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Tags: washington | social | security | medicare

Washington Follies: How Politicians Dance Around the Truth

By    |   Thursday, 20 December 2012 05:52 PM

As many of you know, I am neither a Republican nor Democrat.

As an Independent, my choice is always very simple. I choose the candidate who I feel is the most fiscally conservative.

My reasoning is simple, really. For example, when you fly on an airplane or you are to have major surgery, you want to choose someone based on competence and not on their popularity or feelings about social issues.

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Having said all this, these talks in Washington about “spending cuts” are not real "cuts" like you and I deal with.

In the fantasy world of Washington, if a program is supposed to grow by 8 percent annually and the politicians come out and say it will grow only 6 percent, it is considered a "cut."

By this barometer, if I presently weigh 171 pounds, but I was “predicted” to weigh 184 pounds in 2013 (say, according to normal weight requirements for my age and height), it would be considered a “cut” if I only weigh 178 pounds in 2013.

In the real world, I would not have "cut" 6 pounds. I would have actually gained 7 pounds and probably would no longer fit in my pants.

Social Security and Medicare, by their admission, are scheduled to go broke by the time I am eligible for them.

Fortunately for me, I will not necessarily need them. But hundreds of millions of Americans will.

Meanwhile, President Barack Obama and House Speaker John Boehner, R-Ohio, have agreed to a new measure of inflation that would reduce annual cost-of-living adjustments (COLAs), for Social Security and other government programs.

The inflation measure under consideration is called the Chained Consumer Price Index. On average, the measure shows a lower level of inflation than the more widely used Consumer Price Index because it assumes that as prices rise, consumers turn to lower-cost alternatives, reducing the amount of inflation they experience, The Associate Press reported.

As the AP explained in a recent analysis: If adopted across the government, the change would have far-reaching effects because so many programs are adjusted each year based on year-to-year changes in consumer prices.

On average, annual increases in Social Security payments, government pensions and veterans' benefits would be about 0.3 percentage points smaller each year.

Next year's COLA is 1.7 percent. Under the new measure of inflation, it would be about 1.4 percent. Taxes would slowly increase because annual adjustments to income tax brackets would be smaller, pushing more people into higher tax brackets.

Over time, fewer people would be eligible for anti-poverty programs like Medicaid, Head Start, food stamps and school lunches because annual adjustments to the poverty level would be smaller, leaving fewer people under the official poverty line.

If enacted for 2014, the change would reduce government borrowing by $223 billion over the next decade — $158 billion in spending cuts and $65 billion in tax increases, according to the nonpartisan Congressional Budget Office. The biggest savings — $102 billion — would come from Social Security.

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Obama continues to reject the Republican plan to raise the eligibility age for Medicare from 65 to 67. Boehner now says raising the eligibility age is not essential to a deal.

Obama wants to limit cuts in Medicare and other healthcare programs to about $400 billion over 10 years; Republicans want to overhaul Medicare to save even more money.

Many politicians don't feel these plans need to be changed at all because they feel it is a “moral issue.”

Personally, I wish their salaries and pensions were tied to the annual budget deficit and the solvency of our social safety nets such as Medicare and Medicaid.

Now I’m just an ordinary guy who grew up in Mayfield Heights, Ohio, and has achieved financial independence through investing. I’m not nearly as popular or “brilliant” as these politicians in Washington who think reducing the increase of spending is “cutting.”

Perhaps we all need to call our local congressional members and senators and the media outlets and tell them to quit using the word “cut” when they are actually spending more money each year.

Con artists, thieves and embezzlers like Bernie Madoff get life in person for defrauding folks out of millions of dollars.

Every year, the politicians in Washington defraud taxpayers out of hundreds of billions of dollars.

And not only are they not arrested, but they spend time arguing over “cuts,” which are actually increases, and deceive the public through the clueless media that either won't actually explain the real math or are too incompetent to do so.

I’m neither clueless nor incompetent — and neither are you, now.

Maybe if we all spread the word, we can change these deceptive, dishonest antics.

(The Associated Press contributed to this article)

About the Author: Bill Spetrino Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the Dividend Machine. Discover more by Clicking Here Now.

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In the fantasy world of Washington, if a program is supposed to grow by 8 percent annually and the politicians come out and say it will grow only 6 percent, it is considered a "cut."
Thursday, 20 December 2012 05:52 PM
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