Phase II of the “fiscal cliff” is coming soon, with the goal being to slow the growth of so-called “entitlement spending,” especially Medicare and Social Security.

What if I told you that Congress and the Obama administration may attempt to slow Medicare spending by increasing what you and I refer to as “taxes”?

Is that possible? How do you cut spending by raising taxes? Simple: by a budgetary sleight-of-hand accounting gimmick.

First of all, almost all CDT readers would define as a tax any government-mandated subtraction from one’s gross pay. Examples include federal income taxes, FICA taxes, etc. Therefore, such a definition of a tax would also extend to a senior’s Part “B” premiums for Medicare, which are automatically deducted from an individual’s monthly Social Security payment.

However, in the land of Oz, or the federal government accounting system, part “B” premiums for Medicare are not treated as taxes. Rather, they are called “offsetting receipts,” meaning they are subtracted from gross Medicare spending to yield “net” spending on the total Medicare line item of the federal government’s budget.

Thus, by raising what are really taxes (or Medicare Part “B” premiums), the federal government can actually claim to lower (net) Medicare spending.

Don’t laugh! Such a scenario may be on the horizon. Only in the world of government accounting.

Keith Forrest

State College