ark og ulandskr201103-3.htm

 

 

 

 

 

 

Ignored by Democrats and Republicans both

Paul Krugman’s analysis of the Bush tax cuts is that they – by virtue of creating big deficits – are a sneaky way to force a future administration to scale back Social Security and Medicare/Medicaid. Do you think Americans would accept such a change?

KR: I’m not an economist, but I agree with most of what he says in general. I do think there is an economic argument as to whether the deficits are necessarily a bad thing. But no one has ever one an election by crying about deficits. Most Americans don’t care about deficits because they have them at home. So that’s an esoteric theory: the United States are not going to go bankrupt. The Americans will have to agree to some kind of scaling back, maybe not at this point, but later.

The problem about this issue is that the Republicans cannot touch them for political reasons and the Democrats are demagoging the issue. Al Gore was horrific in the 2000 election, because he’s a smart guy and he knows better than to go around pretending that there is no problem in Social Security, and accuse the Republicans of wanting to kick old people out on the street. Nobody really knows what to do. The seniors all vote for the Democrats: they win every year by making old people afraid that the Republicans are going to take away their Social Security. It is a vote-winning issue. As long as you have this political gap, the Democrats will not do anything about the problems; they’ll just kick the issue back and pretend there is no problem. Bush had a good idea: let the young workers take a little bit of money out of the Social Security system and invest it privately.

Make the retirement system work by personal savings accounts?

KR: Personal savings accounts, yes: you’re then no longer relying a 100% on the government’s Social Security. But Bush got hammered by the Democrats. What we need is a bipartisan consensus on the reform, but it is unlikely to happen soon. Each side sees an electoral advantage in the stand off, so they’re not cooperating. Whether the tax-cuts are aimed to do that I don’t know. But they probably will, and if they force people to sit down and think of a way to restructure the program then it’s a good thing. Because it’s something that has to be done: I am not going to see any Social Security benefits when I turn 65, it is not going to be there because nobody’s doing anything [to reform it] now.

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Photo (illustration): BrunoInBaghdad.com

Photo (portrait):
Francesca Luk