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Friday, November 16, 2007
Robert, the problem is that one party strongly desires to destroy the system. This also means that they are totally willing to renege on any deal, since they don't mind trashing the place.
If you ever feel that the GOP is trustworthy in such things, merely consider that the Greenspan plan collected a god-awful amount of money, which the GOP happily spent on tax cuts and wars.
Something like one-tenth of one percent a year hike in payroll tax until sometime around 2040 (after which S.S. outgo forever flattens) would cover the baby boomers -- as average income increases an average of two whole percent a year: a crisis?
Under the current setup an equivalent amount of income tax will go to cash in Trust Fund bonds to cover the payroll tax shortfall -- beginning sometime around 2017. If we are back in Clinton style surplus mode by then no one will notice. If we are in deficit we will face the choice of either raising the income tax (or some other on-budget tax -- tarrifs? :-]) just a mite or selling just a few more bonds to cover the TF bonds we are cashing -- some crisis.
By 2040, by current projections, we will be paying S.S. retirement about three-quarters out of payroll tax and one-quarter out of income tax -- clunky but, hey, this is government. At whatever point the TF bonds are all cashed in we can decide whether to go on with the same clunky setup or whether to add a few points to payroll tax (at a point in time when average income will have doubled) while making an equivalent chop in the income tax (who cares).
Cutting benefits to avoid doing either will be about as sane a possibility then as would be today (less so -- there will be relatively more seniors). What a crisis.
Obama can do what the privatizers themselves have been unable to do for the past 2+ years--push the "Social Security crisis" back onto the political radar screen. What he can't do--regardless of how wonderful his Social Security Pony Plan may be--is dictate how the problem will be addressed.
A side note: If you think Dems have any stomach for significantly raising taxes on the rich, check with someone on the Senate Finance Committee (where they just had a hearing on the estate tax at which the chairman advocated full repeal). If not for Charlie Rangel in the House, we probably would've seen more tax cuts for the rich this year.
The dynamics could always change somewhat by 2009, but ostensibly clever manipulation of the public that presumes such a change is a recipe for trouble.
The man who said that Paris was worth a mass ended up assassinated, and the tolerant policy he enacted was repealed. There is something to be said for achieving one's goals using honest means.
I don't propose to trust the GOP. I want to destroy them. A middle class tax increase "to save social security" creates slack that the Republicans could use for wars and tax cuts for the rich. It also creates slack that Democrats can use for health care (and maybe a bit of development aid please). Dealing with the general fund deficit is a way to make the debate about taxes a debate about progressivity not total revenue required. I think such a debate would cripple the Republicans for a decade or more.
Denis, I did not say that I think there is a social security crisis. I said it was a useful lie.
What Obama says will be very important only if he is elected which would change the dynamics a bit. Charles Rangel does exist and people who want to stop his bill will have to debate it. I don't think they will survive politically .
Max Baucus represents the Democratic party about as much as Joe Lieberman does. There is good reason to hope that in 2009 there will be at least 53 Senators clearly to the left of him (Ben Nelson is questionable).
Robert: "Denis, I did not say that I think there is a social security crisis. I said it was a useful lie."
Which plays into my point - it's a far, far, *far* more useful lie to the party which (a) has gotten away with sh*t that the most dishonest Democratic politicians could only dream of, and (b) wants to destroy the system.
It's pretty amazing that Krugman is taking this stance in light of what he himself was writing in 1996.
Robert if Medicare and Social Security were being funded out of the same pot then raising the cap on Social Security as a backdoor way of rescuing Medicare might make some sense, but they are not. Social Security doesn't need the money over the short to medium term, Medicare Part A probably will need more money over the medium term (though HI Trust Fund depletion continues to be pushed back in time, it was projected in 1992 to be deplete by 1999, today that has been pushed to 2019) if so it would make sense to simply increase that portion of the payroll tax, perhaps as a surcharge on the wealthy (since Medicare isn't capped to start with).
Given the current state of the financing and Social Security being in cash surplus, lifting the cap simply increases future General Fund obligations at the expense of current workers. Conceptually it may seem sensible and progressive, when measured in dollars and cash flow it simply ends up being unfair to better off wage workers while giving capital a free pass.
It is not a useful lie. It is in fact counterproductive to the progressive agenda. Social Security 'Crisis' is in my view the single biggest barrier to Universal Health coverage. The very last thing we need to do is to reenforce the meme 'Big Government is the Problem'. How about we transform that message to something like 'Social Security Works, Single Payer Can Too' which among other things has the advantage of being true.
As to what Krugman wrote in 1996, I quote Maynard Keynes "When the facts change, I change my mind. What do you do, sir? " Since 1996 we have learned of a surprising productivity growth speed up which will improve the actuarial balance of the SSA (if it is ever reflected in real wages) because after the first check (indexed to wages) a single persons pension goes up proportional to prices.
I am going to add another heresy. I don't care much about the social security trust fund. If it were in a lock box it would matter, but even if congress makes the lock, it can make a key. The combined deficit matters, because deficit spending creates the illusion of wealth and reduces saving. I don't think the designation of a tax as for social security old age and disability pensions matters much. It certainly hasn't made any difference in the past 7 years.
Do this to save social security is the most powerful rhetorical weapon in the USA. The fact that the Republicans have used it doesn't mean that only they can use it.
I have to admit I don't grasp your explanation for Krugman's drastic, 180-degree turn-around on this issue. Do the factors you mention account for such an about-face? In any event, it seems that the one consistent thing about Krugman here is that he overstates his case.Post a Comment