http://krugman.blogs.nytimes.com/2010/06/21/zombies-have-already-killed-the-deficit-commission
Paul Krugman - New York Times Blog
June 21, 2010, 12:12 pm
Zombies Have Already Killed The Deficit Commission
It must have sounded like a good idea (although not to me):
establish a bipartisan commission of Serious People to develop plans
to bring the federal budget under control.
But the commission is already dead -- and zombies did it.
OK, the immediate problem is the statements of Alan Simpson, the
commission's co-chairman. And what got reporters' attention was the
combination of incredible insensitivity - the "lesser people"??? --
and flat errors of fact.
But it's actually much worse than that. On Social Security, Simpson
is repeating a zombie lie -- that is, one of those misstatements
that keeps being debunked, but keeps coming back.
Specifically, Simpson has resurrected the old nonsense about how
Social Security will be bankrupt as soon as payroll tax revenues
fall short of benefit payments, never mind the quarter century of
surpluses that came first.
We went through all this at length back in 2005, but let me do this
yet again.
Social Security is a government program funded by a dedicated tax.
There are two ways to look at this. First, you can simply view the
program as part of the general federal budget, with the the
dedicated tax bit just a formality. And there's a lot to be said for
that point of view; if you take it, benefits are a federal cost,
payroll taxes a source of revenue, and they don't really have
anything to do with each other.
Alternatively, you can look at Social Security on its own. And as a
practical matter, this has considerable significance too; as long as
Social Security still has funds in its trust fund, it doesn't need
new legislation to keep paying promised benefits.
OK, so two views, both of some use. But here's what you can't do:
you can't have it both ways. You can't say that for the last 25
years, when Social Security ran surpluses, well, that didn't mean
anything, because it's just part of the federal government -- but
when payroll taxes fall short of benefits, even though there's lots
of money in the trust fund, Social Security is broke.
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.
So what does it mean that the co-chair of the commission is
resurrecting this zombie lie? It means that at even the most basic
level of discussion, either (a) he isn't willing to deal in good
faith or (b) the zombies have eaten his brain. And in either case,
there's no point going on with this farce.