I’ve written before about the Social Security Paradox. This is the claim of supposed budget hawks that Social Security benefit cuts may be necessary in the future so we must cut future Social Security benefits now. If that sentence sounded kind of circular and meaningless, that’s the point: it’s a paradox!
In Paul Krugman’s column today, he deals with this issue a little, The Dwindling Deficit. I’m afraid he’s he a bit more pithy than I am, “So the plan is to avoid cuts in future benefits by committing right now to … cuts in future benefits. Huh?” Huh, indeed! But he goes on to give the Very Serious Position its due:
I like his counter argument. However, I think that he’s giving the other side too much credit. In fact, I’ve never heard the argument put that way. Instead, these entitlement cutters always take it as a given that smaller Social Security checks are a good thing in themselves. The only argument I ever hear is totally disingenuous, “If we don’t make cuts now, the program will go bankrupt!” This is not true at all. If we do nothing, Social Security will be able to pay 80% of promised benefits in perpetuity. This includes rising wages, so even in real dollars future retirees will be better off with 80% of promised benefits.
So don’t accept what all the Very Serious People say. In almost all cases, what the Very Serious People know—Just know!—is false.
Update (18 January 2013 11:31 am)
Krugman has a blog post this morning that gets more to the core of what I’m talking about. Here’s an extended, but edited, version: