Paul Krugman Tells GOP Senator: ‘Your Facts Are False’ On Social Security

[Igel]

42. It was used as the law required.

It went to Treasury, and Treasury turned it over to Congress.

That wasn't some new (R) idea. It was what the law had required for a while.

It's like the "Republican backed cap." The FICA tax has always had a cap. It's part of the original (D) design that the (R) haven't removed.

so imagine this: Given 2001, remove 9/11 and the recession. There's a small budget surplus and in addition to that there's FICA money from the trust fund given to Congress. What is the (R) Congress going to do with it?

They could have paid down the public debt. They could have increased spending on some (R) priority. They cut have cut taxes. Either way, the money would have been "spent" (assuming that we think of a tax reduction as a government expense).

Still, the (R) Congressperson's point about solvency isn't all that wrong. Krugman focused the issue to one of the SS program's solvency, and that's not a point in dispute. It's just a point that's easy to get muddled. The solvency problem isn't Social Security, the solvency problem's Congress': To repay the Trust Fund will require, over the next 25 years or so, converting nearly $3 trillion of government-held debt into publicly held debt. At the same time dealing with Medicare/Medicaid/ACA cost increases and deficits, plus the increase that's sure to happen in the interest rate on the current debt. Currently public debt interest is about 6% of the budget. That won't stay the same. CBO projections are by 2040 or so the interest on the debt will be something like 60% of GDP, and that's assuming that the Executive branches projections on deficit sustainability and growth rates are met.

Krugman wins on points.