Thursday, October 22, 2009

New paper: “Obama’s $250 Bonus Turns Social Security into Welfare”

The Heritage Foundation has released a new paper by Senior Fellow David John titled "Obama's $250 Bonus Turns Social Security into Welfare." Here's a taste:

Since Social Security recipients will get no cost-of-living adjustment (COLA) next year, President Obama wants to give each of them $250, a move supported in principle by the Republican House and Senate leadership. However, this move is not only unjustified; it makes a fundamental change to Social Security's structure and starts the process of converting the program from an earned benefit funded by a worker's own contributions to a welfare program.

While there will be no Social Security COLA, benefits will not decrease, despite the fact that the cost of living has gone down, thus increasing the amount that recipients can buy with their existing benefits. And the benefit would mean even larger spending in a year with record deficits. This new $250 payment would follow the earlier $250 payment that each Social Security recipient was paid through the stimulus package this year.

Check out the whole paper here.

2 comments: said...

Do you agree or disagree with the assessment?

Andrew G. Biggs said...

I'm not sure that turning the program into welfare would be my biggest complaint about the payments -- although I did argue that Obama would shift Social Security toward a welfare model here ( But overall I see the issue the same way as David John: why are we paying an inflation adjustment in a year in which inflation was negative? There isn't a particularly good justification for it.