We locked up Bernie Madoff for running a Ponzi scheme. Medicare is a bigger one. Seniors think the money deducted from their paychecks was stored in a trust fund. But, in fact, it was spent immediately. The "trust fund" is an accounting gimmick.
The giant seniors' lobbying group, AARP (www.aarp.org), rarely talks about Medicare's coming bankruptcy, and it rejects reforms like means-testing or raising the eligibility age, claiming most problems can be solved simply by lowering health-care costs.
"Do things like make better use of health information technology," David Certner, AARP's director of legislative policy, told me.
The Congressional Budget Office says such reforms won't save much money.
"Well, they're going to have to," Certner said.
That sounds like wishful thinking -- not unusual among powerful lobbies that ignore basic economics. When something is free for one group, demand runs wild, pushing up prices for those who must pay for themselves and the subsidized group.
On top of that, the demographic problem Peterson emphasizes won't go away, no matter how cleverly the "fix health care" argument tries to bury it. Fewer workers per retiree means shrinking Medicare tax revenues -- period -- even if health-care costs are flat.
"Ultimately, somebody's going to have to give up some medical treatment they'd been getting," Peterson says.
Our group of seniors had second thoughts after we spoke. "I hear what the kids are saying," a man said, "When they get to be our age, there may not be any Medicare."
"Tell them to change the law," one said. "If the kids can get the votes, then they can get it done."
Fat chance. The elderly vote on Medicare.
Most young people don't even know they're getting ripped off.