Another unrepentant liar who writes for the NYT.....
Krugman Truth Squad: Progressive Prevaricating
Krugman is dealing with the latest Bush proposal on Social Security reform in typical fashion: He’s lying.
Donald Luskin
National Review Online
Two weeks ago President Bush threw Democratic opponents of Social Security reform for a loop by adopting one of their own reform ideas: “progressive price indexing.” It’s a political masterstroke, one that has breathed new life into an initiative that many had given up for dead. It cures most of the program’s solvency problems, guarantees higher benefits than today’s for all retirees, and promises the fastest benefit growth to America’s neediest.
Sounds pretty good, doesn’t it? So how are die-hard Democratic opponents of reform responding? The usual way, of course: they are lying.
Consider, for example, how Paul Krugman — America’s most dangerous liberal pundit — twisted the truth in his New York Times column last week. Krugman flat-out lied when he wrote that “benefits for the poor would be maintained, not increased” in the president’s proposal.
It’s true that under progressive indexing benefits for the lowest-wage earners would stay the same as under current law. But progressive indexing isn’t all the president has proposed. In his prime-time press conference two weeks ago he also proposed that the minimum Social Security benefit never fall below the poverty line. President Bush said,
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By providing more generous benefits for low-income retirees, we’ll make this commitment: If you work hard and pay into Social Security your entire life, you will not retire into poverty.
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Krugman is lying when he fails to recognize this as a major improvement over current law. As a White House fact sheet explains,
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Today, roughly two million retirees who paid into Social Security their whole lives are collecting benefits that leave them below the poverty line.
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Krugman also lied when he portrayed progressive indexing as “a plan to slash middle-class benefits.” It’s not a plan to “slash” benefits at all, or even reduce them. Under progressive indexing, everyone’s Social Security benefits will be greater than they are today, by the rate of inflation or more. What progressive indexing does is slow the runaway growth in benefits that is profligately promised under current law, growth that virtually dooms the program to insolvency and renders those very benefits unpayable.
Whatever it is — a “slash” or a “growth slowdown” — Krugman is lying when he says that progressive indexing will hit the middle class the hardest. In his Times column Monday, Krugman wrote that “cuts” under progressive indexing
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will have their biggest percentage impact on the retirement income of people making about $60,000 a year.
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We could disprove this lie by citing data from the Social Security Administration’s actuaries. Or we could cite data from the Center on Budget Policies and Priorities, the leftist think-tank whose work Krugman once called “absolutely impeccable.” But instead, let’s just look at a table published in Krugman’s own newspaper, the New York Times, which accompanied a May 1 story on progressive indexing. There you will see in America’s “paper of record” that, in fact, the impact of progressive indexing falls heaviest on the highest-earning retirees — those making $90,000 a year or more, and not those earning $60,000. Sounds like it’s time for Krugman to make what he would call a “humiliating correction.” Either that or the Times itself should; one of the two is wrong.
Here’s another lie. Krugman wrote in Monday’s column,
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Suppose you’re earning $60,000 a year. On average, Mr. Bush cut taxes for workers like you by about $1,000 per year. But by 2045 the Bush Social Security plan would cut benefits for workers like you by about $6,500 per year. Not a very good deal.
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This is a lie because progressive indexing isn’t all there is to what Krugman falsely labels “the Bush Social Security plan.” Bush’s plan, in fact, includes personal accounts that could be invested in securities markets, and would effectively replace the majority of the benefit-growth deceleration coming from progressive indexing. According to the Social Security Administration actuaries, returns from a conservative mix of stocks and bonds trim that $6,500 a year benefit-slowdown to about $2,600.
Now, suddenly, that $1,000 a year tax cut doesn’t look like such a bad deal. Just think what would happen if you invested that $1,000 a year tax cut every year from now till 2045 in an IRA? If it earned 4.9 percent after inflation and costs — the conservative return suggested by the actuaries — then by 2045 you’d have a nest egg worth more than $131,000 (in 2005 dollars). That’s a large enough endowment to generate tax-free income of $2,600 a year, forever. That would replace the impact of progressive indexing without ever touching your initial investment, which would just keep on growing and which you could leave to your grandchildren.
The desperation that motivates all these lies is the Left’s nightmare vision that somehow President Bush will beat the odds and manage to leave his compassionate conservative mark on the signature social program of the New Deal. Krugman painted the nightmare for the Times’ liberal readers by quoting Jason Furman, the leftist economist at the Center on Budget Policies and Priorities:
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“For millions of workers,” Mr. Furman writes, “the amount of the monthly Social Security check would be at or near zero.”
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A theocon world without Social Security? Heaven (so to speak) forefend, because Krugman has even lied in the way he quoted his friend Furman. What Furman actually wrote was that earnings from personal accounts would supplant a portion of traditional benefits, and for some retirees much of the residual traditional benefit would be used for automatic payment of Medicare premiums. So it’s most emphatically not the case that anyone’s Social Security benefits will be anywhere near zero.
Wouldn’t it be simple for the Left if that’s all the vision of President Bush portended? But for the Left it’s way worse than that. By way of his tax cuts and personal accounts and all the other ingredients of the “ownership society,” Bush doesn’t seek a world without Social Security. He seeks a world where no one will need it anymore. And that’s also a world in which no one needs the Left.
— Donald Luskin is chief investment officer of Trend Macrolytics LLC, an independent economics and investment-research firm. He welcomes your visit to his blog and your comments at don@trendmacro.com.
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