No Country for Old Men

I don’t think it’s President Obama’s fault but it looks as if his administration is throwing America’s senior citizens “under the bus.” There’s news today, for example, that Social Security recipients will get no cost-of-living increases in 2010 or 2011. Combine that with the increase scheduled for Medicare prescription plan premiums, and we old folks will actually get less money than we did before. That’s certainly not what we need in our declining years when our aging bodies require increasingly costly care.

social securityThe media attributed this decision to anonymous “Social Security trustees,” but in reality, the people calling the shots are Obama appointees: Timothy F. Geithner, secretary of the treasury; Michael J. Astrue, commissioner of Social Security; Kathleen Sebelius, secretary of health and human services; and Hilda L. Solis, secretary of labor. There are also supposed to be two public trustees, but these seats are currently vacant. So the policy reflects the administration’s priorities, and these priorities do not seem to include the welfare of older Americans.

Most Americans old enough to draw Social Security payments have little else to live on. We contributed to Social Security through our paychecks all of our working lives, and we confidently expected to have a subsistence income when we retired. Some might have a private pension as well, but our savings were invested mostly in equity in our homes, certificates of deposit or money market accounts, and 401 (k) funds.

Now, the equity in our homes has been drastically diminished through no fault of our own, interest rates on CD’s and other accounts are minuscule, and I’m sure you know what happened to those 401 (k) funds. All of these trends result directly from successive governments’ financial policies, which seem designed to encourage risk taking and cushion the consequences of irresponsibility, rather than to reward thrift and prudence.

Under George W Bush, and later under Obama, billions of tax dollars were spent to bail out criminally irresponsible – and in some cases just criminal – financial institutions. Nobody is sure where all of that money has gone. Billions have also been devoted to rescuing mismanaged car manufacturing companies and throwing a lifeline to home buyers who imprudently assumed mortgage obligations that they could not possibly meet.

The Federal Reserve has lowered interest rates to the point where many safe investments produce no worthwhile return, presumably in an attempt to encourage borrowing by “entrepreneurs,” who are by definition risk takers. Most senior citizens do not fall into that category. For example, why would I at 75 years old invest in a venture that might yield returns in 20 or 30 years? If I am around at 95, I won’t be able to do much celebrating.

I realize that Social Security is the federal government’s biggest burden, accounting for about 37 percent of its annual expenditures, but if the money we paid into the program over the years had been invested separately instead of being “borrowed” for the government’s general fund, I am sure there would be more than enough in the kitty to meet today’s obligations.

Of course, government policies are intended to benefit the economy as a whole, not to cater to any one segment, and the administration’s primary goal may be to reinvigorate American inventiveness. Obama’s advisers should remember, however, that consumer spending fuels the everyday economy, creating jobs and generating revenue for future investment and expansion.

Retirees spend a lot of money on such activities as cruises to the Caribbean, day trips to Disney and Branson, and flights back and forth to visit relatives. And where would restaurants be without those retirees lining up for all-you-can-eat buffets and flocking to dinner theaters? At a time when unemployment insurance is running out for many of the millions who have been laid off, spending by retirees would provide much needed cash to keep the economy going – and there’s bound to be a decline in that kind of discretionary spending when Social Security payments shrink.

Having said all of this, I must concede that the Obama Administration didn’t start the fire. As the Billy Joel song puts it, “it was always burning since the world’s been turning,” or at least for as long as I can remember. And there may have been compelling reasons for averting the collapse of the global finance system, for trying to save the jobs of auto plant workers and for intervening to stop the rot in the housing market.

But I wonder why President Obama has chosen to follow the trail blazed by his predecessors, appointing the same financial architects to rescue Americans from the wilderness into which they led us. Is it that the financial world is ruled by forces so powerful that not even the President can resist them?