President Obama's $250 check for seniors: A payment with 2010 in mind

Roughly 300 days in to his presidency, President Barack Obama, who campaigned that he would be the nation's first "post-partisan" president of the modern era, has lately exhibited decidedly partisan economic habits.

Case in point: Obama's current proposal to send a second $250 check to every Social Security recipient, disabled veteran, railroad retirement recipient, and citizen who receives a federal and state pension instead of Social Security; the measure would cost about $14 billion. At first glance, the idea has merit: It would serve as an additional stimulus to keep economic momentum headed in the right direction. Aided in part by the fiscal stimulus package passed earlier this year, the U.S. economy started to recover in the third quarter, most economists agree, and putting more money into the hands of consumers will increase aggregate demand in an economy that needs all the demand it can get.

There are two problems. First, from a GDP-impact standpoint, allocating money to senior citizens is not the most effective use of stimulus dollars. Second, the act has more than a tinge of partisan politics associated with it.
Regarding GDP, the stimulus would be more effective if it, for example, extended unemployment benefits even longer or broadened the food stamp program. Economists know that dollars allocated to those two social support programs translate quickly into increased economic activity. The unemployed frequently use their modest unemployment benefits to pay for essentials such as mortgages or rents and utilities; those eligible for food stamps also tend to use their allocation quickly, for obvious reasons.

Given the above, it's reasonable to argue that Obama favors the $250 grant to senior citizens not solely for economic reasons, but for partisan political reasons as well: Seniors are part of his political base, and equally important, their voter turnout has historically been among the highest in the nation.

The $250 grant would also come after a dose of bad news for Social Security recipients: Due to low inflation, seniors won't receive a cost-of-living increase this year, the Social Security Administration announced. Also, when health care reform is passed, one group that might see an impact on its peripheral benefits – though probably not a reduction in essential health care services – is senior citizens. Now, keep in mind the clock is ticking: There is a congressional election in 2010. Is President Obama trying to shore-up support among seniors after what has been, by most accounts, a spate of bad news on the benefits front for them –- and in doing so attempt to help congressional Democrats in the 2010 election? The view from here argues that he is -- that Obama's $250 senior check is rooted more in partisan politics than in economics.

Now, no doubt more than a few Republicans will probably chime in with sentiments along the lines of: "Hey, President Obama has been blatantly partisan all along;" or "He's never acted in a nonpartisan manner," etc. Of course, some of these Republicans would probably have described Mother Teresa of Calcutta as a "blatant partisan" or as "another tax-and-spend liberal." Point: Hard-core Republicans aren't the most objective observers concerning whether or not a Democratic president is taking a bipartisan approach.

But the Republican lens aside, it's pretty clear that in this case, Obama is attempting to shore-up a portion of his base in the Democratic Party, as well as maintain good standing with those senior citizens who are registered as independent/unaffiliated voters. Sending out those $250 checks is largely an act of partisan politics, and it's a surprisingly unsophisticated move from a savvy chief executive.

Now, given its brazen politics and bluntness, should Republicans hold press conferences and rail against the idea, saying it's simply more government spending, and an example of special-interest politics at its worst?

Sure, they should -- just as long as those Republicans want to lose more seats in the House and Senate in 2010.

Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.
Read Full Story