TTSR, Picture Of The “Trust Fund”

Comments on The Thomas Sowell Reader, Picture Of The “Trust Fund”, pages 78-79.

As I start working for a salary, it will be expected of me to pay part of my earnings into the government’s allusion of a Trust Fund.  A Trust Fund that has been collecting taxes for over thirty years, yet it no longer exists.  There may be a system, a safe, and records of taxes as a reporter from the Kiplinger’s magazine proved, but over the years the system has been dissolved.

The first Trust fund in 1980^[1] took taxed money and kept it safe in the form of security bonds until pensions were due.  Then they sold some of those bonds to pay for the government retirement benefits.

The present system still buys security bonds in the Treasury Department, but there are certain advantages that the government has allowed in.  Advantages like allowing the securities held by the Social Security system not to be counted as part of the national debt, because it is one government agency owing money to another.  This means the government can take money out of the Trust Fund to cover costs other than retirement benefits and give back an I.O.U.  An I.O.U. that they never intend on paying because it does not count as debt.  This is not a once in a lifetime or even a rare occurrence.  The government has traded so many security bonds that they are having to use new tax funds before they are turned into bonds to cover the costs of retirees.

What is left in the trust fund for the future retirees and the upcoming baby boomers, whose pensions are scheduled to cost trillions?  A mire promise.  The treasury securities are nothing more than claims against future revenues of taxes.  Therefore there is no Trust Fund.  The days of buying bonds are past and the goal of saving taxed money from ones youth until old age is no longer a priority.  There will be no government funds to trust in the future.

[1] "Presidential Statements Jimmy Carter". Ssa.gov. Retrieved 2011-09-28.

TTSR, Affordability

Writing Inspired by Thomas Sowell's The Thomas Sowell Reader, Affordability, pages 73-75

Almost anything can be made affordable if a government body take resources from one place in the economic pool and channels them to another.  However, this means of acquiring something misses the whole point of the economy.  The economy exists to supply trade-offs at the market’s terms (prices).  If the government changes the price tag, or even takes it off, the price is not changed.

Do you ever wonder how the government of Canada can afford to bring us FREE health care? Or better yet, how they manage to make us think it is free.   When the government takes something, in this case our hospitals, doctors, and medicine, they package it as being ‘free’, but they are not making medical staff work for free or causing medicine to cost nothing.  We are told that the treasury pays for all the costs but that is not the full truth. Yes, the money comes from the treasury, but the money in the treasury is taxpayer’s money.  In other words, our taxes are funding the ‘free’ health care.  This would project a fair picture to some, being that our taxes are paying for ‘our’ medical needs, but there is more to it than that.

There are people, particularly the elderly, that need operations and medicine to retain their quality of life.  These people have paid the government thousands of dollars over the years, and should receive the care they need.  There are other individuals also having surgeries but theirs are extravagant and unnecessary such as implants, face-lifts, and the abhorrent sex changes.  Most of these expensive operations fit under the government’s definition of “Healthcare” so that healthy people can pay for the extra costs of others.  

Whether people require healthcare regularly or rarely, both groups are paying roughly the same percentage of taxes on income, land, and sales.  But one uses more of the medically pledged tax funds than other.  Because of the way the government has structured this system, the healthy always pay for the care of the sick.  

This is not the fault of those poor in health, and I am not accusing the aged that need care, for it is nearly impossible to go through life without encountering health problems of some kind.  The point is to expose the so-called ‘Free’ health care as a costly tax funded program with flaws.