Paul Krugman Has Me All Shook Up
Posted November 18th, 2007 by Da King
The Akron Beacon Journal printed an editorial by New York Times columnist Paul Krugman in the sunday newspaper. The column was called Obama, played for a sucker like many in the Beltway. I've always been confused by Krugman, one reason being that he is a professor of Economics at Princeton University, but nothing he writes about economics ever makes any economic sense. You'd think even liberal Economists would be able to add and subtract, but not Krugman. His latest column is a case in point.
Krugman takes the position that Social Security isn't going broke, and he cites as his sole proof the contention that our country's financial health will be determined by the growth of health care costs……….???????? I'm not kidding, that's what he said. Here's the relevant passage:
…But the “everyone” who knows that Social Security is doomed doesn’t include anyone who actually understands the numbers. In fact, the whole Beltway obsession with the fiscal burden of an aging population is misguided.
As Peter Orszag, the director of the Congressional Budget Office, put it in a recent article co-authored with senior analyst Philip Ellis: “The long-term fiscal condition of the United States has been largely misdiagnosed. Despite all the attention paid to demographic challenges, such as the coming retirement of the baby-boom generation, our country’s financial health will in fact be determined primarily by the growth rate of per capita health care costs.”
How has conventional wisdom gotten this so wrong? Well, in large part it’s the result of decades of scare-mongering about Social Security’s future from conservative ideologues, whose ultimate goal is to undermine the program
If that doesn't make any sense to you, you're not alone. I had to read that part of Krugman's column like three times to make sure I read it correctly, because the growth rate of health care costs doesn't have one single thing to do with the solvency or insolvency of Social Security, but Krugman pretends he just settled the whole issue with that fatuous statement, and then he just moves on to how the Republicans misled everybody about Social Security the whole time. It is so astoundingly illogical that I think Krugman is misleading us intentionally and hoping we are too dumb to notice. He HAS to be. HE TEACHES ECONOMICS AT PRINCETON, for crying out loud. He HAS to know that Social Security is a Ponzi scheme. He has to know it's going broke. He HAS TO KNOW ! Either that, or he cannot add or subtract and ended up as a Princeton professor anyway. I don't know what Krugman's students at Princeton are learning, but it sure isn't economics. They are probably learning Anti-Conservatism 101.
Krugman says Social Security is a small problem, way down the list of american problems. Never mind that your SS payroll taxes are put into the general fund and immediately spent. Never mind that there is no SS Trust Fund. It doesn't exist. It never did. Never mind that it is nothing but IOU's, a claim on future taxpayers. Never mind that in about 10 years, SS will be paying out more than it takes in. Never mind that such a ponzi scheme would be highly illegal if a private industry tried it (Enron DID). I wrote a previous column about Social Security that you can find here. Paul Krugman says never mind, it's all just Republicans trying to scare you. AND HE'S SUPPOSED TO BE A ECONOMIST !?!?!?!? In a pig's eye, he is ! If Paul Krugman is an Economist and can still write utter nonsense like this, then I'm Elvis Presley, and I'm — All Shook Up.
November 20th, 2007 at 4:50 pm
Hey, King, do you suppose that Krugman and all the others who don't see SS as an important item these days will wise up when all we old people line up and come after those who feel that way. I think it is a shame that Dr. King couldn't be around to lead retired people, he would be one now, in a march on Washington to demand that the Congress do something about the whole thing.
Could it be Krugman's political thinking that causes him to talk that way?
November 20th, 2007 at 7:31 pm
I'm usually baffled by Krugman's thinking (or lack thereof), but this one took the cake. I imagine MLK could have gotten the politicians to sit up and take notice if he was still around.
Actually, Krugman's glossing over of the entire problem with SS indicates that Krugman probably knows he doesn't have a leg to stand on, but he still feels he has to take a swipe at the Republicans anyway, since that's his job at the al Times.
