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As part of broader stimulus legislation, the Obama administration has proposed to hand out $250 checks to senior citizens. This has more than a few folks scratching their heads. As a group, seniors are holding up better than most during the recession. Some commentators point to the political necessity of appeasing the powerful senior voting bloc, but the overall reaction is skeptical. What's wrong with the plan?


  • Fiscally Unwise┬á Norman Ornstein says he fully understands the political strategy here: "The White House wants to provide a buffer against strong opposition from many seniors to health care reform." But that doesn't mean it isn't a terrible idea. Giving seniors $250 "because there will be no cost-of-living adjustment"? The cost-of-living adjustment, he explains, "is supposed to adjust for inflation--meaning the amount goes up when inflation exists but doesn't when it is negligible. Establishing a precedent that Social Security payments go up regardless of whether there is inflation is very bad." He agrees with former CBO head Mr. Penner, who "trashed the plan as utterly fiscally irresponsible."
  • Caving to Seniors in Perpetuity┬á Of course "the politics are attractive," exclaims a frustrated David Leonhardt at the New York Times. "People over 65 vote in large numbers. Saying no to them is never easy. And therein lies a problem that's much larger than one misguided $14 billion proposal." He supports this impressive statement with the following argument:
Just about everybody agrees that solving the deficit depends on reducing the benefits that current law has promised to retirees, via Medicare and Social Security. That's not how people usually put it, of course. They tend to use the more soothing phrase "entitlement reform." But entitlement reform is just another way of saying that we can't pay more in benefits than we collect in taxes.

"If the long-term issue is entitlement reform," says Joel Slemrod, a University of Michigan economist, "the fact that the political system cannot say no to $250 checks to elderly people is a bad sign."
  • Odd Yet Interesting "Don't get me wrong," writes Mark Miller at the Huffington Post, "senior-bashers who argue the payment is unwarranted are wrong." But he finds the image of policymakers bowing to angry, highly-organized elders "instructive"; the $250 to seniors seems likely to be accepted, whereas "a proposal to extend the federal subsidy of health insurance for jobless Americans appears to be stalled."

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