Congress Moves To Shore Up Social Security And Increase Deficit

(MoneyWatch)  The Social Security Administration (SSA) has decided that there will be no Cost of Living Adjustments (COLA) increases in Social Security payments due to the lack of inflation in the United States this past year. This is in line with the law governing the management of the program. Of course while there has been limited inflation over the past year on paper some commodities such as gasoline, health care, prescription drugs and food have seen increases. These kind of costs do hurt the elderly more then other groups especially if the live on a fixed income.

Congress now is proposing to fix this problem that is technically not a problem. House member Caroline Maloney (D-NY) is submitting a bill that would provide one time payments of $150.00 per Social Security recipient. This is similar to the one time payments of $250.00 in the "Stimulus" bill to these same people to make up for the fact that they weren't getting tax cuts.

The only problem with this idea is that while it avoids taking more money out of the Social Security Trust Fund it does increase the general spending of the Federal Government. Right now that is running massive deficits and this will only increase the amount of borrowing required. This has been one of the constant criticisms of the "Stimulus" spending as well as the TARP and auto company bail outs. The decision not to increase the standard payment will extend the viability of the system as it will reduce the amount of money flowing from the Trust Fund.

This issue is comparable to the "pay parity" that Congress enforces for the Federal workforce. This is where the President proposes a higher annual increase for the military then the rest of the Federal employees and Congress refuses to do this and increases all workers base pay. That increases the total budget and right now the deficit.

Some would argue that the SSA is managing the program responsibly and people do not deserve this payment. The strain on the budget is already too high. In a time when many Americans are facing severe reductions in employment and income it would make sense to limit the increases in these government programs. That argument is more compelling with discretionary spending over the "entitlement" ones. In some case the Social Security income is the primary means of support for some. As costs in some areas have increased there should be a corresponding increase in this money.

Of course in the long run if the U.S. doesn't get its total spending under control the whole argument may be moot with the Government and Social Security not having the funds to pay their obligations.