The Geezers Are All Right - Paul Krugman/NYT

[WillyT]

The Geezers Are All Right
By PAUL KRUGMAN - NYT
Published: June 2, 2013

<snip>

Last month the Congressional Budget Office released its much-anticipated projections for debt and deficits, and there were cries of lamentation from the deficit scolds who have had so much influence on our policy discourse. The problem, you see, was that the budget office numbers looked, well, O.K.: deficits are falling fast, and the ratio of debt to gross domestic product is projected to remain roughly stable over the next decade. Obviously it would be nice, eventually, to actually reduce debt. But if you’ve built your career around proclamations of imminent fiscal doom, this definitely wasn’t the report you wanted to see.

Still, we can always count on the baby boomers to deliver disaster, can’t we? Doesn’t the rising tide of retirees mean that Social Security and Medicare are doomed unless we radically change those programs now now now?

Maybe not.

To be fair, the reports of the Social Security and Medicare trustees released Friday do suggest that America’s retirement system needs some significant work. The ratio of Americans over 65 to those of working age will rise inexorably over the decades ahead, and this will translate into rising spending on Social Security and Medicare as a share of national income. But the numbers aren’t nearly as overwhelming as you might have imagined, given the usual rhetoric. And if you look under the hood, the data suggest that we can, if we choose, maintain social insurance as we know it with only modest adjustments.

Start with Social Security. The retirement program’s trustees do foresee rising spending as the population ages, with total payments rising from 5.1 percent of G.D.P. now to 6.2 percent in 2035, at which point they stabilize. This means, by the way, that all the talk of Social Security going “bankrupt” is nonsense; even if nothing at all is done, the system will be able to pay most of its scheduled benefits as far as the eye can see.

Still, it does look as if there will eventually be a shortfall, and the usual suspects insist that we must move right now to reduce scheduled benefits. But I’ve never understood the logic of this demand. The risk is that we might, at some point in the future, have to cut benefits; to avoid this risk of future benefit cuts, we are supposed to act pre-emptively by...cutting future benefits. What problem, exactly, are we solving here?

What about Medicare...

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More: http://www.nytimes.com/2013/06/03/opinion/krugman-the-geezers-are-all-right.html?ref=paulkrugman&_r=0

[denverbill]

1. Ha! That's such a great point.

Because in the future, we MIGHT have to cut benefits, and to avoid that, we should proactively cut them now.

[WillyT]

2. Agreed...

[HooptieWagon]

3. What is being overlooked in SS discussion...

is that a couple decades ago, SS withholding was increased on the baby boomers to cover their retirement costs...so there wouldn't be an undue burden on the successive generations. This is one reason why SS has continued to operate in the black, expanding the SS surplus. To then cut benefits on boomers, who have already been paying extra to generate a surplus to cover their benefits, is simply unfair.

[denverbill]

4. Yes, they raised our taxes giving SS a surplus, then started using the surplus to balance the budget

And used the 'balanced budget' to justify huge tax cuts for the wealthy. Now they are demanding tax increases and benefit cuts from us instead of returning the stolen tax cuts they gave themselves.