Cash for Oldsters

No one ever went broke underestimating political cynicism, but these days even we can't keep up: On Wednesday, President Obama announced that he wants to send every American senior a $250 check.

"Even as we seek to bring about recovery, we must act on behalf of those hardest hit by this recession," Mr. Obama said. Of course it's a mere coincidence that these checks are being proposed, and probably passed, just as Congress is about to vote on health care.

Supposedly these "economic recovery payments" are justified because seniors won't get an inflation-adjusted increase in Social Security benefits this year. This zero cost-of-living, or COLA, increase has many seniors alarmed, and AARP and other lobbies have been fanning their anxiety. Mr. Obama's Wednesday news was timed to pre-empt yesterday's announcement of the zero COLA by the Social Security Administration. The $250 checks will funnel $13 billion to some 57 million beneficiaries—in addition to whatever they have already received as part of the $787 billion stimulus.

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Associated Press
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No one denies that seniors have been hit like everyone else by the recession. But on the other hand, seniors have actually seen an increase in the purchasing power of their Social Security payments since last year. COLAs are tied to the consumer price index—the official measure of the cost of living—and last October seniors received a 5.8% increase, which was the largest boost since 1982.

However, since last autumn's crash the energy prices that drove that 2008 COLA increase have fallen substantially. For the typical retiree this amounts to a real benefit increase of almost $700, according to Andrew Biggs of the American Enterprise Institute and a former Social Security administrator. Even factoring in a zero increase in 2009, over two years the COLAs will average out to about the right increase.

Mr. Obama's $250 check would be the equivalent of another 2% increase, and he is proposing no compensating spending cuts to pay for it. This means the checks will come out of general revenues, which means that they won't be financed based on the traditional calculations of what seniors pay into the system over their working lives.

Never mind, too, that Social Security already increases payments over the long term because every class of retirees has its initial benefits bumped up to keep in step with increases in real wages. Mr. Obama has spoken time and again about the need to control entitlement spending, but we are now seeing that in practice he can't live with a zero COLA increase for even a single year after a previous year's windfall.

This $250 gambit also underscores the dishonesty behind the budget math propping up ObamaCare. Democrats are claiming that half of the new entitlement's outlays will be "paid for" with Medicare cuts in future years. But if Democrats can't tolerate a zero COLA for one year in Social Security, how in the world are they going to bless $500 billion in cuts to doctors, hospitals and other Medicare reimbursements? Mr. Obama is the youthful St. Augustine of entitlement reformers: Lord, make me chaste, but not yet.

The real calculation here is political and comes right out of White House strategist David Axelrod. Every poll shows that seniors are among the most opposed to ObamaCare—by more than a 10-point margin in a late-September Gallup survey. Democrats are panicked that the zero COLA will feed senior opposition to health care and stop their attempt to ram it into law in the next few weeks. Mr. Obama's $250 checks are essentially bribes, a sort of political anesthesia intended to hush up seniors until the legislation is on the books.

And let's not forget the special discredit that belongs to AARP. A vice president for the putative seniors lobby admitted to reporters on Wednesday that "We have a communications challenge" in trying to sell "reform" to his skeptical members. Communications are the least of it given the ugly details of the plan itself. But AARP will now brag on its role in pushing the $250 checks, as if this one-time gratuity could make up for the reductions in medical care for seniors that will inevitably result once ObamaCare goes into action. Let's hope older Americans aren't as gullible as the White House seems to believe.