Krugman vs. Krugman
In liberal Democratic circles, the debate over Social Security has taken a dangerous "don't worry, be happy" turn.
The argument has two equally dishonest components. The first is to deny that Social Security faces a daunting financing problem -- one that will be much easier to fix (and less onerous for the low-income retirees that the head-in-the-sanders purport to care about) sooner rather than later. The second is to mischaracterize the arguments of those who advocate responsible action, accusing them of hyping the system's woes.
One prominent practitioner of this misguided approach is New York Times columnist Paul Krugman. "Inside the Beltway, doomsaying about Social Security -- declaring that the program as we know it can't survive the onslaught of retiring baby boomers -- is regarded as a sort of badge of seriousness, a way of showing how statesmanlike and tough-minded you are," Krugman wrote last week. "In fact, the whole Beltway obsession with the fiscal burden of an aging population is misguided."
Somebody should introduce Paul Krugman to . . . Paul Krugman.
"[A] decade from now the population served by those programs [Social Security and Medicare] will explode. . . . Because of those facts, merely balancing the federal budget would be a deeply irresponsible policy -- because that would leave us unprepared for the demographic deluge, with no alternative once it arrives except to raise taxes and slash benefits." (July 11, 2001)
"Broadly speaking, the next administration . . . will face two big economic tests. One . . . is whether it can stick to a fiscal policy, including a policy toward Social Security, that prepares this country for the demographic deluge." (Nov. 12, 2000)
"The reason Social Security is in trouble is that the system has a large 'hole' -- basically a hidden debt -- because previous generations of retirees were paid benefits out of the contributions of younger workers . . . a multitrillion-dollar debt that somebody has to pay." (Oct. 1, 2000)
"[B]ecause the baby boomers' contributions were used to provide generous benefits to earlier generations, there isn't enough money in the system to pay the benefits promised to the boomers themselves." (June 21, 2000)
In addition to this fiscal amnesia, Krugman misrepresents responsible voices in the debate.
First, he quoted a new paper by Congressional Budget Office Director Peter Orszag and CBO analyst Philip Ellis. Notwithstanding "all the attention paid to demographic challenges," they conclude, "our country's financial health will in fact be determined primarily by the growth rate of per capita health care costs."
True, but Krugman omits any mention of Orszag's latest book, inconveniently titled "Saving Social Security." Orszag and co-author Peter Diamond wrote that "Social Security's projected financial difficulties are real and that addressing those difficulties sooner rather than later would make sensible reforms easier and more likely."