Pelosi Proposes Seniors Subsidy to ‘Replace’ the 2011 Social Security COLA

David C. John / October 15, 2010

Today’s announcement that Social Security recipients will not receive a cost-of-living adjustment (COLA) again in 2011 brought an immediate reaction from House Speaker Nancy Pelosi (D–CA). She proposed that the lame duck Congress vote on giving seniors another $250 one-time payment supposedly to replace the COLA.

This seemingly altruistic gesture would help Social Security recipients, but the real effect would be raising their grandkids’ taxes. These checks would be paid for with borrowed money, money that today’s children would have to repay with interest.

Today’s Social Security is seen as an earned benefit paid for by payroll taxes on earnings. The program is governed by set rules that determine how benefits are calculated, to whom they are paid, and under what circumstances benefits are increased. These rules were put in place to protect the program from politicians who might try to turn Social Security into a welfare program that paid benefits to politically connected groups regardless of whether they actually paid the taxes for them. The COLA rules, especially, were designed to make sure that recipients’ buying power was protected against inflation and to stop lawmakers from raising benefits in an election year. (more…)