| Topic: |
Politics > Politics-USA |
| User: |
"Sogobia" |
| Date: |
04 Jan 2005 08:59:39 PM |
| Object: |
Krugman skewers Bush's Social Security flimflam. |
January 4, 2005
OP-ED COLUMNIST
Stopping the Bum's Rush
By PAUL KRUGMAN
The people who hustled America into a tax cut to eliminate an imaginary
budget surplus and a war to eliminate imaginary weapons are now trying
another bum's rush. If they succeed, we will do nothing about the real
fiscal threat and will instead dismantle Social Security, a program that is
in much better financial shape than the rest of the federal government.
In the next few weeks, I'll explain why privatization will fatally undermine
Social Security, and suggest steps to strengthen the program. I'll also talk
about the much more urgent fiscal problems the administration hopes you
won't notice while it scares you about Social Security.
Today let's focus on one piece of those scare tactics: the claim that Social
Security faces an imminent crisis.
That claim is simply false. Yet much of the press has reported the falsehood
as a fact. For example, The Washington Post recently described 2018, when
benefit payments are projected to exceed payroll tax revenues, as a "day of
reckoning."
Here's the truth: by law, Social Security has a budget independent of the
rest of the U.S. government. That budget is currently running a surplus,
thanks to an increase in the payroll tax two decades ago. As a result,
Social Security has a large and growing trust fund.
When benefit payments start to exceed payroll tax revenues, Social Security
will be able to draw on that trust fund. And the trust fund will last for a
long time: until 2042, says the Social Security Administration; until 2052,
says the Congressional Budget Office; quite possibly forever, say many
economists, who point out that these projections assume that the economy
will grow much more slowly in the future than it has in the past.
So where's the imminent crisis? Privatizers say the trust fund doesn't count
because it's invested in U.S. government bonds, which are "meaningless
i.o.u.'s." Readers who want a long-form debunking of this sophistry can read
my recent article in the online journal The Economists' Voice
(www.bepress.com/ev).
The short version is that the bonds in the Social Security trust fund are
obligations of the federal government's general fund, the budget outside
Social Security. They have the same status as U.S. bonds owned by Japanese
pension funds and the government of China. The general fund is legally
obliged to pay the interest and principal on those bonds, and Social
Security is legally obliged to pay full benefits as long as there is money
in the trust fund.
There are only two things that could endanger Social Security's ability to
pay benefits before the trust fund runs out. One would be a fiscal crisis
that led the U.S. to default on all its debts. The other would be
legislation specifically repudiating the general fund's debts to retirees.
That is, we can't have a Social Security crisis without a general fiscal
crisis - unless Congress declares that debts to foreign bondholders must be
honored, but that promises to older Americans, who have spent most of their
working lives paying extra payroll taxes to build up the trust fund, don't
count.
Politically, that seems far-fetched. A general fiscal crisis, on the other
hand, is a real possibility - but not because of Social Security. In fact,
the Bush administration's scaremongering over Social Security is in large
part an effort to distract the public from the real fiscal danger.
There are two serious threats to the federal government's solvency over the
next couple of decades. One is the fact that the general fund has already
plunged deeply into deficit, largely because of President Bush's
unprecedented insistence on cutting taxes in the face of a war. The other is
the rising cost of Medicare and Medicaid.
As a budget concern, Social Security isn't remotely in the same league. The
long-term cost of the Bush tax cuts is five times the budget office's
estimate of Social Security's deficit over the next 75 years. The botched
prescription drug bill passed in 2003 does more, all by itself, to increase
the long-run budget deficit than the projected rise in Social Security
expenses.
That doesn't mean nothing should be done to improve Social Security's
finances. But privatization is a fake solution to a fake crisis. In future
articles on this subject I'll explain why, and also outline a real plan to
strengthen Social Security.
E-mail:
http://www.nytimes.com/2005/01/04/opinion/04krugman.html?hp=&pagewanted=print&position=
--
"Those seeking profits," (Thomas) Jefferson wrote, "were they given total
freedom,
would not be the ones to trust to keep government pure and our rights
secure. Indeed, it has always been those seeking wealth who were the source
of corruption in government. No other depositories of power have ever yet
been found, which did not end in converting to their own profit the earnings
of those committed to their charge."
http://www.commondreams.org/views04/0618-03.htm
=====================================
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.
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| User: "beber" |
|
| Title: Re: Krugman skewers Bush's Social Security flimflam. |
05 Jan 2005 08:28:19 AM |
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On Tue, 4 Jan 2005 19:59:39 -0700, "Sogobia" <windriver2000@yahoo.com>
wrote:
January 4, 2005
OP-ED COLUMNIST
Stopping the Bum's Rush
By PAUL KRUGMAN
The people who hustled America into a tax cut to eliminate an imaginary
budget surplus and a war to eliminate imaginary weapons are now trying
another bum's rush. If they succeed, we will do nothing about the real
fiscal threat and will instead dismantle Social Security, a program that is
in much better financial shape than the rest of the federal government.
