Tax Guru-Ker$tetter Letter
Wednesday, March 24, 2004
Medicare to go broke by 2019, trustees say - There are a couple of key issues to consider when reading a story like this.
First is the erroneous use of the term "trust fund." There is no such thing as a trust fund for any of the Medicare or Social Security taxes being paid in. All money taken in is spent immediately. In fact, as I've mentioned countless times, the kind of commingling of funds done by our rulers in regard to these supposed trust funds would put regular people in prison if they tried it with private sector insurance or retirement accounts. It's always been a pet peeve of mine, and cause for low credibility towards anyone (in government or media) who refers to the existence of a trust fund when discussing Medicare or Social Security. Such people are either dishonest, stupid, or both.
The other big problem I have with stories like this is the implication that the bean counters in DC can predict with certainty such things as when the Medicare or Social Security system will go broke. Just as with their perpetual misses on predicting the annual budget deficit or surplus, those accountants can't even get it close one year ahead of time, much less decades from now. Again, it's another pet peeve of mine when any kind of financial figures are spouted by our rulers in DC and anyone takes them seriously instead of recognizing them as the WAGs (Wild Ass Guesses) that they are.
Maybe I'm being overly sensitive about the improper usage of the term "trust fund." Perhaps it's just more ignorance on the part of the media, like the story in our local paper a few weeks ago, where the reporter referred to a living trust as a trust fund. However, I am certain that the widespread pervasiveness of the "trust fund" concept among so many people is really an attempt to make taxpayers feel more financially secure than they really are and hide the fact that all of their tax payments are going right back out the door and not into any kind of bank account on their behalf.