Matthew Hoy
By Matthew Hoy on June 20, 2002

Krugman again: I know you've come to expect it. His column is here. It's another diatribe about the horrible idea of letting people invest a portion of their social security in private accounts. I won't deny that there are some problems with private accounts, and an infusion of cash would be needed to move younger people, like myself, into private accounts, while still providing people now on social security with their benefits.

Instead of retyping the whole thing, check out this post from March. It addresses the same issues.

Krugman does make one new claim that I would like to address briefly.

For example, the mystery money infusions that the commission assumes will somehow be forthcoming are almost enough to preserve Social Security exactly as it is, with no benefit cuts, forever.

This is a lie. Plain and simple. You don't even need to know anything about economics to realize it. When Social Security was created there were approximately 12 workers supporting each retiree. By the time the baby boomers retire, there will be approximately 3 workers supporting each retiree. Based on simple demographics, Social Security cannot continue as it has in the past. People are having fewer kids, meaning fewer people contributing to Social Security later on. Social Security is little more than a government-sponsored Ponzi scheme. It requires more and more workers coming in at the bottom to support the retirees at the top.

That infusion of cash that's coming in to save Social Security can really only come from one source -- higher taxes. Maybe this week we can save Social Security, forever, by reinstituting the estate tax and repealing the Bush tax cut? I wonder why Krugman didn't think of that.


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June 2002



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