Increase Social Security Checks Without Increasing The Deficit

November 2nd, 2010 by Al Lewis (alewis)

Social Security payments have not been adjusted for inflation in two years.  However, there is an easy way for the Government to increase their purchasing power for senior citizens:  The ShopAmerica Gift Card.

Instead of just sending out the checks, suppose the Government gave people a choice:  You can either have this month’s check or you can direct it to a website, on which it can be exchanged for a gift card from any number of participating retailers, service providers, manufacturers etc.  Then the store gives the person the gift card when they come in.

Participating merchants would exchange the government checks at maybe a 10%-30% premium.  How do I know that?  First, there is a significant cost savings to merchants who sign up – no advertising, paperwork etc.   Second, many merchants did indeed offer gift card premiums when the first “stimulus checks” were distributed even though they had to advertise these offers and exchange the checks one at a time.  Third, the merchants get their money before it’s spent, which helps with their cash flow.  Fourth, credit cards aren’t involved, which means that they don’t have to pay the credit card companies their 2-3%.

Finally, walk into many chain drug stores now and you’ll see a whole shelf full of cards for sale at face value.   They are being marked up 20%!  Why not give the 20% directly to the user, through the ShopAmerica Gift Card?

Non-Social Security recipients would be allowed to do the same thing with their income tax refunds.

The bottom line:  No cost to taxpayers, more purchasing power for seniors, and stimulated consumer spending.  At www.whytheheck.com, we say:  “Why the heck aren’t we already doing this stuff?”

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2 Responses to “Increase Social Security Checks Without Increasing The Deficit”

  1. harvardeconomist Says:

    I always thought your gift card was the million-dollar idea but tying it to Social Security makes it more relevant and could add political support. You need to spend some money to get these ideas out there. I always see comments from the same people. It’s like you do this blog just to say you came up with these ideas rather than doing this to change the world, which requires more work

  2. littauergal Says:

    I’m one of those same people and I agree. get these ideas out there. I talk to economists all day and none of them come up with stuff like this.

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