November 21st, 2007 at 1:20 pm
To say there is no SS trust fund is, of course, a boldfaced lie. Of course there is a trust fund. Or are you trying to say that the U.S. does not or will not respect it's debt obligations?
SS is perfectly fine until 2017, even if nothing is done. The trust fund will provide FULL SS benefits until 2041, again, without doing a thing. All this is based on a 1% economic growth number. Modest, indeed.
A raising of the payroll cap will solve future concerns. For the forseeable future there are no concerns whatsoever…..just as Krugman says. No crisis…..no emergency.
All talk about "saving Social Security" is simply a hoax perpetuated for the sake of Wall Street. Funny, don't you think, that conservative bloggers and commenters want to do the bidding of a handful of billionaires?
November 21st, 2007 at 8:06 pm
If you think there is a trust fund, then I have a proposition for you. You give me $100,000, I'll go out and buy a bunch of neat stuff with it, and I'll give you an IOU for $102,000. That will be your trust fund. All you have to do to collect is force someone else to pay you the money. I can't, because I already spent it. That is Social Security, to a tee.
Of course the government can make good on it's promise, because they have guns and will forcibly extract the money from the citizenry in the future as needed to coverup their criminality. How does that make it justified ? It's still a SCAM, and it should be illegal. Everybody involved should be in prison.
A raising of the payroll cap alone will NOT solve future concerns. It will actually make the SS hole bigger, because the government spends all the excess revenue above payouts to retirees. Raising the payroll cap might reduce the deficit, or it will allow the crooked politicians to spend yet more money, and it will allow the politicians to continue to mask the true extent of their fraud, but that's all. It will only create MORE SS IOU's to the mythical trust fund, unless the funds are put in a lockbox, but I doubt the pols will do that, especially the Democrats who are perpetrating the con, because then the extent of the hoax and the enormity of the TRUE DEFICIT would be exposed for all to see.
You know, if the government had never spent all the excess money in the first place and not committed fraud, and invested in some very conservative instruments instead, SS would be fine forever, it would be wonderful, with everybody being WAY better off, and no future claims on taxpayers required to keep the ponzi scheme afloat, but they didn't do that. I don't know how you can defend this. I really don't. It's indefensible. You may as well defend bank robbery by saying it's okay because the robbers come up with the cash.
And none of this has anything to do with billionaires at all. That's just what the lying con men who support the SS scam say to fool the marks. It has only to do with ripping off every working person in the USA. It's a national disgrace.
November 22nd, 2007 at 5:27 pm
Mr. King,
Although we've been through this before, you are simply wrong. As the rev has pointed out, the SS fund is adequately financed for the near future. If only our entire federal budget was this way. We would be in great shape if the federal government took in more than it spent until 2017. I agree that it is somewhere between unfortunate and criminal that SS surpluses have been used to mask the true size of the deficits. A pox on both parties for continuing this charade.
However, since this is a political blog, I would like to make several points. Wasn't it Al Gore who wanted to put SS funds in the "lockbox"? Wasn't it under a Repub administration and a Repub Fed chairman that SS was "fixed" 25 years ago? With the doubling of SS witholding rates, nearly tripling the cap, and the elimination of credit card interest deductibility, didn't this result in the largest tax increase in history? Also, at the same time, the federal usury laws were eliminated, resulting in the huge personal debt problem many people face.
So, Mr. Kingrat, don't cry for Social Security. However, I would happily join you if your concern is the federal debt and the unsustainability which our government ignores. If we are to make the changes that are necessary without plunging the economy into depression, we are going to have to rethink our self appointed role as world's policeman and the military spending that it entails.
November 23rd, 2007 at 9:43 am
Frank, you are one confusing fellow. First you say I'm "simply wrong", but then you agreed with my central premise, which is the criminality of Congress spending the SS trust fund, and then the rest of your points all further proved the validity of what I said. You can't have it both ways. As for SS 'fixes', there have been plenty. I think they have raised the SS tax rate something like 18 times. They have reduced benefits. They have taxed benefits. They have raised the retirement age. The system can't be 'fixed', because there's no fixing a ponzi scheme. It's a scam to begin with. It can only be propped up by stealing more money from the public. Yes, the government can go on doing that forever, but that doesn't make it right. No private industry could get away with that type of fraud.
