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September 6, 2001
Federal Budgeting 101 -- It's Not Rocket Science, Not Even With Social Security On The Table
President Bush and congressional leaders can and should dispel the social security and Medicare financing myths that enshroud the current budget debate. It's time for the politicians to be honest with U.S. taxpayers, says Martin Sullivan, economic correspondent for Tax Notes magazine. And it is important that they be honest so that the federal government can start addressing the long-term fiscal issues that are an important part of Medicare and Social Security reform. Sullivan's article appears in the August 27, 2001, edition of Tax Notes magazine.

And what are those myths? Sullivan abandons traditional budget terminology to explain the federal budget to readers in his "apples and bananas" version of the Federal Budget for Dummies. Set in the land of Froo, where taxes are paid in apples and bananas, Sullivan explains the federal budget accounting categories: income taxes and general expenses, social security payroll taxes and benefit payments, and Medicare payroll taxes and benefit payments. And he argues that the politicians can and should drop the rhetoric that confuses the public and has led to the following myths:

Myth 1: A deficit in the non-Social Security part of the budget will adversely affect social security finances.

Myth 2: The Social Security financing problems are due to years of raids on the Social Security surplus by the federal government.

Myth 3: There is not a Social Security trust fund, it is an accounting fiction.

Myth 4: The federal government will pay off all government debt within the next ten years.

Myth 5: The Medicare program is in surplus. Myth 6: Now that the government is raiding the Medicare trust fund surplus, Medicare financing is jeopardized.

Please contact Tax Analysts for the full text of Sullivan's article.

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