And freaks out.
The Center on Budget and Policy Priorities has made some splashes with this graph. I find this strangely unconvincing as a policy argument for anything.It takes Ezra Klein all of 15 seconds or so to take McMegan apart.
For starters, the 0.7% of GDP that it covers only matches the shortfall for a brief period, at least according to the Social Security Trustees report. By the middle-to-late twenties, the shortfall is more than twice the amount of the Bush tax cuts on the rich. Even if we hadn't already (hopefully) earmarked this money for something else, this would be at best a stopgap measure; the program would rapidly begin putting more pressure on the budget.
The Center on Budget and Policy Priorities has posted a response that's pretty persuasive, and suggests that McArdle misread one of the underlying CBO documents. So I'm calling this one for CBPP, at least for the moment.You know when I first saw that graph yesterday I figured "Well gosh, that's a pretty simple point." Yes the SS shortfall will get bigger, but hey, so will the shortfall from the reduced tax revenue over the years. Ezra's point stands pretty firmly clear here: you can't have it both ways.
But that leaves us with McArdle's second point: "While it is perhaps true that you could 'pay for' the Social Security shortfall by rescinding the Bush tax cuts on the rich," she writes, "that would leave a gaping budget deficit that would then have to be paid for in some other way." Well, yes. The contention is that there are better ways to pay down the deficit than raising the Social Security retirement age or cutting benefits.
People like to look at Social Security in isolation, and they routinely say there's no way we can possibly afford the program as currently constructed. The point of the comparison to the Bush tax cuts for the rich is that that's simply not true. The same people saying we can't afford Social Security's shortfall are saying we can afford tax cuts of the same size. Both things can't be true.
Tax cuts = revenue shortfall. Ask any state or local budget person. They actually have to balance their numbers.
The same people saying we can't afford Social Security's shortfall are saying we can afford tax cuts of the same size. Both things can't be true.
ReplyDeleteWell with tax cuts you let people keep more of their money, which they will either save or spend. With the SS shortfall is a flat out loss.
Now with the taxes you will not get 100% of that money back, but a small portion of it will come back in the form of taxes on goods and services.
I was going to leave it at that but I just couldn't resist...
Tax cuts = revenue shortfall. Ask any state or local budget person. They actually have to balance their numbers
Texas is a red of a state as they come, with no personal income tax and rated the best economy in the nation, but I'll leave that for another time.
We're talking about the revenue for the government here. Both would increase the deficit, but one we can afford (tax cuts) and the other we can't (SS benefits).
ReplyDeleteThat doesn't make sense.