Thursday, March 24, 2005

I was Googling "eidelblog"

I wanted to see who's talking about me, and I came across this:
I’m no blind follower of PK (Although I haven’t had the audacity to contradict him in this blog), but Mr. Eidelbus’ response completely misses Krugman’s point. That’s because Krugman wasn’t rambling incoherently: he was actually revealing a major problem in the way Michael Tanner had been discussing Social Security. Tanner wanted to say that there was no trust fund, but that there was still a looming Social Security crisis, and Krugman eloquently called him on it.
First, it's not "audacity" to point out bad economics. It doesn't make any difference that Krugman won the John Bates Clark Medal, that he's said to be considered each year for the Nobel. You shouldn't be afraid to point out bad economics.

Second, this fellow misrepresents what I said. I didn't say Krugman "rambled incoherently" when he said this about the payroll tax. I said he "rambled incoherently" and then started talking about the payroll tax as "just another tax." Come on, RA, are you writing for the Times or CBS that you must put words into my mouth?

Third, though RA went on about mixing up all the different types of tax revenue, my original point still stands: Social Security's funding has always supposed to come from payroll taxes. That's why we can talk about its "surplus," because it has (or is supposed to have) a separate accounting. There was the exception of the early 1980s, but what was the solution? An increase in the payroll tax. Not an increase in the income tax, not a stipulation that the General Fund would be used to offset any deficit, but an increase in the payroll tax.

Social Security and Medicare are funded separately, which is how the "trust fund" exists at all. If that's no longer the case, then our government is perpetuating a fraud worth trillions of dollars.

It's also fraud to claim that the system is solvent though the federal government has to use other sources of tax revenue to shore it up. Once again, if we're going to raise other taxes to compensate for insufficient payroll taxes, can Krugman and others at least be honest about it? Can they at least admit that we have to raise taxes (or, I suppose, borrow money) if we're not going to cut benefits?

Finally, why does this guy think Tanner's statements are mutually exclusive?
You can’t have it both ways: you can’t say that we have specifically a Social Security crisis, but also say that there is no Trust Fund. Tanner claimed that there was no trust fund because Social Security’s income had been taken by the rest of the government. He also said that Social Security’s income exceeded its outgo beginning in the year 2018, and that thus we desperately needed reform.
Both statements are true. There is no "trust fund," because by law, the Treasury got their hands on the money. It's a crisis because at some point, we will need to dip into trust fund and repay this "loan to ourselves." They're not IOUs, but I-Owe-Me.

I didn't "wake up," no matter what this "Rational Action" twerp thinks. He's apparently not familiar with Krugman's talking style, how sometimes he'll split phrases and go off on weird tangents -- or as someone described him to me, "like a meth addict."

Indeed, this anonymous fellow had only this to say about the debate. I had this, this, and this too. If I had been falling asleep, I guess I'd have produced a precise transcript!

Did I mention I never learned shorthand? I was writing as fast as I could, abbreviating some words, but trying to be as precise as possible in quoting.


Blogger Brad Warbiany said...

I'm constantly amazed by our opponents in this fight. We are trying, as a first step, to make the debate accurate. To do so means that we need to look at what the trust fund is, and why it doesn't really exist in the way a trust fund ever could.

If we can at least agree on the facts, then we can start asking whether people are willing to accept tax increases (whether payroll or income is immaterial) to pay for the system. But our opponents don't want to have [lose] that debate, thus they won't even admit the truth of our premises.

That there is no legitimate "trust fund" is fact. That the demographics will force tax increases or spending cuts is a fact. Whether those tax increases come to the payroll tax, or the spending cuts occur outside social security, the total government liability (given current demographic projections) is going to increase, and total government receipts must increase to match.

Thursday, March 24, 2005 6:15:00 PM  
Blogger Perry Eidelbus said...

I'm looking through the debate transcript, and Michael Tanner had a nice zinger that Krugman and Marshall conveniently ignored.

But I would like to suggest that in terms of the Social Security debate, the trust fund makes absolutely no difference. It's essentially meaningless. You don't have to take my word for it. I would suggest you take the word for it of the Clinton administration, who in their fiscal year 2000 budget said, and I quote, "These trust fund balances are available to finance future benefit payment, but only in a bookkeeping sense. They do not consist of real economic assets that can be drawn down in the future to fund benefits, instead they are claims on the Treasury that when redeemed will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of trust fund balances, therefore, does not by itself have any impact on the government's ability to pay benefits."

Friday, March 25, 2005 7:18:00 PM  

Post a Comment

Subscribe to Post Comments [Atom]

Links to this post:

Create a Link

<< Home