Krugman: Social Security Scares

[dw]

Published: March 5, 2004 in The New York Times

The annual report of the Social Security system's trustees reveals a system in pretty good financial shape. In fact, it would take only modest injections of money to maintain that system's current benefit levels for at least the next 75 years. Other reports, however, appear to portray a system in deep financial trouble. For example, a 2002 Treasury study, described on Tuesday in The New York Times, claims that Social Security and Medicare are $44 trillion in the red. What's the truth?

Here's a hint: while even right-wing politicians insist in public that they want to save Social Security, the ideologues shaping their views are itching for an excuse to dismantle the system. So you have to read alarming reports generated by people who work at ideologically driven institutions — a list that now, alas, includes the U.S. Treasury — with great care.

First, two words — "and Medicare" — make a huge difference. According to the Treasury study, only 16 percent of that $44 trillion shortfall comes from Social Security. Second, the supposed shortfall in both programs comes mainly from projections about the distant future; 62 percent of the combined shortfall comes after 2077.

So does the Treasury report show a looming Social Security crisis? No.

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[Manix]

1. The right preys on the misinformed and the ignorant. Sadly, many

will support ideas against their better interests.

[papau]

2. What Krug calls long term "62 y +" is "intergenerational" in other GOP

reports.

"After Alan Greenspan's call for cuts in Social Security benefits, Republican members of Congress declared that the answer is to create private retirement accounts. It's amazing that they are still peddling this snake oil; it's even more amazing that journalists continue to let them get away with it. Yesterday in The Wall Street Journal, a writer judiciously declared that "personal accounts alone won't cure Social Security's ills." I guess that's true; similarly, eating doughnuts alone won't cause you to lose weight. Why is it so hard to say clearly that privatization would worsen, not improve, Social Security's finances?

Should we consider modest reforms that reduce the expenses or widen the revenue base of Social Security? Sure. But beware of those who claim that we must destroy the system in order to save it."


E-mail: [e-mail]

http://www.nytimes.com/2004/03/05/opinion/05KRUG.html?hp

[many a good man]

3. How do tax cuts threaten Social Security?

Can you explain to me how the Bush* tax cuts can in any way threaten the solvency of Social Security? No one has reduced the payroll tax. I thought SS is a completely separate fund. The Feds may borrow part of its surplus but they have to pay it back like they would any other debt. Where is the threat other than the fed's inability to pay back what it borrowed.

On a separate note: can someone point me to a good book or article laying out the reasons that privatizing Medicare would be harmful?

On a related note: papau, thanks a million for sharing your insights and knowledge. I always look forward to reading your posts!

[ochazuke]

4. Is it me, or is it Greenspan?

I used to have respect for him, but the things that he has been saying the past few months are loopy.

Was I wrong to think he was an honorable public servant in the past, or has he morphed into a monster?

I have a theory that with shrub occupying 1600 Pennsylvania, it's like an 'all clear' for closet fascists to come out of the bunker.

5. He got peoples attention on SS

The idea to cut it was nuts

His comments about mortgage debt were far more important.