Wednesday, November 15, 2006

What now for social security?

The new Economist blog posts an entry that is far less arch than the one I linked to yesterday; it's about what will happen to Social Security now that the Democrats, who have been far less concerned about its health than the GOP generally and President Bush in particular (which strikes me as odd). It's a good question, because Social Security is still in trouble, and in fact grows more troubling as the time dwindles before the Baby Boom becomes the Geezer Boom.

Paul Krugman and others on the left have been arguing against SSA alarmism through a strange rhetorical move [$]: they point out that Medicare and Medicaid and other government programs are in far worse straits. Social Security, Krugman adds, must be considered part of the overall Federal budget rather than as a stand-alone program. Or anyway it can be thought of that way, in which case more flexibility is introduced because you can pay for shortfalls in a variety of ways. A privatization program, which Bush proposes, doesn't in fact solve the problem, because you're merely replacing bond debt with stock that won't cover the shortfall (and putting the poor in a rough position, since they are not accustomed to playing the stock market); no matter which way you go, you're not putting in enough money to cover what's going to begin coming out.

In any case it would be a big mistake to table the whole issue, because it's the same type of problem as climate change; the longer you wait, the deeper the soup.

Posted by Evan Hughes at 04:17 PM

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