Economists are none too impressed with Barack Obama's proposal to send each senior a cool $250, and David Leonhardt can see why. The over-65 set has weathered the recession better than anyone—many of them purchased real estate well before the housing bubble burst, and few work in the most-battered industries, like construction—which makes the decision to dole out $14 billion to them "pure pandering,” a co-director of the Tax Policy Center tells Leonhardt.
Social Security payments won’t increase this year, but seniors’ purchasing power has already increased due to deflation, he writes in the New York Times; their median income rose 3% from 2000 to 2008, while households headed by those 25 to 44 saw a 7% drop. The real reason Obama’s cutting them a check is because so many seniors vote. But if Washington’s at all serious about cutting the deficit, at some point we must cut benefits to seniors. “If the long-term issue is entitlement reform,” says one Michigan economist, “the fact that the political system cannot say no to $250 checks to the elderly is a bad sign.”