As part of the $787-billion economic stimulus package enacted in February, Washington sent a $250 check to every adult on Social Security. every adult on Social Security. The same amount went to those enrolled in Veterans Administration, Railroad Retirement and Supplemental Security Income benefit programs. The purpose of the one-time payments was to boost consumer spending and help revive the economy. But in President Obama's view, once was not enough. On Wednesday, he urged Congress to spend $13 billion on a second round of $250 checks, saying, "Even as we seek to bring about recovery, we must act on behalf of those hardest hit by this recession."
The next morning, the government announced that Social Security benefits would not go up automatically next year. For the first time since Congress tied benefits to the consumer price index in 1975, there was no increase in the cost of living. In a masterful bit of spin, the head of the Social Security Administration said that the lack of a cost-of-living adjustment made it all the more important for Congress to approve another $250 bonus. But that's looking at the situation through the wrong end of the telescope. The decline in prices means that seniors will be able to buy more with the dollars they're already receiving. Some advocates for seniors argue that the government's yardstick for inflation underestimates the effect of rapid increases in the cost of prescription drugs. But even an experimental version of the consumer price index that's focused on the elderly found that the cost of living went down over the last year, not up.