From Paul Krugman's blog:
It must have sounded like a good idea (although not to me): establish a bipartisan commission of Serious People to develop plans to bring the federal budget under control. ...
[T]he immediate problem is the statements of Alan Simpson, the commission’s co-chairman. And what got reporters’ attention was the combination of incredible insensitivity – the “lesser people”??? — and flat errors of fact.But it’s actually much worse than that. On Social Security, Simpson is repeating a zombie lie — that is, one of those misstatements that keeps being debunked, but keeps coming back.
Specifically, Simpson has resurrected the old nonsense about how Social Security will be bankrupt as soon as payroll tax revenues fall short of benefit payments, never mind the quarter century of surpluses that came first. ...
So what does it mean that the co-chair of the commission is resurrecting this zombie lie? It means that at even the most basic level of discussion, either (a) he isn’t willing to deal in good faith or (b) the zombies have eaten his brain. And in either case, there’s no point going on with this farce.
Dang, Krugman is good. Simpson is full of 'you know what.' Why that guy gets any 'cred' anywhere in the political world, I do not know. Maybe it's the personality that masks the utter lack of acuity.
ReplyDeleteKrugman is full of it as well.
ReplyDeleteThere is no money in any trust fund. It's all on paper IOUs and those paper IOUs will need to be cashed it to pay benefits and you either raise taxes or borrow more from countries like China to come up with the money.
People aren't going to stand for tax increases and at some point China is going to tear up the credit card.
anon2, all govt funds are just "on paper IOUs," besides that stash of gold at fort knox.
ReplyDeleteA3, you're right. People should remember we haven't been on the gold standard since--Gee, before I was born! And, that's a long long time ago. Remember all those MBS's AIG and Goldman Sachs were selling? They were just paper IOU's too. To the tune of hundreds of B for Billions of dollars worth, coughed up for their benefit, by the US Treasury. I don't know about you, but I used to believe that the checks I got on payday were real money. Just paper, but the bank loved 'em!
ReplyDeleteNancy, A3...for a timely example of the destructive cycle that your way of thinking about money can have over time, have a look at the fiscal environments in greece, spain, portugal, UK, etc.
ReplyDelete(i am A2, checking back in.) my point was that our modern economic system is based on credit, trust, and the backing of our gov't, and not some tangible notion of intrinsic "money."
ReplyDeleteso it doesnt matter to me that ssa trust funds are just a "paper IOU" as long as the gov't can back it up. unfortunately, the ability of a gov't to back up its promises comes down to its military power and credit rating in the eyes of other countries. and i agree, we are spending way too much without bringing in sufficient revenue.
(i am A3, checking back in.) my point was that our modern economic system is based on credit, trust, and the backing of our gov't, and not some tangible notion of intrinsic "money."
ReplyDeleteso it doesnt matter to me that ssa trust funds are just a "paper IOU" as long as the gov't can back it up. unfortunately, the ability of a gov't to back up its promises comes down to its military power and credit rating in the eyes of other countries. and i agree, we are spending way too much without bringing in sufficient revenue, so something's gotta give.