I'm not going to read the rest of this crap. The trust fund has been
spent. That's why there is a crisis. I'll also point out that not long
ago, Democrats were predicting doom for the system, when it suited
their political purposes. They, at least, wanted to fix it. Bush wants
to create a vast subsidy system for the stock market. If you want to
see what such a system does for costs; think what health insurance and
medi-care have done to health costs.
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| User: "Dave Simpson" |
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| Title: Re: Krugman skewers Bush's Social Security flimflam. |
04 Jan 2005 10:30:42 PM |
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Social Security is unsustainable, Krugman, who is discredited, is
nothing but a whining liberal Democratic Party hack.
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| User: "Werner Hetzner" |
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| Title: Re: Krugman skewers Bush's Social Security flimflam. |
04 Jan 2005 10:23:00 PM |
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Sogobia wrote:
January 4, 2005
OP-ED COLUMNIST
Stopping the Bum's Rush
By PAUL KRUGMAN
...
Here's the truth: by law, Social Security has a budget independent of the
rest of the U.S. government. That budget is currently running a surplus,
thanks to an increase in the payroll tax two decades ago. As a result,
Social Security has a large and growing trust fund.
An increase in the payroll tax? But
In 1935, President Franklin D. Roosevelt promised the American people
that the new Social Security Tax would be invested at 3 per cent
interest, so that, by 1983, the tax could be ended and returns on the
investments would guarantee a retirement income for all Americans.
When benefit payments start to exceed payroll tax revenues, Social Security
will be able to draw on that trust fund. And the trust fund will last for a
long time: until 2042, says the Social Security Administration; until 2052,
says the Congressional Budget Office; quite possibly forever, say many
economists, who point out that these projections assume that the economy
will grow much more slowly in the future than it has in the past.
So where's the imminent crisis? Privatizers say the trust fund doesn't count
because it's invested in U.S. government bonds, which are "meaningless
i.o.u.'s." Readers who want a long-form debunking of this sophistry can read
my recent article in the online journal The Economists' Voice
(www.bepress.com/ev).
The short version is that the bonds in the Social Security trust fund are
obligations of the federal government's general fund, the budget outside
Social Security. They have the same status as U.S. bonds owned by Japanese
pension funds and the government of China. The general fund is legally
obliged to pay the interest and principal on those bonds, and Social
Security is legally obliged to pay full benefits as long as there is money
in the trust fund.
Well yes, and the Chinese and Japanese are getting cheaper money for
their credit to us. The value of the dollar has dropped by about a third
in a couple of years.
Naturally, unlike Enron, the gov can print all the money it needs.
Everyone who saved will get screwed - including pensions because their
value will be inflated away. ***** the thrifty. Reward the spendthrifts.
There are only two things that could endanger Social Security's ability to
pay benefits before the trust fund runs out. One would be a fiscal crisis
that led the U.S. to default on all its debts. The other would be
legislation specifically repudiating the general fund's debts to retirees.
Argentina was a preview.
That is, we can't have a Social Security crisis without a general fiscal
crisis - unless Congress declares that debts to foreign bondholders must be
honored, but that promises to older Americans, who have spent most of their
working lives paying extra payroll taxes to build up the trust fund, don't
count.
Either way somebody is going to get fucked.
Politically, that seems far-fetched. A general fiscal crisis, on the other
hand, is a real possibility - but not because of Social Security. In fact,
the Bush administration's scaremongering over Social Security is in large
part an effort to distract the public from the real fiscal danger.
There are two serious threats to the federal government's solvency over the
next couple of decades. One is the fact that the general fund has already
plunged deeply into deficit, largely because of President Bush's
unprecedented insistence on cutting taxes in the face of a war. The other is
the rising cost of Medicare and Medicaid.
Actually, there are lots of demands on the treasury. Name and agency -
find a demand.
As a budget concern, Social Security isn't remotely in the same league. The
long-term cost of the Bush tax cuts is five times the budget office's
estimate of Social Security's deficit over the next 75 years. The botched
prescription drug bill passed in 2003 does more, all by itself, to increase
the long-run budget deficit than the projected rise in Social Security
expenses.
Taxing the rich is not going to work. The rich will just move. We are
going to outsource the rich. Then the poor can make jobs for us.
That doesn't mean nothing should be done to improve Social Security's
finances. But privatization is a fake solution to a fake crisis. In future
articles on this subject I'll explain why, and also outline a real plan to
strengthen Social Security.
Well yes, as happened before, we can increase the payroll tax even more
and reduce and delay and tax the benefits even more. What else is new
for the brilliant Krugman?
E-mail:
http://www.nytimes.com/2005/01/04/opinion/04krugman.html?hp=&pagewanted=print&position=
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