Monday, May 02, 2005
The gift that keeps on giving: The New York Times' Paul Krugman has decided to take a break from his demogoguing America's health care system to outline his plan for fixing Social Security.
Just kidding. The numbers in the graphic above have changed again -- except for the goose egg for solutions. Nope, instead Krugman does what he has done ever since issuing his empty promise for solutions to the Social Security problem -- criticize anything and everything suggested by any Republican.
Sure enough, a close look at President Bush's proposal for "progressive price indexing" of Social Security puts the lie to claims that it's a plan to increase benefits for the poor and cut them for the wealthy. In fact, it's a plan to slash middle-class benefits; the wealthy would barely feel a thing.
Under current law, low-wage workers receive Social Security benefits equal to 49 percent of their wages before retirement. Under the Bush scheme, that wouldn't change. So benefits for the poor would be maintained, not increased.
But if nothing is done to Social Security then the working poor -- and everyone else -- will face a 25-30 percent benefit cut because that will be all that the program can afford to pay out after 2043 or thereabouts. With that in mind, the current level of benefits is the best that's been offered by anyone thus far.
The administration and its apologists emphasize the fact that under the Bush plan, workers earning higher wages would face cuts, and they talk as if that makes it a plan that takes from the rich and gives to the poor. But the rich wouldn't feel any pain, because people with high incomes don't depend on Social Security benefits.
Cut an average worker's benefits, and you're imposing real hardship. Cut or even eliminate Dick Cheney's benefits, and only his accountants will notice.
This is a complaint about capitalism, not about the president's Social Security plan. Krugman wants Dick Cheney to feel more pain in his pocketbook? Fine. Raise his taxes. But such complaints are a non sequitir when it comes to Social Security policy.
If the Bush scheme goes through, the same thing will eventually happen to Social Security. As Mr. Furman points out, the Bush plan wouldn't just cut benefits. Workers would be encouraged to divert a large fraction of their payroll taxes into private accounts - but this would in effect amount to borrowing against their future benefits, which would be reduced accordingly.
As a result, Social Security as we know it would be phased out for the middle class.
Krugman writes as though Social Security is some sort of retirement plan -- something he's argued against in the past.
Let me just first say what Social Security is, and just repeat -- it is not a pension fund. It is not an investment project. It's a social insurance program. It is a -- it's something that is there to protect people against misfortune. Now, it's a big social insurance program. It is in fact the principle source of retirement income for many, many people in the United States. But it's -- you need to think of it always as, in fact, being social insurance.
So why does the average member of the middle-class need it? If it's an insurance policy of some sort, then the rich don't need it at all, and the middle class certainly shouldn't be outraged if their benefits are trimmed. Anyone in the middle class who is counting solely on Social Security for their retirement is a fool.
Of course, Krugman was simply denying reality when he spoke those words at a Democracy Now! debate and embracing it in his latest Times column. Social Security is an insurance program, yet everyone -- politicians, economists and Joe Taxpayer -- behaves as though it is a retirement program. Why? Because insurance doesn't pay everyone.
If you buy car insurance, you don't get money unless you're in an accident, your car is stolen or some other woe befalls you. Yet Social Security pays out to everyone. Reach 62 years of age or older, then you get paid. That's a pension plan -- not an insurance policy.
It's worth noting, that this plan that the president suggested as a starting point for debate, was authored by a John Kerry supporter. You knew all those Democrats were out to give the middle class the shaft.
The sad thing is, we no longer have an exchange of ideas. We have the GOP offering ideas and the Democrats running around with their fingers in their ears yelling: "I can't hear you."
If Krugman's columns aren't enough to prove that point, then Sen. Patrick Leahy's performance on Fox News Sunday should put any doubts to rest.