krebscycle

Simpson-Bowles is terrible…. It offers nothing on Medicare that isn’t already in the Affordable Care Act. And it raises the Social Security retirement age because life expectancy has risen — completely ignoring the fact that life expectancy has only gone up for the well-off and well-educated, while stagnating or even declining among the people who need the program most. – Krugman

Krugman is like your well meaning cousin who sits with you at the poker game and yells, “you have 4 aces, why are you only adding $1 to the pot and acting defeated?” The Social Security argument is just wrong – worse, it’s irrelevant. It’s wrong because Simpson-Bowles, far from “completely ignoring” people who need early retirement proposes that 20% of retirees be granted hardship status even if they don’t qualify as disabled. Furthermore they propose making the benefits more progressive and adding a higher benefit for low income retirees to keep them above the poverty line. But the critique is irrelevant because Krugman does not understand how the game works.

The minor tinkering with Social Security is a side issue in Bowles-Simpson. The important issue is tax expenditures – the $trillion/year distributed by the Federal tax system mostly to the powerful and well connected.  That subsidy drives increasing wealth inequality, drags down the productive economy by shielding entrenched companies from competition, and starves the government of funds for social services and infrastructure. What’s more the existence of the tax subsidy cuts to the heart of how the wealthy and selfish have changed the rules for their own benefit. The reason Mitt Romney is able to qualify for a 9% effective tax rate is that decades of lobbying have bought Congress and the Courts and cowed the IRS (it’s not afraid to harass middle income taxpayers, but it does not want to tangle with massed regiments of tax attorneys  or struggle through chains of off shore corporate shells).

The key political issue of our time is convincing a larger part of the American public that the deficit and the weak economy are not due to lazy black people, greedy immigrants, and pointy-headed bureaucrats – as the Republicans claim –  but to $trillion/year of tax expenditures for the super-rich. That’s why the Simpson-Bowles Chairman’s report, brought to us by an old school right wing Western Republican and a centrist Democrat is such dynamite.

See also: Bowles-simpson-truth-destroys-conservative-lies

and Bowles-Simpson and the Grand Compromise.

and Naivete of the Liberal Economists