Yes and no. In 1986 Congress moved traditional Social Security (the old-age and disability programs) "off budget". Medicare is "on budget". This has no economic meaning. Because the "off budget" label is so silly, most budget figures include Social Security.

But isn't Social Security a "trust Fund", which means Congress can't tamper with it?

 The trust funds are mostly accounting devices, and there are three; one for old-age and survivors benefits, one for disability insurance and one for Medicare hospital insurance. They don't prevent Congress from tampering. It often alters benefits, usually - but not always - increasing them. Congress also shifts money among trust funds to prevent shortfalls. In 1994 it made a huge transfer form the old-age to the disability trust fund; $122 billion between 1994 and 2000.

So what? Aren't retirees simply "getting back" their payroll taxes, which were invested to pay for their benefits?

No. Social Security and Medicare are pay-as-you-go programs. Today's taxes pay for today's benefits. In 1994 old-age and survivors benefits totaled $276 billion, or 90 percent of the $308 billion collected in payroll taxes. The taxes of today's retirees were spent years ago. The same is true of Medicare.

OK. But if the taxes of today's retirees had been invested, the savings - plus interest - would cover their benefits. Right?

Wrong. Consider a married worker with average wages who retired in 1993 at the age of 65. This couple has an average life expectancy of 15 to 19 years. The worker's payroll taxes, if invested with interest, would pay for about three years of benefits; adding the employer's taxes would cover about seven years. Medicare benefits are many time retirees' previous taxes, even if those taxes had been reinvested.

As American ages, existing benefits for the elderly can be maintained only by raising taxes or cutting other programs. If Americans dislike those choices, they'll have to cut the elderly's benefits or let budget deficits continue.

Popular folklore is wrong. Social Security isn't a fully funded pension. It is welfare. Current workers pay for current retirees. Benefits shift according to economic conditions and political whim. The folklore is propaganda intended to impose the burden of deficit reduction onto programs for the non-elderly or taxpayers, mostly workers. This is unfair. By that, I don't mean that today's retirees should suffer deep benefit cuts. But modest changes are justified: slight trims in cost-of-living adjustments; taxing Social Security income as any other; some increase in Medicare fees. Over the longer term, we need to raise retirement ages gradually and make retirees bear more of their health costs. These changes would affect mostly people of my generation (I am near 50) and younger.

We need to adapt to new social conditions. People live longer; they should work longer. Older Americans are wealthier; they should be more responsible for themselves. The guardians of today's privileges make it impossible to discuss tomorrow's needs. It's an unseemly legacy.