In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today’s young may well get less than they put in).
Of course we all recognize that bit of inflammatory scare-mongering from Gov. Rick Perry’s book “Fed Up!” in which he tells the inconvenient truth about Social Security that every American knows but no politician is forth-right enough to confront. That in its current state, it is doomed to fail and leave generations that had paid into it stuck without the return they were promised. In short: A Ponzi Scheme.
Oh, wait… my mistake. Thanks to some excellent work by Tyler Durden at ZeroHedge.com I now see that the quote above is not from Gov. Perry but from a young, idealistic economist named Paul Krugman writing in the Boston Review in 1997.
Yes, that same Paul Krugman who is cited as the liberal’s favorite go-to Nobel Economist always willing to throw incendiary polemic after incendiary polemic at any politician with an “R” after their name. The same Paul Krugman who is held up by those liberal pundits and journalists as the smartest economist in the world. The same Paul Krugman who just one year ago wrote this about Republican efforts to make reforms to Social Security to solve its inherent “pyramid scheme” structure:
Legally, Social Security has its own, dedicated funding, via the payroll tax (“FICA” on your pay statement). But it’s also part of the broader federal budget. This dual accounting means that there are two ways Social Security could face financial problems. First, that dedicated funding could prove inadequate, forcing the program either to cut benefits or to turn to Congress for aid. Second, Social Security costs could prove unsupportable for the federal budget as a whole.
But neither of these potential problems is a clear and present danger. Social Security has been running surpluses for the last quarter-century, banking those surpluses in a special account, the so-called trust fund. The program won’t have to turn to Congress for help or cut benefits until or unless the trust fund is exhausted, which the program’s actuaries don’t expect to happen until 2037 — and there’s a significant chance, according to their estimates, that that day will never come.
Apparently, when you’re a Nobel Economist you can make numbers mean whatever you want them to mean in any given decade depending on who your political target happens to be. (Al Gore’s Peace Prize is making a little more sense now.)
Most significantly, this revelation should give pause to the Beltway Chattering Class who have confidently proclaimed that Gov. Perry’s “straight talk” (remember when they loved “straight talk” when it came from John McCain and was directed at George W. Bush?) about Social Security has doomed his chances of beating President Obama in a general election.
The fact remains that anyone who honestly looks at the numbers involved with Social Security without a political agenda can’t help but see the truth. What was meant to be a retirement pension program for senior citizens has become a pay-as-you-go old-age entitlement that must be changed in order to survive. We must either increase the amount of money put in to the program, or we must change the benefit payouts in the form of increasing the retirement age or reducing the number of people receiving benefits or the amount of those benefits.
And that’s not me or scary Gov. Perry talking, it’s Nobel Prize-Winning Economist Paul Krugman talking. Well, at least the 1997 version.
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