We have four great public enterprises in the US...Social Security, Healthcare, Education, and Defense. Two articles in today's Dallas Morning News shine a light on the political and accounting fraud in Social Security and Healthcare. Similar articles could be written about Education and Defense. The bottom line...voters have been led by the delusion that we can afford these programs in their current form.
The first article is by Scott Burns. The key paragraphs follow.
Now Social Security needs cash to pay promised benefits. This is not how it looks on the books. The Social Security Trustees Report for 2010, for instance, estimates that the program will cost $729.6 billion this year. Income for the year is estimated to be $840.8 billion, including $118.1 billion of "interest" on trust fund assets. That sounds like a healthy surplus — $111.2 billion. Indeed, total income for the program is projected to exceed costs until sometime between 2020 and 2025.
What's the problem?
The interest income is funny money. It is not cash. It is a book entry, an IOU from the Treasury. On a cash basis — taxes in, benefit checks out — the program is in deficit. When Social Security asks the Treasury for actual cash, the Treasury won't have it.
So where can the Treasury get the cash? It can borrow it from someone else — like China. Or it can ask the Federal Reserve to expand the program of "quantitative easing" and print money.
Worse, it will be doing this year after year because the trust fund, functionally, is a fraud. Every dime of the $2.6 trillion of contributions and credited interest will have to be borrowed, printed or raised in new taxes. End quote.
The second article discusses the scope of cost shifting in Healthcare. This article compares charges to cost in hospitals in Texas. The results are stunning.
http://www.rr.com/local/topic/article/rr/4473267/47493046/Gap_between_hospitals_costs_and_charges_sparks Cost shifting is the practice of shifting the much of the cost of Medicare, Medicaid, and indigent care to private insurance or the uninsured. In simple terms, private insurance premiums bear a 20-40% hidden tax to support underpayments in government programs.
The implications are enormous. The avenues for inefficency and corruption are endless. But the implementation of Obamacare will be the real tipping point. Millions of government sponsored patients will be added to the rolls. Their underpayments will be forced into the premiums of private insurance. The collapse of private health insurance will be almost immediate. The effect on healthcare will be devastating, and the cost of public care will escalate 20-40% or more.
Give politicians credit. Their ability to serve up freebies to a gullible and greedy public should never be questioned.
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