I'm Feeling Frugal Today, So...

Let's look at the Federal Budget, and how we might reduce the Deficit (NOT the yearly expenses, which are, of course, important).

The Deficit is that nasty storm in the far horizon. We can set up our family picnic, have a good time, and be inside before the storm comes.

Sometimes.

At other times, the clouds will move in fast, and, almost before we can react, the rain will drench us.

I've been hearing about the Deficit (I capitalize it, because it's an indicator of its importance) since I was a kid. It was a relatively low-level problem in my younger years.

By the late 1960's, an overheated economy had begun to make it more difficult to adjust the budget. If politicians voted down increases in military spending, Social Security, or other budget items with a lot of payments to individuals who depended on that spending for their income, he was likely to be defeated.

If he voted for status quo, or increases, it was inflationary. A few times, we had the worst of both - an inflationary economy and stagnant incomes.

It quickly became apparent to many of people that a main driver of the increase in the debt was the so-called entitlements:

• Medicaid, Medicare
• Welfare
• Food Stamps

The government was slowly getting out of some of the programs that had been in effect, such as some of the big housing projects (and replacing them with Block Grants), but were adding on other, more expensive projects and departments - HUD, EPA, etc.

In the midst of all of this, COLA was introduced - the Cost of Living Adjustment.

COLA is a main driver of debt at this time. If the economy is bad, and the cost of living decreases, the COLA never goes down. It's a ratchet, that only is applied in one direction - adding on to those monthly checks.

Which checks are affected?

Government beneficiaries - servicemen, "welfare", Social Security, federal retirees. 

Because they never face smaller paychecks when the pinch of increased costs hits, these recipients have no incentive to stop the Deficit from increasing - when it goes up, the economy is pressured, and - voila - they get more money.

Win-win - for them.

In contrast, most people actually lose when the cost of living increases. The businesses they work for have to cut corners, in response to increased costs, and they are likely to face pay freezes, if not cuts.

COLA has to stop - now. It's not going to get any easier in the future. Will seniors feel the pinch? Sure.

But, it still has to be done. It just isn't fair for working people to bear the brunt of the financial hit, while seniors get to avoid the pain.

Reason has a suggestion that is simple.

The Daily Signal's solution is multi-pronged.

If we don't do this, SOON, the younger people might just take any of the decisions out of our hands.

And, it WON'T be pretty for those affected.

AARP can keep threatening legislators who try to clamp down on the over-the-top amount that goes to the senior population. They WILL NOT be able to out-vote them forever.

The longer they wait, the harder the changes will be. The longer they insist on holding the line, the MADDER the younger voters will become. Pent-up anger, when released, it NOT pretty.

AARP, and the geriatric lobbyists, need to pick the time frame for giving in - anywhere from 3-5 years, max. If they don't, there WILL be a rebellion. And, it will likely involve some hideous outcomes for some. They've watched elders get their Senior Discounts, yearly cruises to exotic lands, cushy lifestyles, and, generally, better medical care at a lower cost than younger people can get.

There is a simmering anger. Expect a raid on savings/investment/annuities, and manage your own portfolio accordingly.