However, I have learned that the government has several more options for "spending cuts:"
- Pay the provider less for the same product. The proposed 2% cut in Medicare is to simply have health care providers accept 2% for the exact same services and products. The providers only choice is to participate or be excluded from Medicare. Gee, I wish I could tell my grocery store or gas station to accept 2% less and have them participate. Unfortunately, they will choose not to do business with me anymore.
- Future promised cuts that usually don't materialize. A typical government tactic is to claim a savings credit today for spending cuts in the future, even they don't materialize, which they usually don't. For me, that would mean I could claim a spending cut of $25,000 in 2012 if I delay purchasing a car from 2014 to 2015.
- Postponing benefits. Another government spending cut is to delay benefits for entitlements, such as Social Security. So raising the age for full retirement is considered a spending cut for the government. I guess this works because starting later means less payments over the programs lifetime, but I don't see how it should be claimed as a current savings. For example, if I take a major vacation every five years starting at 55 and decide to delay the start until 60, I will take one less major vacation over my lifetime. But I shouldn't claim a spending cut in the year I decide to delay.
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This is not financial or frugal living advice. Please consult a professional advisor.
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