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He interrupted his sabbatical for this?

Paul Krugman resurfaced yesterday just long enough to grace us with this shrill, hysterical hit piece on Social Security. In it, he is irresponsibly dismissive of the grave actuarial problems inherent in the system. Why? Because he's terrified that it might actually be a Republican who tackles the problem head-on, instead of Clinton, Gore or Kerry.

It's a shocking piece for a professional economist. No charts, no graphs, no calculations -- no real argument at all, really. Just a bunch of alarmist, empty rhetoric along the lines of "[T]he privatizers... come to bury Social Security, not to save it," and "For Social Security is a government program that works.... And that's why the right wants to destroy it."

Arguments to support these absurd assertions? Not to be found in this column, but he makes a vague promise to expound on these themes when he returns in January. Krugman wants us to believe it would "destroy" Social Security to allow us actually to own a small fraction of our accounts. He wants us to feel threatened by the prospect that we as participants might hold actual (God forbid!) honest money as opposed to a government IOU. Despicable.

But the thing that really bothers me about this column is how deliberate it is. Everyone has an off-day, and I could shrug this column off if Krugman had merely been feeling uninspired one day and, with a deadline looming, he scratched himself and said, "Hell, I guess I'll dash off an unsubstantiated hit piece on Bush's Social Security plan." But that's not what happened. He interrupted his vacation to pen this swill. Astonishing.

I know a rabbi who says, "It's never good to stay away for too long. If you do, your people will learn they can get along without you." Go back on vacation, professor. Don't hurry back. Finish your book. In fact, make it ten-volume set. I want the American people to learn once and for all that they don't need your alarmist, hyper-partisan, intellectually dishonest nonsense.


Krugman has expounded on this topic before and has cited other sites that get into more extensive number crunching than he can in one column. Is he being hysterical? Well, even Stephen Moore of Club for Growth admits that the social security privatization accounts do not help with the demographic problems when the baby boomers retired.

Frankly, I think that you are the one being hysterical here. You're saying that we who oppose private accounts are just afraid "that it might actually be a Republican who tackles the problem head-on, instead of Clinton, Gore or Kerry".

Yeah, right. Sure, I am afraid that Bush is going to ruin the Social Security program because I am afraid that a Republican will get credit for ruining it.

Personally, I think those pushing the private accounts are being essentially dishonest because they do not deal with the shortfalls that are going to increase, not decrease, as a result. At least, the Cato Institute proposals for total privatization written back in 1998 attempted to deal honestly with the transition costs. I personally believe that their numbers were a bit rosy because the stock market returns at that time were at historical highs. Still, it dealt with transition costs.

Just like when Republicans fought the Hillary Clinton healthcare proposal back when the Democrats had complete control, the Democrats need to rise up and get some truth in accounting here.

You would like to dismiss Paul Krugman and everyone who disagrees with you as being part of the wacko left just afraid to give Bush any credit.

That is such dishonest bullshit. Krugman's piece rightfully questions the wisdom of private accounts, while rightfully pointing out that the income tax cuts of the Bush administration has put even more pressure on the FICA tax to balance current (non SS) expenditures. The FICA tax was not cut, yet some Republicans do talk about the surplus still being generated (revenue created by the FICA tax verus current SS outlays) as adding to a mythical debt that we are not required to honor.

I have paid into Social Security. I know it might be less, but damn it if I am going to lay down to see it destroyed. George Bush artfully promises to protect the benefits of those "at or near retirement." Clever words.

Krugman's article is one of many that will be written, especially once Bush actually offers up the details of his plan. I guess your plan is to mock and deride the "absurd assertions" of those that will dare question Bush's plan to overall a program that many count on.

"But the thing that really bothers me about this column is how deliberate it is."

Yeah, well, Social Security is an important issue and Paul Krugman may have deliberately come back from this vacation to comment on an important debate that is about to be joined.

Good God, disagree with Paul Krugman all you like. Crunch the numbers and show how we will be better off in the long and short run -- but Paul Krugman is raising legitimate questions here.

You are the hyper-partisan here who wants to shut down honest debate by attempting to demonize those who disagree with you.

PE, from what I've been hearing from the administration so far, we're probably talking about putting *two percent* of our contributions into private accounts. You and Mr. Krugman and others need to explain why this is "destroying" SS, or I will continue to label such discussion as hysterical.

BTW, my father was a federal employee for most of his life. He never paid a dime into Social Security. He still had a retirement plan though, and it looked something like what the "privatizers" want to do with Social Security. Ever wonder why the federal government thought such a plan was okay for its own employees but not for the rest of us?

You're right, of course, that transition costs need to be addressed. But these "costs" are inherent in the system regardless. We face them now or we face them (compounded) later.

First of all, two percent is a big deal when you are talking about trillions of dollars. Go ask a bank sometimes to reduce their interest rate by two percent. Also, any privatization system, from a strictly actuarial viewpoint, is going to suffer from the fact that people will now be able to pass on to their children money that used to be kept by the state should that worker and his spouse die early.

Second, we do not know how much of the old plan that two percent is replacing. At least, with the total privatization plan, I know, if I am under a certain age, that I will be completely trading in the old plan for the new plan. The Cato Institute plan laid it out for various age groups (above a certain age - stay in current system, middle aged - buy to stay in system or bought out to leave, young - must leave) in the transition to privatization.

A hybrid system is being sold as an additional benefit on top of what already is, but will it eventually replace what we have? Also, the social security progam as it is provides a lot more services than just giving earned benefits. What programs are going to stay and what is going to go over the long term?

Yeah, I am damn wary that a hybrid system could become a bait and switch -- and frankly NONE of my concerns revolve around Bush actually doing something good for which he would then take credit. I believe accusations to that effect are a crock.

