This year the Social Security program did not hand out cost of living increase checks to folks. There are a variety of bills in Congress at a variety of stages arguing that the government should cut $250 checks to each individual who is on social security to help cover the cost of living increase.

I agree with a recent article I read that this could be a bad idea.

“Though the Senate recently rejected an amendment that would give each recipient $250, President Obama has signaled support for the idea, and an identical bill in the House is gaining support.

This is a mistake. With the deficit expected to reach 10.6 percent of gross domestic product in 2010, it’s important that we spend every dollar wisely.”

Why do I agree?

1. They already adjusted. One way or another, everyone is doing something to make ends meet. It’s hard, yes, but people make things work.
2. One time payments generally get spent that way- like one-time windfalls. Like you won the lottery. Or like you got a birthday present. Not like an increase that compensates you for a gradual increase that happened over time

If you want to help people adjust to something, do it while they are adjusting to said something. Not afterward.

10.6% of GDP is nothing to laugh at or ignore. It could be a serious problem, especially if we don’t do anything about cutting it down. There has to come a time when we say- ok “It’s time to stop handing out money to the banks, to the car companies, to the taxpayers and to, yes, the social security recipients.” That’s me saying that. I think that time is now. It’s time we start owning up to the fact that we spent beyond our means for a long time and we just don’t have the money.

As the article’s authors, Alicia H. Munnell (former member of the Council of Economic Advisers and the director of the Center for Retirement Research at Boston College) and (Andrew G. Biggs, former deputy commissioner of Social Security and a resident scholar at the American Enterprise Institute) argue, even if we had an extra $14 billion to throw around, which we don’t really, what we should do is throw it at the unemployment problem, or other benefits along those lines.

I still think this will pass, though. Congress responds to its constituents, and a good portion of those constituents are on social security, and they are vocal and vote. They will get their money.

And I see that as as big an issue as any in the coming decades. Folks who have been working their whole lives will be retiring, and they will want their promised social security benefits- and their 401K’s, and everything else we have built the idea of the future on.

The problem, of course, is that the money isn’t really there. To a certain point, social security and 401K’s and any kind of retirement benefit is a bit of a dream bordering on a pyramid scheme- stocks and the stock market will only go up as long as other people see it as something attractive to buy into.

When was the last time you wanted to put any of your money into stocks or pay your social security? Exactly.

Photo Credit: Steve Wampler (via Flickr under CCL)