Despite frequent and boisterous claims from the Biden Administration regarding being “transitory,” inflation continues to worsen. Last week, we were treated to new monthly and annual inflation numbers; both exceeded even the highest estimates from so-called experts. Congress and the Administration continually stoke the inflationary fire with bad policy, excessive spending, and excuses. What should we expect?
Good news is generally released in Washington, D.C. early in the day. Reporters then scramble to get their scoop into the public domain, helping any Administration they support. The bad news is treated in a manner that at best could be called clandestine. Late on Fridays, following the close of business, and in the dark of night, unpleasant news is quietly slipped into certain government websites, where only diligent media discover the truth.
So it was this past Friday when the Center for Medicare & Medicaid Services (CMS) announced 2022 pricing for Medicare Parts A, B, and D. Naturally, the news provided another metaphorical inflation nail in the coffin for Senior Citizens. The Biden Administration is plagued by inflation of their own making, and their responses are woefully inadequate.
- Consumer Price Index (CPI, the overall price level) increased over the past 12 months by +6.2% and continues rising
- Social Security Benefit Payments for 2022 are increasing 5.9% (in fairness, that was an accurate inflationary estimate when it was announced, which happened just before the last superheated numbers drove annual inflation up to 6.2%)
- Income Tax Brackets are indexed to avoid “Bracket Creep,” which is caused by Cost-of-Living Adjustments, or COLAs, rising faster than the indexing of Income Tax Brackets by IRS
- Medicare Payments also increase annually (using a COLA) to reflect inflation, but Medicare premiums are rising, not 3.1%, nor 6.2%, not the originally leaked 7+%, but 14.55%, due to a last-minute increase to cover a new Alzheimer’s drug called Aduhelm
- Medicare’s Income Related Monthly Adjustment Amounts (IRMAA), reflect increased Medicare premiums for higher-income Americans, yet IRMAA bracket adjustments do not reflect actual inflation
- Chained CPI is a new and different measure of COLA for Social Security Recipients, supposedly providing a more accurate accounting of items routinely purchased by older Americans, but it further understates costs and under compensates benefits
Any thinking person would be hard-pressed to comprehend any “fairness” in the current system. From the above explanation, it appears that government policy is, “Heads I win, tails you lose.” One year at a time, the effect is relatively nominal but compounded over time, it will ruin the Middle Class as we know it today. Government of the people, by the people, and for the people, has been cast aside in favor of an even Bigger Government.
Are you better off than you were 10 months ago? Be afraid, America; be very afraid.
Van Wie Financial is fee-only. For a reason.
