[North-NV-Greens] Fwd: Social Security - Inventing A Crisis

[Paul Etxeberri]

>Paul Krugman has appeared on Bill Moyer's NOW program on PBS, which 
>is broadcast on
Friday nights at 9 PM. If you haven't seen NOW, please do while you 
still can. The Bush "regime"
has targeted NOW; in the near future it will be reduced to only half 
an hour weekly.

Pax, Paul Etx

>
>Social Security - Inventing A Crisis
>
>Inventing a Crisis
>By Paul Krugman
>
>New York Times Op-Ed Columnist - December 7, 2004
>
>http://www.nytimes.com/2004/12/07/opinion/07krugman.html
>
>Privatizing Social Security - replacing the current
>system, in whole or in part, with personal investment
>accounts - won't do anything to strengthen the system's
>finances. If anything, it will make things worse.
>Nonetheless, the politics of privatization depend
>crucially on convincing the public that the system is
>in imminent danger of collapse, that we must destroy
>Social Security in order to save it.
>
>I'll have a lot to say about all this when I return to
>my regular schedule in January. But right now it seems
>important to take a break from my break, and debunk the
>hype about a Social Security crisis.
>
>There's nothing strange or mysterious about how Social
>Security works: it's just a government program
>supported by a dedicated tax on payroll earnings, just
>as highway maintenance is supported by a dedicated tax
>on gasoline.
>
>Right now the revenues from the payroll tax exceed the
>amount paid out in benefits. This is deliberate, the
>result of a payroll tax increase - recommended by none
>other than Alan Greenspan - two decades ago. His
>justification at the time for raising a tax that falls
>mainly on lower- and middle-income families, even
>though Ronald Reagan had just cut the taxes that fall
>mainly on the very well-off, was that the extra revenue
>was needed to build up a trust fund. This could be
>drawn on to pay benefits once the baby boomers began to
>retire.
>
>The grain of truth in claims of a Social Security
>crisis is that this tax increase wasn't quite big
>enough. Projections in a recent report by the
>Congressional Budget Office (which are probably more
>realistic than the very cautious projections of the
>Social Security Administration) say that the trust fund
>will run out in 2052. The system won't become
>"bankrupt" at that point; even after the trust fund is
>gone, Social Security revenues will cover 81 percent of
>the promised benefits. Still, there is a long-run
>financing problem.
>
>But it's a problem of modest size. The report finds
>that extending the life of the trust fund into the 22nd
>century, with no change in benefits, would require
>additional revenues equal to only 0.54 percent of
>G.D.P. That's less than 3 percent of federal spending -
>less than we're currently spending in Iraq. And it's
>only about one-quarter of the revenue lost each year
>because of President Bush's tax cuts - roughly equal to
>the fraction of those cuts that goes to people with
>incomes over $500,000 a year.
>
>Given these numbers, it's not at all hard to come up
>with fiscal packages that would secure the retirement
>program, with no major changes, for generations to
>come.
>
>It's true that the federal government as a whole faces
>a very large financial shortfall. That shortfall,
>however, has much more to do with tax cuts - cuts that
>Mr. Bush nonetheless insists on making permanent - than
>it does with Social Security.
>
>But since the politics of privatization depend on
>convincing the public that there is a Social Security
>crisis, the privatizers have done their best to invent
>one.
>
>My favorite example of their three-card-monte logic
>goes like this: first, they insist that the Social
>Security system's current surplus and the trust fund it
>has been accumulating with that surplus are
>meaningless. Social Security, they say, isn't really an
>independent entity - it's just part of the federal
>government.
>
>If the trust fund is meaningless, by the way, that
>Greenspan-sponsored tax increase in the 1980's was
>nothing but an exercise in class warfare: taxes on
>working-class Americans went up, taxes on the affluent
>went down, and the workers have nothing to show for
>their sacrifice.
>
>But never mind: the same people who claim that Social
>Security isn't an independent entity when it runs
>surpluses also insist that late next decade, when the
>benefit payments start to exceed the payroll tax
>receipts, this will represent a crisis - you see,
>Social Security has its own dedicated financing, and
>therefore must stand on its own.
>
>There's no honest way anyone can hold both these
>positions, but very little about the privatizers'
>position is honest. They come to bury Social Security,
>not to save it. They aren't sincerely concerned about
>the possibility that the system will someday fail;
>they're disturbed by the system's historic success.
>
>For Social Security is a government program that works,
>a demonstration that a modest amount of taxing and
>spending can make people's lives better and more
>secure. And that's why the right wants to destroy it.
>
>E-mail: krugman at nytimes.com
>
>Copyright 2004 The New York Times Company
>_______________________________________________________
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-- 
Paul Etxeberri

"Forests precede civilizations and deserts follow"   ---Chateaubriand