There have been many politicians who SAID they wanted to put SS in a lockbox, but it's a different story once they are in office. Al Gore was the VP for 8 years, btw. Maybe he could have gotten Bubba's ear on the subject if he felt so strongly about it, eh ? The last congressional vote on the lockbox idea was last year, and the Democrats all voted against it. Most of the Republicans voted in favor of it.
November 23rd, 2007 at 9:45 am
And Frank, if you want to know my opinion of the debt and the deficit, read my article 'From The Frying Pan Into The Fire'.
November 23rd, 2007 at 4:33 pm
Mr. King,
If you are right, then the federal government has no intention of ever repaying any of it debts. The Chinese, the Japanese, and all of the Tbill holders around the world hold worthless paper. Every prediction of SS's demise have been based on unrealistically conservative economic projections. The supposed problem with SS funding is the spike in the birth rate after WWII, aka the baby boom. SS is adequately funded until most of the boomers are dead.
November 23rd, 2007 at 8:21 pm
Mr. King,
Just read "From the frying pan into the fire". Bravo! I agree with almost everything you have to say. But to solve this fiscal insanity is going to require a change in our government's perceived role, domestically and internationally.
Here's how I see the last fifty odd years. Internationally, we prevailed in the Cold War because we were able to economically outlast the Soviet Union. We were able to do so because of capitalism's inherent superiority and our relationships with our allies. Where the Soviets sucked their allies dry, we supported ours and they in turn ended up supporting us. While the Soviets went bankrupt, we caused considerable damage to our economy. With the fall of the Soviet Union, we had a chance to step back and repair this damage. Unfortunately, we have continued to keep an anachronistic military presence throughout the world and with it are trying to outspend the rest of the world in this area.
Domestically, we have cut the top income tax rate to a third of what it once was. We allow corporations to enjoy the benefits of this country while basing themselves offshore, becoming tax free. People who are fortunate enough to live off of investment income often pay less in taxes than people whose income is derived from their physical labor. Meanwhile, we have had thrust upon us a "free trade" economic model which has been disastrous for all but the wealthy.
I see very few of our leaders who recognize this state of affairs and even less prepared to deal with them.
November 24th, 2007 at 4:23 pm
frank: This….
"While the Soviets went bankrupt, we caused considerable damage to our economy. With the fall of the Soviet Union, we had a chance to step back and repair this damage. Unfortunately, we have continued to keep an anachronistic military presence throughout the world and with it are trying to outspend the rest of the world in this area."
….is exactly right. The military industrial complex has been indebting this country's economic system for a long time. Vietnam, nuclear build-up and all……then the Soviets quit….the complex pimps were frantic….they pumped Star Wars….and then the kingdom came on 9-11. War eternal….for profits, naturally.
The kick-in-the-ass part is that these same pimps are trying to paint a "crisis" picture for the domestic, non-military industrial complex, Social Security program……because too much money has been spent and borrowed.
It's similar to a guy who steals your car, and then when he's driving away with it, he flips you the bird
November 25th, 2007 at 9:17 am
Rev, as usual, your rhetoric is contradicted by the facts. Only 20% of our federal budget goes to military/defense. The way I do math, that leaves 80% for the rest, which should be more than ample. What you conveniently left out of your calculations is that projected increases in SS/medicare/health care will soon consume the entire budget if we don't get a handle on them. That's why those folks you so rudely refer to as 'pimps' are concerned. You'd have to be a moron not to be concerned. Go ahead and paint america as the evil empire if you want, just don't expect me to fall for it, because it's crap. All you have to do is look at who we are fighting against to figure that one out. Maybe someday the world will become one big happy kumbayah drum circle, but we ain't close to being there yet.