Commentary by Daniel T. Zanoza, Executive Director
On Monday, August 24, 2009, the Social Security Administration announced a freeze of the annual Cost Of Living Adjustment (COLA) would go into effect in 2010 and 2011. Seniors and the handicapped receiving Social Security benefits are given an annual cost of living increase. For example, in the year beginning January 2009, Social Security recipients received a 5.8% increase in their monthly checks. Although the COLAs have varied in percentage, recipients have always seen their benefits go up during the past 30 years without fail.
In the past, some have suggested the Social Security Administration could save billions of dollars by eliminating COLAs, but usually such proposals were considered the third rail of politics. With the decision to freeze COLAs for the next two years, many believe there will be a heavy price to pay by the Barack Obama Administration.
The President has already come under heavy criticism concerning his plan to reform national health care. Seniors have turned out in droves at town hall meetings across the nation, voicing their opposition and outrage regarding $500 billion of projected cuts to Medicare. Many seniors feel the reform of America's health care system would primarily by paid for on their backs. According to data, 25% of Medicare's budget is spent on the last year of an individual's life. Even the most steadfast supporters of health care reform admit one day medical services to the elderly would eventually have to be rationed with the outcome being government bureaucrats, instead of doctors, making life and death decisions regarding health care services for the elderly and handicapped.
For decades, senior citizens have represented a solid voting bloc for the Democratic Party. However, groups like the American Association of Retired Persons (AARP) were out front in their backing of a move to nationalize health care. But recently, the AARP has taken a huge political hit and loss in membership totaling 60,000 since July 1st of 2009. While AARP still supports health care reform, the organization has changed its tactics of late, taking a more low key approach to the issue.
I believe the freeze in COLAs is a political ruse. The Democratic Party fully understands the loss of the senior voting bloc would ultimately result in a sea change in American politics. This, combined with the fact baby boomers are now approaching retirement age may spell doom for the Democratic majority and change the fortunes of a Republican Party which seemed to be on the edge of political viability.
The elderly will certainly blame the Obama Administration after they receive their first Social Security check in 2010. Even those who do not follow politics closely would associate the COLA freeze with the Party in rule. The Obama administration is fully aware of this fact. This may sound cynical to some, but I believe Barack Obama will attempt to spin the financial freeze facing seniors to his advantage. Obama will do so by feigning outrage, while at the last minute riding in to "save the day." He will turn this fiasco into a positive opportunity, designed to bring straying seniors back into the Democratic fold. The President will find a way to undo the freeze on COLA's, thereby projecting himself as the defender of seniors and handicapped.
It is foolish to think there has not been (and will not be) an increase in the cost of living during the past fiscal year. Energy prices have gone up, along with the cost of food, shelter and the necessities of life. We are expected to believe the cost of living has remained stagnant and will do so for the next two years. But even economists who stand by Obama's "tax and spend" fiscal policies agree there will be considerable inflation in the very near future. Indeed, some project hyper-inflation is just around the corner for the American economy, due to the existing record deficits and projected mass debt for the future.
Usually, bad news of the political nature is saved for release on Friday's; the mindset being many Americans do not pay attention to news stories over the weekend. However, isn't it strange the announcement regarding the freeze in COLA's was made at the beginning of a news week?
If senior citizens are the victims of cuts in Medicare related to national health care reform and see their cost of living increases vanish, the combination would spell doom for the Democratic majority and the President. If there is one absolute regarding Barack Obama and those who surround him, they are not political neophytes. I believe the freeze in COLA's was politically manufactured, in order to head off the growing displeasure the elderly have with the Democratic Party. Obama will fashion himself as Democrats have in the past. He will once again demonstrate his supposed compassion for the downtrodden, disenfranchised and less fortunate by creating the illusion of a crisis for seniors and then solve it by removing the freeze on COLA's.
Part of Barack Obama's stimulus package included a one time only payment of $250 for those receiving Social Security benefits. But the President's plan to "save the day" for seniors will be a stroke of dastardly proportions. It is a plan some might call genius, while others will say it is meant to play on the emotions of our nation's elderly and handicapped, many of whom solely depend on their monthly Social Security income.
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