A nation of whiners and panderers
By Michael R. Shannon
web posted October 26, 2009
Inflation is an overall increase in the price level. It's like economic Viagra that expands the economy but only provides very localized benefits to a favored few. If inflation only lasted four hours — regardless of whether or not your doctor was celebrating with you — then it would not be so dangerous. But increased price levels have a tendency to linger long after the initial thrill is gone.
Determining the level of inflation is accomplished by the Consumer Price Index (CPI), which is in turn calculated by the prices of a selection of goods and services that average consumers typically purchase during the year. So hearty soups would be included in the CPI but a heart transplant would not.
If the cost of this basket of goods and services goes up the inflation rate increases by that percentage of overall price movement.
No inflation is good because it means the economy has price stability and if you get a pay raise you can actually buy more. What's more, the dollar is and stronger and the Chinese will be happy to continue to finance Obama's Spend–a–thon.
So you would think that when the U.S. Labor Department announced that prices fell last year the reaction would be positive.
Unfortunately, arriving at that obvious conclusion would require a Congress, media and citizenry that was not composed of economic illiterates, publicity seekers, whiners and panderers — so naturally the news was greeted with outrage because Social Security checks would not increase this year in response to nonexistent inflation!
This breaks a string of 34 consecutive years in which inflation caused Social Security checks to increase due to a Cost of Living Adjustment (COLA). Last year's jump of 5.8 percent being the largest in COLA history.
A nation of adults with mature, responsible leaders would view a lack of inflation as a positive condition that did not require Congress to throw money at it.
But no, Congress thinks it's a legitimate function of government to give couch potatoes coupons so they won't have to pay for a converter box to upgrade their TV reception when the nation goes HD.
(Where were these philanthropists when my perfectly good AM clock radio was rendered obsolete by DJs, with suspiciously low and mellow voices, playing all the good music on FM radio?)
Currently the U.S. is running the largest deficit in inflation–adjusted dollars in history. This $1.4 trillion monetary black hole is larger than the deficit we ran during World War II. But now the Obama Administration has decided to open up a new $13 billion front in its War on Capitalism and give the seniors $250.00 checks to replace the COLA increase they didn't get.
This handout is pandering in its most egregious and infantile form. Any elected representative that votes for this welfare confirms that Washington is a corrupt political culture unable to say "no" to any form of handout if it might result in a vote.
News coverage of the UnCola isn't helping either. An AP reporter was trolling the old folks home and came up with this senior moment, "We were good citizens all our lives...and what do we get?"
Well for starters you get vastly more from Social Security than you put into it. Ten years ago a medium lifetime earner received almost $88,000.00 more in benefits than he paid into it, which is a 9.9 percent return on your money and much better than my 401K has been doing.
Seniors as a group also have a lower level of poverty than the youngsters paying for their Social Security benefits.
Probably the most misleading statement in AP coverage was the "average senior living on a fixed income…" hand–wringer, which serves to bring me back to economic illiterates in the media.
People living on Social Security aren't living on a fixed income: It's indexed for inflation! Even better for seniors, the index only works in one direction. A truly indexed benefit would decline 2.8 percent this year to reflect the decrease in the CPI, but Social Security, like all government programs, only goes up.
Furthermore, we stimulated seniors last year in the first Obama Porkapalooza with a $250.00 check based on the theory they would rush down to CVS and stock up on Flomax and Poligrip.
This is another generational example of robbing young Peter to pay elderly Paul to vote for Democrats, although with economic and demographic trends it's more accurate to say it's robbing Ping to pay Pablo.
I'll leave seniors with one comforting thought: at the rate Obama is expanding the deficit, Social Security recipients will never have to worry about the lack of a COLA increase again.
Michael R. Shannon is a public relations and advertising consultant with corporate, government and political experience around the globe. He is a dynamic and entertaining keynote speaker. He can be reached at firstname.lastname@example.org.
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