American seniors could see the biggest increase in Social Security payments in nearly 40 years, according to a new estimate from the non-partisan advocacy group, The Senior Citizens League. The organization projects that the cost-of-living adjustment for 2022 could be 6.1% because of higher inflation. This is up from the previous month’s forecast of 5.3%.
Seniors Are in the Money
In June, the consumer price index (CPI) surged to a 13-year high of 5.4% amid rising food and energy prices. This prompted the organization to expect the 2022 Social Security COLA to be higher based on the CPI for Urban Wage Earners and Clerical Workers (CPI-W). With only a few more months left of the current fiscal year, it could fall based on the data. That said, the administration has warned Americans to anticipate “rapid inflation” for several more months, backtracking on previous comments.
The Social Security COLA for 2021 was 1.3%, equating to approximately $20 more per month for many retirees. For the last couple of decades, the SS COLAs have been minimal, resulting in American seniors suffering from diminishing purchasing power.
But this could change in the future. Rep. John Garamendi (D-CA) proposed the Fair COLA for Seniors Act of 2021, which recommends substituting the current CPI-W measurement to CPI for the Elderly. He contends that it would highlight the growing expenses that people age 62 and older endure. But Republicans suggest implementing the Chained CPI, measuring how Americans change their spending when prices increase.
Whatever policy proposal is discussed, the primary challenge that the retirement program faces is the cost. As Liberty Nation has reported, the trust fund is running low on cash, so any revision that would increase benefits would add even more pressure to an already troubled entitlement scheme.
Yes, We Fibbed – Rapid Inflation is Here
Remember when Treasury Secretary Janet Yellen averred that she did not see any inflation problems on the horizon? In March, the former head of the Federal Reserve assured everyone that inflation risks were “small.” It was as recently as May when she told NBC, “I don’t believe that inflation will be an issue.” Despite everyone reading the same data, watching global events unfold, and monitoring the central bank’s money printers, Yellen rejected the inflation premise. She is not dismissing it anymore.
Speaking in an interview with CNBC on July 15, Yellen conceded that she anticipates the U.S. economy will witness “several more months of rapid inflation.” But she is optimistic that the numbers will begin to ease “over the medium term.”
“We will have several more months of rapid inflation. So, I’m not saying that this is a one-month phenomenon. But I think over the medium term, we’ll see inflation decline back toward normal levels. But, of course, we have to keep a careful eye on it.
So I don’t think we’re seeing the same kinds of danger in this that we saw in the run-up to the financial crisis in 2008. It’s a very different phenomenon. But I do worry about affordability and the pressures that higher housing prices will create for families that are first-time homebuyers or have less income.”
At least Yellen admits that inflation is here to stay. Fed Chair Jerome Powell recently told the House Financial Services Committee that inflation would moderate. Powell is so confident in his stance that he does not think the Eccles Building should taper the ultra-aggressive and unprecedented quantitative easing (QE) campaign of the last year.
Indeed, these are the smartest men and women in the room. Perhaps the great William F. Buckley was right: “I would rather be governed by the first 2000 people in the Manhattan phone book than the entire faculty of Harvard.”
California Dreamin’ of a UBI
California is set to establish the country’s first taxpayer-funded universal basic income (UBI) after lawmakers unanimously approved legislation that would send out monthly checks of up to $1,000 for pregnant women and young adults who had resided in foster homes. Policymakers will also ensure that UBI recipients can apply for any other state government benefit and that the money will not be classified as income.
Will this bill be expanded universally to all California residents? As former Stockton Mayor Michael Tabbs tweeted, “Now there is momentum,” adding, “Things are moving quickly. The next stop is the federal government.” But could California begin seeing an explosion in pregnancies? What about shrinking payrolls in The Golden State? Can the state even afford another welfare scheme?
While President Joe Biden has yet to endorse a UBI, his child tax credit expansion has been likened to a guaranteed income. Suffice it to say, parents on the west coast will be rolling in money.
In addition to the basic income guarantee, the White House started sending out monthly child tax payments of $300 for each child under six ($250 per kid between six and 17). Moreover, as the sweetened $300-a-week federal unemployment benefit showcased, giving away free money does spark unintended consequences. There has been a labor shortage in the post-pandemic economy, with millions of jobs going unfilled, despite millions of Americans still out of work.
California is broke. The federal government is putting everything on the credit card. The broader economy is still reeling from the COVID-19 public health crisis. So, here is one simple question: Where is all this money coming from anyway? It is a toxic concoction of taxing, borrowing, and printing. If only financing life’s expenses could be as easy as Uncle Sam makes it out to be.
Read more from Andrew Moran.