Social Security (must read)

Paul Krugman does a great job explaining why the social security crisis is a phony one in this column:

http://www.nytimes.com/2005/01/04/opinion/04krugman.html?hp

Here's a key quote:


The short version is that the bonds in the Social Security trust fund are obligations of the federal
government's general fund, the budget outside Social Security. They have the same status as U.S. bonds
owned by Japanese pension funds and the government of China. The general fund is legally obliged to
pay the interest and principal on those bonds, and Social Security is legally obliged to pay full
benefits as long as there is money in the trust fund.

There are only two things that could endanger Social Security's ability to pay benefits before the
trust fund runs out. One would be a fiscal crisis that led the U.S. to default on all its debts. The
other would be legislation specifically repudiating the general fund's debts to retirees.

That is, we can't have a Social Security crisis without a general fiscal crisis - unless Congress
declares that debts to foreign bondholders must be honored, but that promises to older Americans, who
have spent most of their working lives paying extra payroll taxes to build up the trust fund, don't
count.


This column should be required reading for anyone who wants to express an opinion on the subject.

I've saved a copy, so email me if you can't read this on line for some reason.