New Approach Needed to right Social Security

The Times loses its balance

By Greg Anrig Jr., The Century Foundation

March 2, 2004--Today's New York Times Business Section includes a story, incongruously introduced with the sober headline "Medicare and Social Security Challenge," that relies exclusively on a small cadre of economists who practice a dubious art called "generational accounting." The output of that cottage industry is gargantuan numbers, all intended to convey the impression that government programs are on an inexorable path toward meltdown—a future that purportedly dictates the necessity for some combination of massive tax increases and horrific cuts in programs like Social Security and Medicare.

Big numbers, which emerge naturally when you make guesses about the size of the economy, government, tax burdens, and so forth indefinitely into the future, are both scary and intimidating. So here's a little perspective that the Times should have included to orient their unnecessarily alarmed readers this morning: The tax cuts that the Bush administration endorses would cost three times as much as the projected Social Security deficit over the next 75 years, and more than the combined deficits of Social Security and Medicare's Hospital Insurance program over the same time horizon. Presumably, if we can afford the president's tax reductions, alternatively we can afford to take the manageable steps necessary to bridge the long-term financing gaps in those two programs.

There are any number of prominent economists who could have fleshed out the article's token words of caution about the shortcomings of generational accounting and explained why strengthening the finances of Social Security and Medicare is well within the realm of the doable. Unfortunately, that perspective will be harder to achieve now that the New York Times has ratcheted up the credibility of alarmists.