Medicare Fund Future Still Grim

The Medicare program's current forecast is slightly less bleak than last year's, but the fund is headed for insolvency in 2026, say the trustees of the Medicare's Hospital Insurance Trust Fund.

1 comments on "Medicare Fund Future Still Grim"
B B Foonman (6/3/2013 at 4:36 PM)

The so-called "trust" funds are used as a red herring to keep people from realizing that Social Security and Medicare taxes are really just additional personal income taxes. The Medicare "trust fund" contains a "special type" of Treasury Bonds. They cannot be sold to raise the money to make future Social Security payouts. They can only be redeemed by the US Treasury but they are NOT counted as "debt held by the public" like real, marketable Treasury Bonds. The only way a government bond can be redeemed by the Treasury is by the government collecting taxes and fees, or borrowing elsewhere by issuing another bond. All government bonds are effectively a promise to tax in the future. A government bond that the government itself holds is a promise to pay itself in the future, but with what? Future taxes or borrowing. From the "CITIZEN'S GUIDE TO THE 2012 FINANCIAL REPORT": "In addition to debt held by the public, the Government reports about $4.7 trillion of debt outstanding.... It represents debt held by Government funds, including the Social Security and Medicare trust funds. ...these amounts are both liabilities of the Treasury and assets of the Government trust funds," The "trust funds" are both an asset and a liability to the government, i.e. a wash. The American people would be no worse off and no better off financially if the Social Security and Medicare "trust funds" were simply erased. But the American people would be less fooled if the "trust funds" were eliminated.


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