Wednesday, November 21, 2007

Social Security Reform

Ruth Marcus attempts to "call out" Paul Krugman for inconsistency on Social Security reform, complaining that he "mischaracterize[s] the arguments of those who advocate responsible action, accusing them of hyping the system's woes." Given that she writes for a newspaper that constantly shills in favor of private accounts (oh, that courageous Fred Thompson), I can't say I'm surprised by this characterization. Paul Krugman provides a brief response to Marcus here.

The Post's objections to the Thompson plan are weak. They object to his (far from original) proposal to base increases in benefits on cost of living rather than growth in wages because of its effect on low-earning workers. The Post's insistence that this change would be unfair to the poor betrays both its belief that Social Security should be a welfare program, and that the proposal is inadequate to maintain Social Security as a meaningful benefit. If the Post wants to transform Social Security into a welfare program, it should just say so. It has to know that if different indices are used for the poor, we will eventually reach a point where the poor will get the highest benefits in a system that is meant to pay out based on what you have paid in. Adding heavily subsidized "private accounts" as a "sweetener"? If we supposedly can't afford the current system, which involves using Social Security funds to purchase treasury notes, how will we afford this diversion of trillions into (presumably limited) private investments? Thompson's plan is written for a rich faction that wants to eliminate Social Security, and quite deliberately reduces the benefit such that, eventually, the payments will seem so nominal that voters will support the elimination of the program. The Post gives that "two cheers" because they are too obtuse to grasp that, or because the fig leaf isn't quite big enough?

People like Ruth Marcus sit at the bottom of an enormous well and, when asked to help find a way out, propose digging their way to China with a teaspoon. I'm all for long-term planning, and that includes planning for the future of Social Security. But this is not 2000-2001, when we were deciding what to do with the Clinton budget surpluses. We have three feet of water in the basement, Fred Thompson's plumbing service proposed that our priority should be switching to high efficiency shower heads, and the Post is pretty happy with that... but is concerned that a few people should enjoy higher flow. And if you dare suggest that they have their priorities messed up....

Calling for Social Security reform when the economy is strong and we are running budget surpluses might be courageous, at least as politicians define courage, as there doesn't appear to be a need. When we have massive budget deficits, in the absence of any plan to deal with immediate fiscal issues or even Medicare costs, calling for Social Security reform is cowardly. It represents pandering to a particular group of Social Security foes, and an attempt to "look serious" while sidestepping the financial issues that we face right now or which will go into crisis long before 2040, the date when by some projections the Social Security trust fund will become exhausted.

So let's have it - the Post's comprehensive plan to deal with our present budget issues, including but not limited to Social Security. Can we expect that sometime soon Mr. Hiatt? Ms. Marcus? (I didn't think so.)

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