May 10, 2005

Lies by Omission

In a syndicated article aptly titled "Final Insult," liberal NY Times columnist Paul Krugman proves once again why he is a columnist, and not a reporter or an economist. Reporters are supposed to present facts, and economists are supposed to be good with numbers. In this column Krugman proves he is good with neither facts nor figures.

Krugman writes:

Before I take on this final insult to our intelligence, let me deal with a fundamental misconception: the idea that President Bush's plan would somehow protect future Social Security benefits.

If the plan really would do that, it would be worth discussing. It's possible - not certain, but possible - that 40 or 50 years from now Social Security won't have enough money coming in to pay full benefits. (If the economy grows as fast over the next 50 years as it did over the past half-century, Social Security will do just fine.) So there's a case for making small sacrifices now to avoid bigger sacrifices later.

It is certain that Social Security will not have enough money to pay full benefits to retirees. For Krugman to deny this is either transparently dishonest, or it displays a pathetic ability to do basic math. There is no "protection" under the current system.

When Social Security was set up, more than a dozen people were paying into FDR's Social Security Ponzi Scheme for every person that drew benefits. As the Baby Boomer Generation retires, and lives far longer after retirement than previous generations, as few as two people will be paying into the system for each person drawing out, and each person drawing out will be pulling out far more money than the two working people put in. The system is unsustainable, based purely upon the hard numbers of those working versus those drawing on the system.

Krugman's not-so-artful dodge using the red herring of historical economic growth does not support his position. Economic growth is irrelevant to the hard numbers of people paying into the Social Security system versus people drawing for the Social Security system. Good economy or bad economy, people are going to grow old and retire. His argument is completely irrelevant to his position...

...But it provides excellent support for Bush's plan to allow people to privitize part of their savings and invest it into the economy through conservative investments. The economy has not only grown over the past fifty years, but over the past 100, including the Great Depression. Long term investments in government bonds, index funds, and other diversified investments will yield a much higher rate of return that pouring money into the hole of Social Security. How much would it mean to you? Figure it for yourself.

The difference for my decidedly-middle class family is a net gain of $1,570/month more under the Bush Plan, which throughly trumps my projected benefits under Social Security's current guise. Of course, the current Social Security program will be out of money by the time I retire, so actual returns under Bush's plan look far better than the calculator would indicate.

Krugman then goes on a disingenuous attack, claiming that Bush's plan would cut taxes, but cut benefits far more. But Krugman only provides part of the story, and lies by omission; he doesn't apparently include in his calculations the private accounts that are a key component of the Bush plan. In short, he presents all the negatives of the plan, without any of the positive.

When all you tell someone is that you are going to cut out their diseased heart, you are telling them they are going to die. By leaving out the key fact that you are going to put back in a stronger, more vibrant heart, you give them a prognosis 180 degrees away from the truth. Yet this is exactly what Krugman does, while have the gall to say, "I'm not being unfair."

You're not only unfair Mr. Krugman, you're blatantly dishonest.

Posted by Confederate Yankee at May 10, 2005 08:46 AM | TrackBack