Tuesday, December 07, 2004

Unsustainable Looting

Today Josh Marshall comments on the recent Reuters report which reads:
The White House said on Monday it would borrow money to help pay for adding personal retirement accounts to Social Security, after ruling out tax increases to finance a transition experts say could cost $1 trillion to $2 trillion over 10 years.
Not that we did not already know that this would have to be the case without cutting benefits or raising taxes. Of course, both of those are going to result from this borrowing anyway. In any case, the urge to take action now stems from the claim that Social Security as it exists is "unsustainable." As we know, this is a dubious claim that exaggerates the shortfall that will occur between 2042 and 2052 and which could be remedied through some minor adjustments.

Marshall describes the point this way:
Just how much extra funds would be needed and whether those funds would come from borrowing or benefit cuts or new taxes is a matter of debate. But precisely those choices which make Social Security "unsustainable" in a few decades are the ones the White House is happy to make now in order to speed the process of phasing out the Social Security program.

Simply financing the 'transition costs' of phasing out Social Security will cost a good trillion or two dollars, maybe more -- by the White House's own informal estimates. And where on earth are we going to get that money? Borrow it, says the White House. Notta problem. In other words, we have to start phasing out Social Security now because if we don't we're going to face some big borrowing in a few decades. But we can avoid that horror of horrors by doing some big time borrowing now to finance abolishing Social Security we won't have to face that terrible fate a few decades from now.
More "stealth by default" in the offing. This time it is stealing from the American work force by intentionally defaulting on the loans to the Social Security trust fund.

UPDATE: Paul Krugman has taken a break from his break to discuss this issue in today's NYTimes.


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