This article highlights the problem I have with Krugman in general. His economic analysis is pretty dead on. There is no immediate SS crisis and there won't likely be one for another 50 years. And not even then if interest rates continue to rise.

It's the interweaving of his partisan views that I find objectionable. Like this:

"The report finds that extending the life of the trust fund into the 22nd century, with no change in benefits, would require additional revenues equal to only 0.54 percent of G.D.P. That's less than 3 percent of federal spending - less than we're currently spending in Iraq."

It may be less than we are currently spending in Iraq, but what we are spending in Iraq is not sustainable indefinitely anyway. So why the Iraq reference?

And I've saved the best for last:

"...very little about the privatizers' position is honest. They come to bury Social Security, not to save it. They aren't sincerely concerned about the possibility that the system will someday fail; they're disturbed by the system's historic success."

He provides no factual basis for this conclusion. I guess we are supposed to believe that because his economic analysis in correct, that his twisted political opinions are, by default, correct as well.

Sorry Professor, but I'm not buying it.

This is not an area of expertise for me but I want to add what I have come to understand.

First, Barry is correct that the proposal came to setting aside 2%. This is important because I have yet to hear a single elected Democrat who has acknowledged that little factoid. It obviously gets in the way with their "Bush is going to destroy SS" arguments.

Second, the ability to do so is optional, not mandatory. If someone feels more comfortable stayin within the old parameters, he or she is welcome to do so. Given that, it is pure speculation to attempt to calculate a 'cost' as we have no way of knowing how many will opt to dod so.

Third, studies which the Dems have acknowledged show that SS is in deep doodoo as we boomers start to retire. There have been numerous studies indicating this.

Hence, something needs to be done. Bush has a proposal. What does Krugman counter with? The bilge that CRB quoted.

PE, you jumped all over Barry for saying that Krugman, et. al. oppose Bush proposals because of the source.

Well, consider this: Krugman's own comments that Bush wants to change the system because 'they're disturbed by the system's historical success'.

Now we are talking New Deal economics here. And we are talking big-time partisanship with that statement.

Second, this idea, if memory serves me, was first broached during the Clinton administration by...the Clinton administration. Did brother Krugman rip them a new one for such a lame-brained idea?

If he did, I must have missed it.

As a side bar, can anybody still believe that Krugman's leave of absence excuse of needing to finish a textbook was nothing more than sour grapes at the stupidity of the American populace for not listening to him?

I do not believe that Clinton ever supported privatization. There was some talk about investing a portion of the trust fund in the stock market, but, because that would not have created private accounts, that technically would not be "privatization."

The Cato article cites a report that claims that Clinton was seriously studying private accounts, but that it never became his public position. Indeed, David Wilcox, who is cited in the article as one of the authors of the paper and who now works for the Federal Reserve Board, made no public statements in favor of private accounts when he was Assistant Secretary.

In any case, I have printed out the 89 page paper by Wilcox and others regarding fiscal and SS policy in the 90s -- and, yes, I do understand that there are some Democrats who have supported private accounts. Bob Kerrey is just one example. It does seem strange, however, that you criticize Krugman for not attacking Clinton for a policy that Clinton (reportedly) considered seriously but never ultimately made a public declaration in its favor.

Remember this from the 1999 SOTU speech?:

Clinton: Devote Surplus To Social Security
President Clinton begins his State of the Union address Tuesday night. (Reuters)

Related Links

Text: State of the Union

Text of GOP Response

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'93-'99 Index: Issue by Issue

Full Coverage: State of the Union

Full Coverage: Clinton Accused


By John Harris
Washington Post Staff Writer
Wednesday, January 20, 1999; Page A1

President Clinton appeared before a joint session of Congress last night to present an ebullient vision of a nation enjoying vast prosperity after six years under his leadership, a newfound abundance that he said should be used to prepare for the burden of a rapidly aging population in the next century.

At a moment of maximum personal travail, Clinton opened his annual State of the Union address with a boast that "America is working again" before announcing a policy barrage that includes one of the more ambitious initiatives of his presidency: a plan to devote some $2.7 trillion in projected budget surpluses over the next 15 years to Social Security.

Speaking in personal terms about the obligations of his baby-boom generation, [B]Clinton proposed allowing the 64-year-old retirement program to invest a portion of its money for the first time in the stock market. And he pledged a new program that would spend billions to create individual accounts designed to coax Americans to invest more for their retirement.[/B]

First of all, back then Clinton had resisted tax cuts, meaning we actually had $2.7 trillion dollars to spend over 15 years. Now a similar sum will add to an already growing deficit as Bush has made it clear that he is not going to raise taxes -- plus the program is voluntary, meaning those most likely to use it are younger workers, not the baby boom generation nearing retirement.

This indeed would be an entirely different discussion if we were still enjoying growing surpluses, but the fact of the matter is that the deficit is growing and will probably continue to grow with the new prescription benefit soon to go into effect, as well as a pledge to make all tax cuts permanent and an ongoing war in Iraq.

My major problem with Bush's proposal is the budget crunch that I see over the next 20-30 years, a problem that did not exist with such acuity five years ago.

Second, I'm not sure how that article jives with the Cato Institute article. Why would the Cato Institute write about Clinton secretly considering plans before he abandoned plans if in fact he did publicly propose those plans?

Clinton Eyed Private Social Security Accounts

By Glenn Kessler
Washington Post Staff Writer
Friday, June 29, 2001; Page A08

President Clinton and his economic advisers spent 18 months secretly discussing the elements of a plan to add individual investment accounts to Social Security, but abandoned it when it became clear the president would be impeached, according to a paper by three former administration officials that will be presented today at a Harvard conference.

Even Stephen Moore, who likes philosophically the idea of private accounts, admits that the creation of private accounts will greatly add to the deficit in the near future.

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