Paul Krugman is hilarious. He has an incredible gift for arguing one thing while effectively admitting that just the opposite is true. His latest New York Times column, “The Geezers Are All Right”, is no exception.
I’ll come to that in a moment. Incidentally, though, I was reading this article by Thomas J. DiLorenzo today at LewRockwell.com (which I found because it was linked to in this interview with him about the legend of Abraham Lincoln), in which he wrote:
Murray Rothbard explained the role of the court historian in an essay entitled “The State” in his book, For a New Liberty. “[S]ince the early origins of the state,” he wrote, “its rulers have always turned, as a necessary bolster to their rule, to an alliance with society’s class of intellectuals. The masses do not create their own abstract ideas, or indeed think through these ideas independently; they follow passively the ideas adopted and promulgated by the body of intellectuals . . .”
Moreover, “the alliance is based on a quid pro quo: on the one hand, the intellectuals spread among the masses the idea that the State and its rulers are wise, good, sometimes divine, and at the very least inevitable . . . . In return for this panoply of ideology, the State incorporates the intellectuals as part of the ruling elite, granting them power, status, prestige, and material security.” The intellectuals use academic jargon to portray themselves as “scientific experts” who assist our rulers in the practice of what they call “statesmanship,” a pleasant-sounding euphemism for what normal people would think of as plain old, down-and-dirty politics.
That reminded me of Paul Krugman and the role he plays in manufacturing consent for government economic policy, i.e., the insanely irresponsible spending and the Fed’s money printing. He’s not a court “historian”, but he is a court economist. Or maybe court jester.
Which brings me back to his latest column. He begins by writing:
Last month the Congressional Budget Office released its much-anticipated projections for debt and deficits, and there were cries of lamentation from the deficit scolds who have had so much influence on our policy discourse. The problem, you see, was that the budget office numbers looked, well, O.K.: deficits are falling fast, and the ratio of debt to gross domestic product is projected to remain roughly stable over the next decade. Obviously it would be nice, eventually, to actually reduce debt. But if you’ve built your career around proclamations of imminent fiscal doom, this definitely wasn’t the report you wanted to see.
The only problem with this is that if you actually read what the CBO is saying (as I’ve already pointed out, twice, in reply to previous incarnations of this mantra of Krugman’s), it doesn’t exactly say that everything looks “well, O.K.” Krugman likes to just cherry-pick whatever he can from a source like the CBO’s updated budget projection and willfully ignore anything that doesn’t suit the argument he wants to make. Compare, for example, what the CBO report actually says about the U.S. government’s rising debt:
Such high and rising debt later in the coming decade would have serious negative consequences: When interest rates return to higher (more typical) levels, federal spending on interest payments would increase substantially.
Moreover, because federal borrowing reduces national saving, over time the capital stock would be smaller and total wages would be lower than they would be if the debt was reduced. In addition, lawmakers would have less flexibility than they would have if debt levels were lower to use tax and spending policy to respond to unexpected challenges. Finally, a large debt increases the risk of a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.
Does that sound, “well, O.K.” to you? I’m guessing probably not. But then, “O.K.” is a rather relative term, which Krugman is able to rationalize using to describe the government’s financial situation that way simply by comparing it to a strawman-argument scenario of “imminent fiscal doom”—as opposed to fiscal doom that is certainly foreseen, but just not expected to occur tomorrow, just yet.
So what about the old geezers? That’s the title of his column, after all. He’s of course referring to Social Security, which, he assures his readers, is just fine. Nothing to worry about. I mean, sure, the program has some issues that need to be worked out, but it’s nothing to get all excited about. Krugman writes:
Still, we can always count on the baby boomers to deliver disaster, can’t we? Doesn’t the rising tide of retirees mean that Social Security and Medicare are doomed unless we radically change those programs now now now?
“Maybe” not? Notice that he could just as well have answered “Maybe so”, and the meaning would be the same. So what is he really trying to say here? He allows:
To be fair, the reports of the Social Security and Medicare trustees released Friday do suggest that America’s retirement system needs some significant work. The ratio of Americans over 65 to those of working age will rise inexorably over the decades ahead, and this will translate into rising spending on Social Security and Medicare as a share of national income.
But then he adds:
But the numbers aren’t nearly as overwhelming as you might have imagined, given the usual rhetoric.
So, again, he is able to argue that Social Security is nothing get too worried about even while acknowledging its rising costs solely on the basis of a comparison to “the usual rhetoric” that the program is “doomed”. It’s not “doomed”, he argues, because
if you look under the hood, the data suggest that we can, if we choose, maintain social insurance as we know it with only modest adjustments.
Sure we can. You could also theoretically make “only modest adjustments” such as cutting back on promised returns or getting newcomers to pay in ever increasing amounts in order to extend any Ponzi scheme.
Krugman goes on:
Start with Social Security. The retirement program’s trustees do foresee rising spending as the population ages, with total payments rising from 5.1 percent of G.D.P. now to 6.2 percent in 2035, at which point they stabilize. This means, by the way, that all the talk of Social Security going “bankrupt” is nonsense; even if nothing at all is done, the system will be able to pay most of its scheduled benefits as far as the eye can see.
So, according to Krugman, “all the talk of Social Security going ‘bankrupt’ is nonsense”.
Except he then says it “will be able to pay most of its scheduled benefits….” Most of…? Isn’t that the same as saying that it won’t be able to pay all of its scheduled benefits?
Then there his “as far as the eye can see” remark. Apparently, Krugman is a bit nearsighted, because while his eyes can’t see Social Security going bankrupt, the program’s trustees whose report he cites to bolster his argument can.
They state it pretty plainly:
The projected combined OASI and DI Trust Fund asset reserves increase through 2020, begin to decline in 2021, and become depleted and unable to pay scheduled benefits in full on a timely basis in 2033.
In other words, the report Krugman cites to bolster his statement that “all the talk of Social Security going ‘bankrupt’ is nonsense” in fact spells out pretty explicitly that Social Security is going bankrupt.
With that in mind, let’s go back to that “able to pay most of its scheduled benefits” comment. Here’s an example of what Krugman is referring to (emphasis added):
The Trustees project that the asset reserves of the OASI Trust Fund and of the combined OASI and DI Trust Funds will be adequate over the next 10 years under the intermediate assumptions. However, the projected reserves of the DI Trust Fund decline steadily from 85 percent of annual cost at the beginning of 2013 until the trust fund reserves are depleted in 2016. At the time reserves are depleted, continuing income to the DI Trust Fund would be sufficient to pay 80 percent of scheduled DI benefits. The DI Trust Fund does not satisfy the short-range test of financial adequacy.
So there you can see what Krugman means by “most of”, along with another clear statement about the program’s insolvency.
Now here’s where it gets really funny. Following the above statements from Krugman, he writes in his very next paragraph:
Still, it does look as if there will eventually be a shortfall…
In other words, right after assuring readers that it is “nonsense” to talk about Social Security going bankrupt, he effectively admits that it is going bankrupt.
But remember, kids, it is not “doomed” because with a few “modest adjustments”, like the government plundering ever more of the fruits of your labor, this bankruptcy can be prevented, or, well, at least put off for a while longer! So, Krugman concludes, we can just “stop obsessing about how we’ll pay benefits to retirees in 2035”.
all the talk of Social Security going “bankrupt” is nonsense.