In his blog today, the NY Times columnist bypasses an editor who might bring sanity to his writing and posts the following on Social Security:
And bear in mind what happens when payroll receipts fall short of benefits: NOTHING. No new action is required; the checks just keep going out.If by NOTHING you mean that the Social Security surplus which has been hiding the true size of the federal deficit now tips into negative territory. When outlays outstrip the FICA income, the Social Security Trust Fund has to cash out Treasury bonds and the U.S. Treasury must pay them off. The money has to come from somewhere, either in the form of higher taxes or cuts in spending. Ha-ha, just kidding, it will be paid off with even more borrowing.
Here's what the wet-blanket Social Security Trustees said in 2009:
Annual cost will exceed tax income starting in 2016, at which time the annual gap will be covered with cash from redemptions of special obligations of the Treasury that make up the trust fund assets until these assets are exhausted in 2037.Everybody chill out, declares Krugman, you're still getting a check, right? Geez!
The projected trust fund deficits should be addressed in a timely way so that necessary changes can be phased in gradually and workers can be given time to plan for them. Implementing changes sooner will allow their effects to be spread over more generations. Social Security plays a critical role in the lives of 52 million beneficiaries and 160 million covered workers and their families in 2009. With informed discussion, creative thinking, and timely legislative action, present and future Congresses and Presidents can ensure that Social Security continues to protect future generations.Zombie lies! Everybody remain calm! All is well!
Krugman's argument amounts to claiming that while we're deep in debt and can't possibly afford to pay the long-term obligations we've made, at least the repo men haven't shown up yet.