February 08, 2005

Retirement for Everyone! (When Pigs Fly)

I'm in Prof. Paul's International Trade Law & Policy this semester, where we spent the first few classes talking about basic economic theories and how that has affected the US in the past and will affect us in the long-run. We also talked about how Bush's Social Security plan will affect the current budget and trade deficits... and how its really not a plan that'll create any kind of real security for our generation when we hit retirement (although, of course, some of us will make out really well and be very happy we didn't have to pay 12% of our income to a failing system throughout our working lives). I was going to write a blog about what I've found out in class and through my own research, but I don't have time for that crap, so here's a lovely interview with economist Paul Krugman from a recent Rolling Stone.

The privateers are claiming that you can have something for nothing. They're basically saying, "Let's assume that pigs can fly." And when you say, "You know, it's not good to assume that pigs can fly," they respond by saying, "What's wrong with you? Don't you understand the enormous advantage of flying pigs?"

trade deficit chart.jpg
Yes, I definitely think borrowing another $2 trillion is what we need right now...

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Don't believe everything Paul Krugman tells you. There may be a Social Security trust fund that is currently running a surplus. However, as long as the government is running a budget deficit any arbitrary accounting distinctions that you make (e.g. earmarking money for Social Security) is effectively meaningless. The overall government (Social Security included) is spending more money than its taking in. It would be foolish to think that this will not effect Social Security at some point.

The real problem, though, is Medicare and not Social Security. Some economists lump Social Security and Medicare together as "entitlements for the elderly" while others think this is fallacious reasoning. Either way, it's mainly Medicare and the rapidly increasing costs of health care (premiums are up more than 40% since 2000, if you can believe that) that will bankrupt the government and, with it, Social Security once the Baby Boomers retire.

So, after a little research I agree that Social Security is not a big problem -- Medicare is. But if you think the AARP is opposing Social Security reform fiercely, just wait until someone tries to touch Medicare.

Posted by: dr v at February 9, 2005 04:44 AM

I don't believe everything Krugman says... it just closely approximated what we covered in my class and I like his "flying pigs" analogy. Flying pigs are always funny. As for Medicare, that's a whole other animal... mainly because it involves private companies and not just the government. Fixing Medicare would require a health care industry overhaul and not just program fixes. I'm glad you agree with me about Social Security though... I don't know if I can live with a man who supports a Bush plan. I'd like for you to always come out against them - even if it's just for show.

Posted by: Kristina at February 9, 2005 11:14 AM