I fear that Paul Krugman is begging to be misunderstood in this new column on Social Security.
With a typical combination of smooth explanation and prickly invective, he slaps Social Security reformers upside the head for trying to fix what he says ain't broken. The program's actuaries don't expect the trust fund to run out until 2037. So he sums up:
In order to avoid the possibility of future benefit cuts, we must cut future benefits.
Ha! I can already see the debate unfolding. Somebody will accuse Krugman of rejecting all Social Security reforms. Krugman will respond that he's being misrepresented (after all, the article leaves open the possibility that Social Security could benefit from minor reform). There will be blog blood. And three weeks later, the professor will write a blog post in tepid favor of means-testing the program, but with the caveat that he's nervous about the general public viewing SS as welfare...
In any case, I think he's being a bit unfair in this piece. For example, Krugman accuses Alan Simpson, one of the deficit commission's headliners, of peddling nonsense on Social Security. Simpson has said that he's considering a range of options for reforming the program, from raising the retirement age to means testing, so that we won't have to slash recipients' checks by 25% in twenty years.
That loss of income won't mean much to folks in the top decile. But for the bottom 50% of the country that relies on SS for a whopping 83% of their retirement income, that would mean a steep 20% haircut.
Krugman's phrasing -- in order to avoid the possibility of future benefit cuts, we must cut future benefits -- obfuscates the fact that slowly implementing a gradual reform today means we don't have to implement steeper cuts in ten, twenty, thirty years. Cutting future benefits today, especially from the richest recipients, rather than cutting future benefits tomorrow actually makes quite a bit of sense!
Krugman's sentences are always well lit, but I wish this column weren't so fiery. A call for softly means-testing Social Security and using the savings to protect benefits for the bottom 50 would have been a better opening argument than a vague invective against "obvious nonsense."
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