• Resources on Medicare financing

    I have not yet had time to read the following, but I wanted to flag them for readers and for my future self. All are PDFs.


    • Austin:
      I have over 8 pages of excerpts and links on the Trust Fund and Budget Perspectives.
      The reason is that to understand the difference between these 2 perspectives, one understands the difference, for example, between thinking there is no cash flow problem until trust fund exhaustion, and thinking the same cash flow problem exists today.

      From a paper entitled “Fiscal Year 2013 Analytical Perspectives Budget of the U.S. Government:”
      Pages 459-460 “From the perspective of the trust fund, these balances represent the value, in today’s dollars, of taxes, fees, and other income that the trust fund has received in the past for the purpose of funding future benefits and services. Trust fund assets held in Treasury bonds are legal claims on the Treasury, similar to bonds issued to the public. Like all other fund assets, these are available to the fund for future benefit payments and other expenditures.
      From the perspective of the Government as a whole, the trust fund balances do not represent net additions to the Government’s balance sheet. The trust fund balances are assets of the agencies responsible for administering the trust fund programs. The trust fund balances are also liabilities of the Treasury. These assets and liabilities cancel each other out in the government wide balance sheet. When trust fund holdings are redeemed to fund the payment of benefits, the Department of the Treasury finances the expenditures in the same way as any other Federal expenditure – by using current receipts if the unified budget is in surplus or by borrowing from the public if it is in deficit. Therefore, the existence of large trust fund balances, while representing a legal claim on the Treasury, does not, by itself, determine the Government’s ability to pay benefits.
      This can be accomplished (strengthening the Nation’s ability to support future benefiits) by simultaneously running trust fund surpluses while maintaining an unchanged Federal fund surplus or deficit, so that the trust fund surplus reduces the the unified budget deficit or increases the unified budget surplus. This demonstrates the need to follow a fiscal policy that is consistent with the Government’s obligation to repay the bonds when needed to pay benefits in the future. This means saving more now before the obligations become due and pursuing policies that will increase long-run growth and national income. Otherwise, the Nation will have fewer resources available in the future to meet its obligations and will face more difficult choices among cutting spending, raising taxes, or borrowing from private credit markets.”
      Don Levit

      • Don,

        Your continued posting on this puzzles me. You keep saying nothing I find contradictory with what I’ve written. I’m not sure what points you are trying to clarify or address. I’ve raised this three times. Now, I give up.