There was a time when Paul Krugman was serious. In 1996 he wrote:
Generous benefits for the elderly are feasible as long as there are relatively few retirees compared with the number of taxpaying workers — which is the current situation, because the baby boomers swell the workforce. In 2010, however, the boomers will begin to retire. . . The budgetary effects of this demographic tidal wave are straightforward to compute, but so huge as almost to defy comprehension.
. . .
In fact, the so-called ”trust funds” are making barely any provisions for the future. In another spectacular statistic, Mr. Peterson notes that if Medicare and Social Security had to obey the same rules that apply to private pensions, the reported Federal deficit this year would be not its official $150 billion, but roughly $1.5 trillion.
In short, the Federal Government, however solid its finances may currently appear, is in fact living utterly beyond its means. While the present generation of retirees is doing very nicely, the promises that are being made to those now working cannot be honored.
Today, demagoguing entitlements is the core Democratic strategy. Now Krugman toes the line, taking the trust fund very seriously and smearing anyone concerned about entitlement (such as 1996 Krugman) as dishonest:
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. . .
So where do claims of crisis come from? To a large extent they rely on bad-faith accounting. In particular, they rely on an exercise in three-card monte in which the surpluses Social Security has been running for a quarter-century don’t count — because hey, the program doesn’t have any independent existence; it’s just part of the general federal budget — while future Social Security deficits are unacceptable — because hey, the program has to stand on its own.
I don’t even understand what he is alleging that dishonest people like me and 1996 Krugman are saying. Yes, the trust fund is an accounting fiction. Social Security takes in tax money and spends it on benefits. For decades it has run a surplus doing so. (Those surpluses “don’t count”? What is that even supposed to mean?) Now it is running a deficit. Soon — long before the “trust fund” runs out of imaginary money — it will be running a massive, unaffordable deficit.
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