Krugman on Social Security

[Frances Morey]

Many of you may read Krugman in the Times, if not, here is his latest column:

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>March 2, 2004 
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>OP-ED COLUMNIST 
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>Maestro of Chutzpah 
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>By PAUL KRUGMAN 
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>The traditional definition of chutzpah says it's when you murder your 
>parents, then plead for clemency because you're an orphan. Alan Greenspan 
>has chutzpah. 
> 
>Last week Mr. Greenspan warned of the dangers posed by budget deficits. But 
>even though the main cause of deficits is plunging revenue - the federal 
>government's tax take is now at its lowest level as a share of the economy 
>since 1950 - he opposes any effort to restore recent revenue losses. 
>Instead, he supports the Bush administration's plan to make its tax cuts 
>permanent, and calls for cuts in Social Security benefits. 
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>Yet three years ago Mr. Greenspan urged Congress to cut taxes, warning that 
>otherwise the federal government would run excessive surpluses. He assured 
>Congress that those tax cuts would not endanger future Social Security 
>benefits. And last year he declined to stand in the way of another round of 
>deficit-creating tax cuts. 
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>But wait - it gets worse. 
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>You see, although the rest of the government is running huge deficits - and 
>never did run much of a surplus - the Social Security system is currently 
>taking in much more money than it spends. Thanks to those surpluses, the 
>program is fully financed at least through 2042. The cost of securing the 
>program's future for many decades after that would be modest - a small 
>fraction of the revenue that will be lost if the Bush tax cuts are made 
>permanent. 
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>And the reason Social Security is in fairly good shape is that during the 
>1980's the Greenspan commission persuaded Congress to increase the payroll 
>tax, which supports the program. 
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>The payroll tax is regressive: it falls much more heavily on middle- and 
>lower-income families than it does on the rich. In fact, according to 
>Congressional Budget Office estimates, families near the middle of the 
>income distribution pay almost twice as much in payroll taxes as in income 
>taxes. Yet people were willing to accept a regressive tax increase to 
>sustain Social Security. 
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>Now the joke's on them. Mr. Greenspan pushed through an increase in taxes on 
>working Americans, generating a Social Security surplus. Then he used that 
>surplus to argue for tax cuts that deliver very little relief to most 
>people, but are worth a lot to those making more than $300,000 a year. And 
>now that those tax cuts have contributed to a soaring deficit, he wants to 
>cut Social Security benefits. 
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>The point, of course, is that if anyone had tried to sell this package 
>honestly - "Let's raise taxes and cut benefits for working families so we 
>can give big tax cuts to the rich!" - voters would have been outraged. So 
>the class warriors of the right engaged in bait-and-switch. 
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>There are three lessons in this tale. 
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>First, "starving the beast" is no longer a hypothetical scenario - it's 
>happening as we speak. For decades, conservatives have sought tax cuts, not 
>because they're affordable, but because they aren't. Tax cuts lead to budget 
>deficits, and deficits offer an excuse to squeeze government spending. 
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>Second, squeezing spending doesn't mean cutting back on wasteful programs 
>nobody wants. Social Security and Medicare are the targets because that's 
>where the money is. We might add that ideologues on the right have never 
>given up on their hope of doing away with Social Security altogether. If Mr. 
>Bush wins in November, we can be sure that they will move forward on 
>privatization - the creation of personal retirement accounts. These will be 
>sold as a way to "save" Social Security (from a nonexistent crisis), but 
>will, in fact, undermine its finances. And that, of course, is the point. 
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>Finally, the right-wing corruption of our government system - the partisan 
>takeover of institutions that are supposed to be nonpolitical - continues, 
>and even extends to the Federal Reserve. 
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>The Bush White House has made it clear that it will destroy the careers of 
>scientists, budget experts, intelligence operatives and even military 
>officers who don't toe the line. But Mr. Greenspan should have been immune 
>to such pressures, and he should have understood that the peculiarity of his 
>position - as an unelected official who wields immense power - carries with 
>it an obligation to stand above the fray. By using his office to promote a 
>partisan agenda, he has betrayed his institution, and the nation. 

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