Tuesday, January 04, 2005

Paul Krugman and Social Security

Paul Krugman is the uber-liberal "economist" with his own column in the most prestigious newspaper of record, the New York Times. Each of his columns attracts massive blogging interest, and today's column is no exception.

Today he wrote:

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.

With him being a so-called economist, it's shameful that he endorses an accounting gimmick at face value. Sure, Congress can pass a law declaring Social Security its own special budget, but Congress can't magically change the fact that the government has a limited amount of resources with which to dole out benefits. No matter which "budget" our government spends from, essentially it's all one big pile of money.

Hoystory does a really great job debunking the column. Hoystory seems to implicity support the Bush Social Security privatization proposal, and I don't think that proposal has been thought out very well, but otherwise, Hoystory seems right on target.

There's a nice Social Security chart at Random Jottings.

In a much shorter Krugman post, Jim at Thinking Right points out how liberals have completely changed their tune on Social Security since three years ago.

Secure Liberty offers a passionate plea for moving to an "ownership" system. I agree with the idea that we have to do something.

Being a libertarian, my preferred solution would be to simply establish a long-term plan to phase out benefits. Running a massive retirement plan isn't one of government's necessary functions.


Adam said...

I agree totally with your stance that it should be phased out, but that will probably not happen for a long time. A good plan would be to decrease the amount each age group puts in, and decrease the amount they can receive. People under, say, 26, wouldn't pay into social security or collect anything from it.

But the way the government runs, and the way politicians work, it won't happen. There won't be enough people with the guts to go against the older population who are afraid of anything being done to social security. Until the system is broken in a major, catastrophic way that involves no one getting any of their checks or people are weened off of the idea of government hand outs, it won't happen.

The fact that Bush is even bringing up his weak plan says something about how much support it has *somewhere*. This would be a good issue to use to get young voters -- "hey, your money is being stolen and when you retire you won't get it back. I have a plan to fix it." (The politician would then have to provide said plan, not just a web address.)

Jeremy said...

This S.S. reform B.S. is gonna meet the same, if not a worse, end as Clinton's National Healthcare initiative. These "personal legacy" agendas of second term Presidents almost never peter out.

monkeygrinder said...

I think in the bubble years of the late nineties I was receptive to dumping social security for private accounts.

This was before we could see GWB's demonstrated incompetence in everything he touches, while the Amen chorus tells us he just pooped a diamond.

If it must be fixed, let someone other than Bush do it.

EZE said...

While I don't support mandatory investing, it is clearly a superior alternative to being forced to give money to retirees who consistently voted to steal money from others merely because they failed to plan for retirement. So I say decrease their benefits and give the people their money back. Bush is proposing a compromise that just might be acceptable to enough people to get it passed. Ideal? No. But better than doing nothing and waiting for bankruptcy.

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