Every year about this time, the Social Security and Medicare board of trustees release their annual report on the status of the Social Security and Medicare trust funds. And every year about this time, political hacks and pundits twist the data in those reports to serve their own agendas. I will use today's column to help my readers understand the issues.

It will be best to start with some background. I'm going to primarily stick to the Social Security trust fund report because this is, after all, a column about Social Security. There are two Social Security trust funds. One is the Old Age and Survivors Insurance fund. It is funded by a major portion of the Social Security payroll tax. Social Security retirement and survivor benefits are paid for out of the OASI fund. A much smaller portion of that tax is funneled into the Disability Insurance trust fund. And of course that fund is used to pay monthly Social Security disability benefits. I must point out here (for about the thousandth time in this column) that the DI trust fund is NOT used to pay for Supplemental Security Income disability benefits. Almost everyone confuses SSI disability with Social Security disability. They are two entirely separate government programs. SSI benefits are paid for out of the general funds of the government, NOT out of Social Security trust funds.

Both the Social Security and Medicare trust funds are made up exclusively of U.S. government treasury bonds. The way Social Security and Medicare are financed has led to many arguments over the years in this column. I don't have the time or space to get into those issues today. Anyone who wants to learn more about the funds and how they work can go to the actuarial portion of the websites of the oversight agencies. You can find Social Security actuarial data at www.socialsecurirty.gov. Social Security is managed by the Social Security Administration. And you can find Medicare actuarial data at www.cms.gov. CMS stands for the Centers for Medicare and Medicaid Services, the agency that runs the Medicare program.

The law requires that the Social Security and Medicare trust funds be overseen by a six-member board of trustees. Four serve by virtue of their positions within the federal government: the secretary of the treasury; the commissioner of social security; the secretary of health and human services; and the secretary of labor. There are also two public trustees who are appointed by the president for six year terms.

And although some pundits try to label the trust fund reports as little more than propaganda spun by political hacks (the aforementioned dignitaries acting on behalf of the Administration), the reports are actually generated by boring old bean counters — Social Security and Medicare actuaries. And I mean that in the best sense of the term. I used to work right down the hall from SSA's actuaries, and these folks are dedicated public servants who do a superb job of analyzing data and presenting the country with the facts about the status of the funds and projections for the future of the funds. They are not at all influenced by the political party in power at the time. For proof, all you have to do is look at past reports issued when conservative Republicans sat in the White House and when liberal Democrats sat in the White House. The reports are always essentially the same, simply updated annually based on economic variables.

This year's report shows essentially no change in the projections for the Social Security funds from last year. The combined OASI and DI trust funds will keep the system solvent through 2033.

But a more important date is 2020. That is the date when the system will begin to pay out more in benefits than it collects in taxes. That means the system will have to begin redeeming large chunks of its reserve funds to keep the checks going out each month. And since those reserve funds are entirely government IOUs, guess who would have to cough up more money to keep the system in the black? (The answer is all of us.)

As I've pointed out many times in this column, we will never reach that crisis point. There will be major reforms to Social Security before 2020. My best guess as to reforms: a long range increase in the retirement age; a possible cut in COLAs; and a slight increase in the payroll tax or wage base). And those reforms will keep us from ever reaching those trust fund crunch points. I know there are many skeptics out there who think Congress will never get its act together to reform Social Security. But all they have to do is look at history. The last time major reforms were enacted, in the early 1980s, we were only five years away from the Social Security doomsday clock. So we've still got some wiggle room before things get desperate and Congress is finally forced to act.

A more urgent issue is if you consider the disability trust fund on its own. By itself, the DI fund is scheduled to be depleted in just two short years — by 2016. (Disability claims are on a rather alarming rise because of the large number of aging baby boomers whose bodies are breaking down before they hit their retirement years.) We've been down this road before too (for different reasons). The last time the disability fund was near insolvency, they simply borrowed money from the OASI fund. Of course, today that would be like robbing a poverty-stricken Peter to pay an almost destitute Paul. What Congress should do is enact a very slight increase in the Social Security payroll tax to be earmarked for the disability fund. But they won't. At least, not any time soon — because no one wants to increase anyone's tax. So once again, in the next year or two, we will see another short term borrowing binge (from OASI to DI), which of course will just exacerbate the retirement trust fund shortfall .

If you have a Social Security question, Tom Margenau has the answer. Contact him at [email protected]. To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.