep up with consumer inflation. Inflation has been flat, so there is no need to raise benefits. That should be the end of the story. Instead, two rationales have been offered for raiding the barren Treasury to send $250 checks to seniors. The first is that the cost of living for seniors rose anyway, despite the flat inflation. This argument neatly sidesteps two key facts: (1) The consumer price index does not measure any particular person's cost of living perfectly -- it is always a rough measure; and (2) there are probably many years -- such as last year, when seniors got nearly a 6 percent increase -- when the usual adjustment is probably too high. Why only adjust up?

The second argument is that the economy needs more stimulus. It does not. And if it did, this is the worst kind -- one-time, lump-sum checks. The most recent demonstration of this was the ineffectual Bush administration checks in 2008.

A more likely rationale is purely political. Seniors are nervous that health-care "reform" will eat at the foundations of their Medicare benefits, so it is a good time to assuage their fears by greasing their palms. Their fears are unwarranted -- no future Congress will have the gumption to follow the Senate plans for Medicare. But the logic suggests that we all deserve checks because reckless health-care reform will create another underfunded entitlement that will erode the foundations of all our livelihoods.

Diana Zuckerman

President of the National Research Center for Women and Families

The proposal to give an extra $250 to every Social Security recipient is a great example of how politics undermines common sense. Social Security benefits go up each year to keep up with inflation, but since the cost of living went down this year, there is no rational reason to give $250 to each beneficiary, regardless of their income.

This $250 gift is not free. It adds to our deficit and undermines the health of our Social Security system, which already faces a crisis when large numbers of baby boomers are retired. Future Social Security benefits will need to be decreased to make up for the $13 billion spent on this program.

Even if the temptation to assist Social Security recipients is irresistible, this is not the way to do it. Instead, why not provide a $250 bonus to those with incomes below a certain level, or not provide it to people with unearned income above a certain level, rather than to everyone, including aging millionaires and billionaires? One reason why Americans love Social Security is that it is not "welfare" -- it is earned, based on taxes previously paid. This $250 is not. If this is not an earned benefit but rather a program to help the poor, we should give it to those who most need it, regardless of age. If it is a poverty program for the elderly, why not give the money to elderly people who most need it and will soon spend it?


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