Friday, December 03, 2004

Not Quite

DeLong says that Mankiw breaks "message discipline" and actually reports that 2+2=4. But, that's not what Mankiw does. What Mankiw does is say "assume X=2. Then, X+2=4." This, admittedly, is a shocking degree of honesty coming from someone in the Bush administration. However, it is still the case that X does not in fact equal 2.

Calling the current system of Social Security benefits unsustainable, a top economic adviser to President Bush on Thursday strongly implied that any overhaul of the system would have to include major cuts in guaranteed benefits for future retirees. 'Let me state clearly that there are no free lunches here,' said N. Gregory Mankiw, chairman of the Council of Economic Advisers, at a conference on tax policy. . . . Mr. Mankiw's remarks suggested that President Bush's plan to let people put some of their Social Security taxes into 'personal savings accounts' would have to be accompanied by changes in the current system of benefits.

While Mankiw is admirable for saying that any social security overhaul of the kind he and the Bush administration have in mind would indeed require "major cuts," it is not the case that "the current system of Social Security benefits" is "unsustainable." There's actually a reasonable chance that they're sustainable without any changes to the program at all, given the rather pessimistic assumptions used to predict its future. But, in any case, with minor revenue enhancements to this system, which would cost far less than any "privatization" plan which would satisfy Bush's promise not to cut the benefits of those currently retired or near to retirement, the system can easily be sustained.