Keep Your $250 Gift To Retirees … Or Send It Where It’s More Needed

I don’t usually find myself agreeing with the Washington Post editorial board these days. But setting aside the nasty “pandering” slant, I share its view that the White House and Congress should shelve the plan to send Social Security recipients another $250 to compensate for the lack of a cost-of-living adjustment next year.

At least, I concur so far as payments to seniors are concerned. Benefits to other affected groups may be a different story. I’m more comfortable speaking only as one of the 41 million or so who receive benefits because we’ve reached the official retirement age.

Would I like an extra $250? Sure, even though I’d have to pay part of it back in income taxes. Am I disappointed that my monthly benefits won’t be higher next year? Of course. But do I, like some of the recipients who’ve reacted, feel that level payments will be unfair? Absolutely not.

Like other recipients, I’ve already benefited from a protection in the COLA system. Benefits go up when the Consumer Price Index for Urban Wage Earners and Clerical Workers rises, but they can’t go down when it drops.

In 2009, benefits reflected a sharp 5.8% rise in the CPI-W the year before. They stayed level in 2010 when the CPI-W dropped by 2.1%. And as the Center on Budget and Policy Priorities explains, I and all my fellow beneficiaries will still be ahead of the game next year.

This isn’t to say that many recipients of Social Security retirement benefits won’t feel strapped. CBPP reports that the average benefit in June 2010 was $14,000.

More than half of the recipients rely on the benefits for the majority of their cash income. For about a quarter, it provides more than 90%. Dependence increases with age, as income from work becomes less likely and savings get used up.

If you’re trying to make do on $14,000 — or less if you were a low-wage worker — even $250 can make a real difference. But the proposed extra cash would go to all recipients, even the wealthiest.

The White House argues that seniors have seen their savings fall as a result of the recession. Undoubtedly true, as my monthly statements can attest. But we’re likely to have taken less of a hit than younger people — assuming we followed the standard advice to shift toward lower-risk investments as we aged.

In any event, a recent survey by the Pew Research Center found that 70% of us have held our own during the recession — a much higher percentage than for any other age group. This, I suspect, is a combination of investment strategy and, perhaps more importantly, Social Security itself.

Now maybe there’d be nothing wrong with a modest gift from the fed if everyone else had enough to get along on. As things stand, the poverty rate for seniors dropped a bit last year — down to a record low 8.9%. The child poverty rate was more than twice as high — 20.7%. For single-woman families with children, it was a shocking 38.5%.

Which brings me to my last point. While Social Security benefits keep about 90% of seniors out of poverty, a new CBPP analysis shows that TANF cash benefits to parents and children aren’t enough to lift the families out of deep poverty, i.e., above 50% of the federal poverty level, in any state in the country.

Even combined with food stamps, they’re not enough to get families to 75% of the FPL in 41 states and the District of Columbia. (For the District, the maximum TANF cash benefit for a family of three is 28% of the FPL. With food stamps, the family gets to 59% of the FPL.)

Not only that. In all but three states, the benefits are lower in inflation-adjusted dollars than they were when TANF was created in 1996. They’ve lost at least 20% of their value in 29 states and the District, where the loss has been 25.8%. No COLAs here.

In all but one or maybe two states, a TANF family of three was getting less than half the average Social Security retirement benefit in July 2010. What will happen unless Congress renews the now-expired TANF Emergency Contingency Fund is an open question since a majority of states have used a portion of their allocation for basic cash assistance.

So if the White House and the Democratic leadership in Congress want to send $250 checks where they’re needed most, I suggest they send them to TANF families.

“Welfare mothers” aren’t as politically popular — or as likely to vote — as seniors. But they’re raising a generation of desperately poor children, who are at high risk of lifelong poverty — and ultimately dependence on Social Security checks that won’t be big enough to lift them out.

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One Response to Keep Your $250 Gift To Retirees … Or Send It Where It’s More Needed

  1. [...] Second Look At Flat-Lined Social Security Benefits For Seniors Before I decided to publicly reject the administration’s proposed $250 Social Security gift, I thought about potential [...]

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