02 May 2005

Krugman Explains How Bush Plan is Really a "Gut Punch" to the Middle Class

Paul Krugman explains, about as clearly as it's possible to explain, how Bush's "indexing" of social security benefits proposal is really nothing less than an incremental scheme to do away with Social Security for the vast majority of Americans.


  1. http://www.poorandstupid.com/chronicle.asp
    "THE LIES LIE UPON LIES Paul Krugman's New York Times column today terribly distorts the already terribly distorted meaning of a quotation from Jason Furman, liberal economist at the liberal think tank The Center on Budget Policies and Priorities. Krugman tries to give the impression that "progressive price indexing" of Social Security benefits -- which President Bush proposed in his press conference last week -- would severely reduce benefits for the middle class. He quotes Furman thus:

    "For millions of workers," Mr. Furman writes, "the amount of the monthly Social Security check would be at or near zero."

    What Furman actually wrote, however, was quite different. Furman's statement depended on not just considering progressive price indexing of benefits, but also the fact that workers would (1) voluntarily reduce their standard benefits in exchange for likely greater benefits from personal accounts; and (2) pay their Medicare premiums by deduction from their Social Security checks. Here is what Furman wrote:

    For many middle-income workers, Medicare premiums would consume most or all of the very small monthly Social Security benefit that would remain under the combination of progressive price indexing and “carve-out” private accounts. Social Security checks for millions of ordinary American workers thus would be close to or at zero.

    Krugman took Furman's quote wildly out of context to make it seem as though progressive indexing alone would reduce the Social Security check. But Furman's original quote is deceptive in its own way. First, it may nominally reduce the amount of a check to have a payment for Medicare (or anything else) deducted from it, but that doesn't reduce its value. And second, Furman is falsely setting the post-retirement benefits resulting from personal account values at zero; in fact, those would be paid out each month too, no doubt as part of the Social Security check.

    The Times yesterday took another subtle opportunity to misquote CBPP -- its most reliable and frequently cited source of left-leaning economic analysis. In a front-pager yesterday -- "Social Security: Help for the Poor or Help for All?" -- a graphic showing the purported reduction for various categories of wage earners caused by progressive indexing cites both the Social Security Administration and CBPP as its source. In reality the SSA has never published one iota of the information contained in this graphic; its entire content comes from CBPP, which itself claims that it developed its analysis based on SSA figures. But isn't it so very much more credible for the "paper of record" to pretend it is using government statistics, rather than mere analysis from a left-leaning lie factory?"

    Posted by Donald Luskin at 8:53 AM

    See also John Tierney's recent op ed in the NYT that essentially calls Krugman a lazy liar when he points to Chile's private accounts.

  2. Anonymous's comments criticize sources and accuse Krugman of lying, but they don't actually refute the essential points made in his op-ed. Can you prove that the Bush plan would not, as is widely reported, result in major cuts for the majority of working people, while having disproportionately little impact (as a percentage of actual income IN RETIREMENT) on Bush's only real constituency, the very rich?

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  6. No one ever claimed that Social Security is perfect. But none of the right wing drivel added above changes the inescapable fact that the Bush plan is a deliberate attempt to drastically cut future benefits for the majority of Americans, with a sop to the lowest income bracket. Social security is a significant component of income for very many people, and instead of imposing a reasonable burden, as do all of the European countries, to make up a minimal retirement security income system for ordinary wage earners, the Radical Conservatives want to gut the program in the interests of low taxes for the rich. However you cut it, it's mean spirited and wrong, and fortunately most people in this country are waking up... and just not buying it.

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