While I do not spend much time following inside-the-beltway fiscal policy debates every now and then I decide to tune in and see which way the wind is blowing. The fiscal cliff talks provide a good opportunity to see what's politically possible. So what's politically possible as the US budget deficit grows dangerously for another year? Old age entitlements cuts. Not surprising. As old age entitlements become such a large slice of total government spending and US total debt continues to grow toward dangerous levels it only makes sense for old age entitlements to lose their immunity from cuts.
Obama also gave ground on a key Republican demand — applying a less-generous measure of inflation across the federal government. That change would save about $225 billion over the next decade, with more than half the savings coming from smaller cost-of-living increases for Social Security beneficiaries.
Warning to anyone who expects as good of retirement benefits from their government as their parents or grandparents are getting or have gotten: Nope. Not gonna happen. Obamacare already cut Medicare and shifted money toward the working age (but often not working) poor. Whether or not it happens in this round of budget cutting expect cuts for old age entitlements. Save more for your retirement.
Expect to work longer. Better pace yourself toward that end. Choose a career path will keep you employable in your 60s.
Meanwhile, the possibility remains that the deal could get even more distasteful for Democrats, particularly if Republicans counter Obama’s request for $1.2 trillion in new taxes with a demand for an additional concession on health care, such raising as the eligibility age for Medicare beneficiaries from 65 to 67.
While Obama tentatively agreed to raise the Medicare eligibility age during talks with Boehner in 2011, it has emerged in the current negotiations as a line the White House is unwilling to cross.
If President Obama and congressional Republicans fail to reach a deal in the coming weeks, Americans face a fierce wave of tax hikes and spending cuts that could threaten the U.S. economy. Yet Britain has already crashed over its own economic precipice, with the Conservative-led government unleashing a radical experiment in austerity since coming to power in 2010 that has seen public spending corralled and taxes increased on this side of the Atlantic.
Actually, US living standards have been in decline for years and Britain's present is really America's present too. Stagnant living standards cause lower growth in tax revenues and therefore make the overpromised old age entitlements problem even bigger.
|Share |||By Randall Parker at 2012 December 17 09:28 PM|