SOCIAL SECURITY….Calculated Risk has posted links to the video of the debate between Michael Tanner of the Cato Institute, Josh Marshall of Josh Marshall, Inc., and Paul Krugman of Princeton and New York Times fame. It was a very civil debate, but it’s clear to me that Tanner is making moral arguments that the general public just doesn’t buy. We like Social Security, and we don’t see it as a welfare program. Moreover, Tanner’s numbers are extremely suspect, and all of his sorrowful head-shaking at Krugman’s rebuttals isn’t going to convince anybody otherwise.
Cato, a libertarian policy center founded in the late 1970’s, has been arguing for 25 years that Social Security is on the verge of crisis. In a recent position paper, Tanner wrote that Social Security faces a horrendous unfinanced liability of $26 trillion over 75 years. In a footnote, he cited the 2003 trustees’ annual report. Actually, the trustees’ intermediate projection is for a deficit, over 75 years, of $3.7 trillion. Though that is a lot of money, it could be covered by an immediate surcharge to the payroll tax of less than two percentage points, or by various combinations of tax hikes and benefit cuts, each of them quite manageable. But $26 trillion is too big a hole to fix. When I asked Tanner about the footnote, he admitted that the trustees didn’t actually say $26 trillion; Tanner derived the figure by counting the cash-flow deficits that the trustees project from 2019 on out. In other words, he ignores the next 15 years or so, during which time Social Security will be running a surplus. And he assumes that the assets in the trust fund, which should be accruing interest into the 2040’s, won’t exist, either. Tanner counts only the bad years and only the bad numbers. Another doomsayer, former Republican Representative John Kasich, pegged the Social Security deficit at $120 trillion in a recent op-ed — some 32 times the agency’s figure. (Kasich toted up annual deficits in nominal — not inflation-adjusted — dollars for every year through 2080, by which time a hamburger could cost $40.)
Thankfully, I think that Tanner & the privateers have lost this debate already. Maybe it’s time to focus on privatizing the US Postal Service or the National Park Service instead. Yeah, that’s the ticket.