Friday, January 9, 2009
The $38 Billion Shadow Stimulus
While a new Congress and a new White House debate details of an economic stimulus plan, Social Security recipients are already reaping a $38 billion windfall.
The extra money comes thanks to a quirk in the Social Security Administration's regularly scheduled cost of living adjustment.
Every year, Social Security payments increase along with the Consumer Price Index for Urban Wage Earners and Clerical Workers. The increase is set at whatever the change in inflation was between July and September from one year to the next.
The program that so many hate and call broken, is one of the few things helping to sustain the economy and keeping millions of people from experiencing real economic hardship and depression. If fiscal conservatives get their way the U.S. will privatize Social Security and the results could be disastrous as retirement savings are exposed to the vagaries of the stock market. Remember what happened to Fannie Mae and Freddie Mac once they were privatized.