Friday, January 14, 2005

Krugman on the real crisis in social security
I have resisted posting on social security because I don't know a damn thing about it. I know, that doesn't usually stop me. When the 2 political sides tell opposing stories about essentially the same really big government numbers, it is one of the more helpless positions for a regular, ignorant citizen like me, to endure.

The Republican position--that the beneficiaries will soon outdistance the contributors causing the system to run an unsustainable deficit, an eventuality that deserves fixing now rather than then--makes some sense. But here is what makes more sense to me: take no chances (privatization) with the safety net of social security, plus don't make our immediate budget problems hugely worse. If our budget was balanced, Medicare and Medicaid looking good for the next 30 years, then I'd say sure let's figure out how to avoid any long-term social security problems.

As it is, it's one of the few government programs running a surplus right now. Of course, you wouldn't no that by looking into the account balance since we eschewed the "lockbox" strategy of Al Gore and raided the trust fund. Krugman says it best this past week:
We already have a large budget deficit, the result of President Bush's insistence on cutting taxes while waging a war. And it will get worse: a rise in spending on entitlements - mainly because of Medicare, but with a smaller contribution from Medicaid and, in a minor supporting role, Social Security - looks set to sharply increase the deficit after 2010.

Add borrowing for privatization to the mix, and the budget deficit might well exceed 8 percent of G.D.P. at some time during the next decade. That's a deficit that would make Carlos Menem's Argentina look like a model of responsibility. It would be sure to cause a collapse of investor confidence, sending the dollar through the floor, interest rates through the roof and the economy into a tailspin.
If you want more looks at social security from people who know way more than us, or at least me, check out Kevin Drum's positions here and Brad Delong's here. For the political angles, nobody has been more on top of it than Josh Marshall, who keeps a list of Democrats who have indicated openness to privatization plans. He also makes note of when they take positive steps to come off of the list, like Mississippi's Gene Taylor today.

I would like to believe that W is foolhardy and doomed to defeat for trying such a thing as dismantling social security. But I have thought that before (lying about war, huge tax cuts for the wealthiest, etc.) and watched him win. Democrats must remain vigilant and united on this issue, not because of the political opportunities (that's just partisan gravy), but because the long and short-term health of the economy, and social security with it, may hang in the balance.

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