Saturday, September 26, 2009

COLAs and Their Effect on The Budget

Since 1975, Cost of Living increases in Social Security checks have insulated seniors from the effects of free-spending government policies. When the government decides to "balance" the budget by printing more money, seniors automatically get a raise in their checks.

Not so the average citizen. We have to beg hard of our employers to get a raise, and, when we do, it seldom covers the entire amount that we are now short.

So, the average senior has no reason to fear deficits - in fact, many eagerly vote for those who promise them (either directly, or indirectly, by making promises they can't pay without essentially "kiting a check").

I never liked the balanced budget people - they always seemed to be one-note nuts. But, maybe it's time to re-visit that increasingly rare practice of not writing a check your bank can't cash - that day.

Let's make the government follow that practice. To do otherwise is to follow the practice that alcoholics do - when suffering the effects of drinking too much, they start drinking again (which WILL kill the pain), and begin the cycle anew. I did that once - I drank too much, so had a few the next day, which turned into more, so I woke up the next day even worse.

I'm a slow learner - it took me a week of boozy haze before I decided to suffer on Saturday, and finally get off the merry-go-round.

[NOTE: in times of EXTREME emergency - war or other major disaster - I'm not against borrowing against future expectations. I do so myself on occasion - when a family member becomes gravely ill or even dies, when the house suffers major damage, when your car is totaled - that's not the time to say "I can't afford it". You take care of the emergency, by loans or credit cards, then tighten your belts after.)

4 comments:

Dr.D said...

I doubt that there are very many seniors who are truly "insulated" from the effects of inflation due to massive government deficit spending. At the same time, I agree with the idea that the country should have a balanced budget. A big part of balancing the budget should be to cease starting new federal spending programs and to wind down existing programs. Of course, that will happen just as soon as pigs fly.

The power to spend money is the power to control how people live, and Congress likes that power. They are not going to give it up willingly, even though they never legitimately had it under the Constitution for most purposes. The usurpation began long ago, and they like it, they like it far to much to turn loose of it now with out a fight.

Anonymous said...

I'm afraid the mentality is 'after me, you come first'... no one will willingly give up what has been given to them at little or no cost. In time it becomes an entitlement and yes, we are being controlled.

(Say, do the feds get an automatic cost of living, too?)

Linda said...

Many of the workers in federal government do, yes.

scott said...

COLA sounds nice, but as I pointed out before, increasing the money supply, e.g. inflation, does not affect all prices equally. Since approximately the 1920's, Americans have embraced the whole "stable money as measured by consumer prices" mentality, which is a complete joke economically speaking. Why this happened in the 20's, I honestly have no idea, but it is simply fairy-land economics. It is nonsense.

At any rate, SS and Medicare will eventually bankrupt the country. Paying for these programs will become impossible, COLA or no COLA. More than any other reason, SS and Medicare persuade me that inflation is unavoidable. The US simply cannot afford them, and the government will not admit it through honest default. It will inflate the money supply, lie about the inflation, and pretend that it is paying people "just as it promised." But the money won't buy anything.

Eventually, people will figure it out. SS will not support them, and their savings/investments will be wiped out by events in the economy. There are a lot of people out there who will simply never retire. They will not be able to. Work 'till you die will be the name of the game.

At least that's my prediction.