April 23, 2012 5:23PM # Sometimes, Governments Lie (6th Anniversary Ed.) By [Michael F. Cannon](https://www.cato.org/people/michael-f-cannon) --- SHARE *(This blog post first [appeared](https://www.cato.org/sometimes-governments-lie/) at Cato@Liberty following the release of the 2006 Medicare and Social Security trustees’ reports. I repost it, with updated links and “exhaustion dates” because sadly nothing else has changed.)* **[Sometimes, Governments Lie](https://www.cato.org/sometimes-governments-lie/)** Year after year, federal officials speak of the Social Security and Medicare trust funds as if they were real. Yesterday Today, the government announced that the Social Security trust fund will be [exhausted](http://www.ssa.gov/oact/TR/2012/tr2012.pdf) in 2040 2033 and that the Medicare hospital insurance trust fund will be [exhausted](http://www.treasury.gov/resource-center/economic-policy/ss-medicare/Documents/TR_2012_Medicare.pdf) in 2018 2024— projections that the media dutifully [reported](http://www.nydailynews.com/news/money/social-security-finances-worsen-trust-funds-run-dry-2033-trustees-report-article-1.1066156?localLinksEnabled=false). But those dates are meaningless, because there are no assets for these “trust funds” to exhaust. The Bush administration wrote in its FY2007 [budget](http://www.whitehouse.gov/omb/budget/fy2007/pdf/spec.pdf) proposal: > These balances are available to finance future benefit payments and other trust fund expenditures—but only in a bookkeeping sense. These funds…are not assets…that can be drawn down in the future to fund benefits…When trust fund holdings are redeemed to pay benefits, Treasury will have to finance the expenditure in the same way as any other Federal expenditure: out of current receipts, by borrowing from the public, or by reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, increase the Government’s ability to pay benefits. This is similar to [language](http://books.google.com/books?id=RATyep8nF7EC&pg=PA4674&lpg=PA4674&dq=%E2%80%9Cdoes+not%E2%80%A6have+any+impact+on+the+Government%E2%80%99s+ability+to+pay+benefits%E2%80%9D&source=bl&ots=u0Wzcs3K0Z&sig=Ks4BnT0WQbDW46GUZ18QE9p-sm8&hl=en&sa=X&ei=28CVT7CIF8PY0QGc-43nBw&ved=0CDAQ6AEwAg#v=onepage&q=%E2%80%9Cdoes%20not%E2%80%A6have%20any%20impact%20on%20the%20Government%E2%80%99s%20ability%20to%20pay%20benefits%E2%80%9D&f=false) in the Clinton administration’s FY2000 budget, which noted that the size of the trust fund “does not…have *any* impact on the Government’s ability to pay benefits” (emphasis added). I offer the following proposition: > If the government knows that there are no assets in the Social Security and Medicare “trust funds,” and yet projects the interest earned on those non-assets and the date on which those non-assets will be exhausted, then the government is lying. If that’s the case, then these annual trustees reports constitute an institutionalized, ritualistic lie. Also ritualistic is the media’s uncritical [repetition](http://www.chron.com/news/article/Poor-economy-worsens-Social-Security-s-finances-3501950.php) of the lie. ##### Related Tags [General](https://www.cato.org/general), [Government and Politics](https://www.cato.org/government-politics), [Health Care](https://www.cato.org/health-care), [Social Security](https://www.cato.org/topic/social-security), [Tax and Budget Policy](https://www.cato.org/tax-budget-policy) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).