Krugman on Social Security Paradox

Paul KrugmanI’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:

O.K., you can argue that the adjustment to an aging population would be smoother if we commit to a glide path of benefit cuts now. On the other hand, by moving too soon we might lock in benefit cuts that turn out not to have been necessary. And much the same logic applies to Medicare. So there’s a reasonable argument for leaving the question of how to deal with future problems up to future politicians.

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:

Essentially the entire GOP is committed to radical policy goals that are also deeply unpopular…

One faction basically wants to use the party’s power of obstruction: threaten to provoke a crisis over the debt ceiling—in fact, do this again and again—and thereby force Obama to implement the GOP agenda.

The other faction wants to achieve the same goals by stealth. Pretend that what you’re really concerned about is debt and the fate of our children; cultivate the Very Serious People and the deficit scolds; impersonate a budget wonk; and smuggle the agenda in by dressing it in fiscal responsibility camouflage…

But there is no hint at this point that anyone in the party is willing to consider the possibility of not demanding policies the public hates.

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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