liberal ["liberalis" L - suitable for a freeman, generous; "eleutheros" Gk - free] (adj) generous, open-minded, not subjugated to authoritarian domination; (n) one who believes in liberty, universal suffrage and the free exchange of ideas. elite ["eslire" Fr -- to choose fr.L "eligere" -- choose] (n) the choice part; best of a class; the socially superior part of society.

Wednesday, February 02, 2005

Good Point

After being named as the chief "do-nothing" Democrat economist/antagonist in the GOP Saving Social Security playbook, Paul Krugman strikes back with the ultimate in Social Security/Budget projection conundrums:
They can rescue their happy vision for stock returns by claiming that the Social Security actuaries are vastly underestimating future economic growth. But in that case, we don't need to worry about Social Security's future: if the economy grows fast enough to generate a rate of return that makes privatization work, it will also yield a bonanza of payroll tax revenue that will keep the current system sound for generations to come.

Alternatively, privatizers can unhappily admit that future stock returns will be much lower than they have been claiming. But without those high returns, the arithmetic of their schemes collapses.

It really is that stark: any growth projection that would permit the stock returns the privatizers need to make their schemes work would put Social Security solidly in the black.

And I suspect that at least some privatizers know that. Mr. Baker has devised a test he calls "no economist left behind": he challenges economists to make a projection of economic growth, dividends and capital gains that will yield a 6.5 percent rate of return over 75 years. Not one economist who supports privatization has been willing to take the test.
The real dangers to the solvency of Social Security, at least within the actuarially forseeable future, are defense spending, homeland security spending, the Bush tax cuts, and Medicaid.

In AA we learned about not trying to fix problems in the future at the risk of avoiding problems we can fix in the present.

It's an elaborate form of denial, symptomatic of sick people.


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