Medicare and Social Security Challenge(NYT whores for Bush SS cuts)

[papau]

http://www.nytimes.com/2004/03/02/business/02retire.html

March 2, 2004
NEWS ANALYSIS
Medicare and Social Security Challenge
By EDMUND L. ANDREWS


ASHINGTON, March 1 - When Alan Greenspan urged Congress last week to cut future benefits in Social Security and Medicare, sending elected officials to the barricades, he was if anything understating the magnitude of the problems ahead. Today's budget deficits are measured in the hundreds of billions, but the looming shortfalls for the two retirement programs are projected to be in the tens of trillions of dollars.

LIE#1 - this trillion number is the present value of all future obligations that was taken from a study about inter-generational equity- In the authors view the only way to protect future generations from excessive tax is to increase the tax and decrease the benefits for the current generation - it is the equivalent of saying we need a $11 trillion fund of equities to have the equivalent of a fully funded corporate defined benefit plan. Of course SS is an insurance concept based and funded by intergenerational transfers - chosen the 30's to be this way so as to keep the tax take at the lowest level possible - no fund of equities was meant to accumulate because that was SOCIALISM BY THE BACK DOOR - at least to the GOP who screamed that -and now the NYT sells the GOP reversing their position as they try to kill Social Security - and the New York Times labels this shit as "Analysis" rather than op-ed.

The Bush administration has estimated that the gap between promises under current law and the revenues expected will total $18 trillion over the next 75 years. But an internal study in 2002 by the Treasury Department, looking much further ahead, concluded that the gap was actually $44 trillion - and would climb each year that nothing was done.

LIE#2 - after 2042 the wage base is increased or the retirement age raised to 70 from the current Reagan passed age 67, and all is well. There is no problem

Indeed, the numbers are so big and extend so far into the future that they border on the surreal. Analysts in both Congress and the administration warn that the flood of retiring baby boomers will cause federal spending on old-age benefits to eventually consume as much of the nation's economy as the entire federal budget does now. And while the problems would be acute even if today's federal budget were balanced, the budget deficits that seem likely for the rest of the decade make matters worse. That is because the government is borrowing more than $200 billion a year from the Social Security and Medicare trust funds to finance its operating deficits.

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FINALLY A BIT OF TRUTH


Mr. Bush and many administration officials contend that much of Social Security's problems could be solved by letting people divert some of their payroll contributions to private investment accounts they might manage for themselves. But some experts say that the government would have to borrow as much as $1 trillion over the next several decades to make up for the lost revenues and pay retirees benefits earned under the old system. And the Congressional Budget Office, in a report on privatization plans last year, said none of the proposals would have much effect. "Using government resources to buy stocks and bonds, without other spending and tax changes, would not automatically lead to an increase in the nation's pool of investment resources,'' the budget office concluded. "There is no such thing as a free lunch.''
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AND NOW BACK TO LIES AS WE COMPARED FULLY FUNDED TRADITIONAL PLANS TO INTER-GENERATIONAL TRANSFER FUNDED SS, AS DISCUSSED IN A "FAIRNESS BETWEEN GENERATIONS" PAPER

Professor Kotlikoff of Boston University has devised a "menu of pain'' to lay out different ways of bridging the gap. The choices range from an immediate increase in federal income taxes of 69 percent to an immediate cut in Social Security and Medicare benefits of 45 percent. And those numbers may be too low, he said, because even the disavowed Treasury estimate for the shortfall may be too low. Adding in the new prescription drug program, he said, the imbalance is closer to $51 trillion.<snip>

AND THE LAST MAJOR LIE

Whether one accepts the administration's forecast or that of the disavowed study, everyone agrees that the potential problems with Social Security and Medicare dwarf the short-term problems of balancing the budget.<snip>
NOPE _ NOT EVERYONE AGREES - I DO NOT AGREE, THE CHAIR OF THE TUFTS UNIV ECON DEPARTMENT DOES NOT AGREE, AND BELOW PAUL KRUGMAN DOES NOT AGREE.

http://www.nytimes.com/2004/03/02/opinion/02KRUG.html?hp

OP-ED COLUMNIST Maestro of ChutzpahBy PAUL KRUGMAN March 2, 2004
The traditional definition of chutzpah says it's when you murder your parents, then plead for clemency because you're an orphan. Alan Greenspan has chutzpah.Last week Mr. Greenspan warned of the dangers posed by budget deficits. But even though the main cause of deficits is plunging revenue — the federal government's tax take is now at its lowest level as a share of the economy since 1950 — he opposes any effort to restore recent revenue losses. Instead, he supports the Bush administration's plan to make its tax cuts permanent, and calls for cuts in Social Security benefits.Yet three years ago Mr. Greenspan urged Congress to cut taxes, warning that otherwise the federal government would run excessive surpluses. He assured Congress that those tax cuts would not endanger future Social Security benefits. And last year he declined to stand in the way of another round of deficit-creating tax cuts.But wait — it gets worse.You see, although the rest of the government is running huge deficits — and never did run much of a surplus — the Social Security system is currently taking in much more money than it spends. Thanks to those surpluses, the program is fully financed at least through 2042. The cost of securing the program's future for many decades after that would be modest — a small fraction of the revenue that will be lost if the Bush tax cuts are made permanent.

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