Social Security is not in crisis, and doing nothing would be preferable to adopting the private accounts being proposed by President George W. Bush. That was the message of New York Times Op-Ed columnist and award-winning economist Paul Krugman during the Feb. 11 inaugural presentation in the Hazen Polsky Foundation Business Lecture Series.
In discussing “The Role of Economics in the Political Arena,” Krugman told the audience that filled McNally Amphitheatre that the President’s plan is too risky, shifting the nation’s fiscal safety net for retirees from a guaranteed payment to an expectation based on stock market performance.
Currently, the average retiree receives annual social security payments equal to 35 percent of her income at retirement. Under the private-account proposal expected from Pres. Bush, that guaranteed payment could drop as low as 8 percent for those people who shifted the maximum contribution into a private account.
Krugman admits that social security has financial problems, but the situation is not dire, he said. What many people don’t realize is that the Congressional Budget Office has calculated that social security will be able to pay full guaranteed benefits through 2052, at which point benefits would be reduced to 81 percent. Krugman said it’s possible that a few technical adjustments could address that situation and blames the media for not clearly laying out the issue.
“Broadcast media buys into the crisis idea and is more hostile to social security than the average Republican member of Congress,” said Krugman. “If [private accounts] happen, it will be because the public has not been properly informed.”
The Hazen Polsky Foundation Business Lecture Series will bring two prominent figures in business and economics that enhance the student experience as well as enlighten faculty and alumni.