America’s Senior Moment

Paul Krugman has an informative and important article in The New York Review of Books concerning Social Security, Medicare, Medicaid, the aging population and fiscal responsibility. NewMexiKen recommends you find time to read the entire article, but here are some notable points:

[A]nd many economists now think that the original optimism was right after all: if the economy grows as fast over the next fifty years as it did over the past fifty years, Social Security will be sound for the foreseeable future. And if the economy doesn’t grow that fast, by the way, the high rate of return on stocks needed to make privatization work can’t possibly materialize, either.

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In that sense, the trust fund is as real an obligation of the US government as bonds held by Japanese pension funds. The other way would be if the United States found itself in a general fiscal crisis, unable to honor any of its debt. Given the size of the current deficit and the prospect that the deficit will get much bigger over time, that could happen. But it won’t happen because of Social Security, which is a much smaller factor in projected deficits than either tax cuts or rising Medicare spending.

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As you may have noticed, right now everyone is talking about Social Security, and nobody is talking about the stunning shift from budget surplus to budget deficit since Bush took office.