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Monday, March 06, 2006

Medicare, Social Security and the danger of fiction believed as fact

Some time ago I wrote about the arrest, conviction and sentencing of Bernie Ebbers of MCI/Worldcom. The simple explanation is that his crime was using fancy accounting tricks to create the fiction that liabilities were assets and that MCI/Worldcom was doing quite nicely, though it was hemorrhaging money. And there was the resulting collapse as the market finally caught up with MCI and Bernie, et al. The market will prevail, just like the Mississippi WILL flood in spite of all the levees and dikes.
As I was sending off an email to a friend in response to one he sent on the current debt ceiling for the deficit. I copied the article from Dr. Walter E. Williams on the huge multi trillion dollar liability from Social Security and Medicare. Dr. Williams referenced the National Center for Policy Analysis.I went to the site and searched for "Medicare". And clicked on this analysis. And again, Medicare is an accounting fiction. It is the same fiction that sent one man to prison for 25 years. And that was only for a few billion dollars in fraud and fiction. The analysis politely calls Medicare "unstable". Medicare is a pay-as-you-go system. It is NOT insurance! No matter what it's called, it is not insurance. There is no risk pool. It is a pay in, pay out. And an accounting fiction. And that's just Part A. Part B is even more of a fiction.
And as we look at a mediocre and relatively minor figure of $8,000,000,000,000 for the deficit, we're looking at an additional $4,000,000,000,000 a YEAR in additional unfunded liability to Medicare.Friends, in case you missed it, that's
to the $60,000,000,000,000-$70,000,000,000,000 in current dollars that we'd need to put aside today,now to pay for Medicare and Social security!
And the Charlie Brown public still chooses to believe the Lucy van Pelt Congress that there really is a football there to kick. And she'll let you.


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