It’s a cold day in May when I have anything good to say about Harper’s magazine. (Here’s what I thought of their last issue.) But it’s a bit chilly, and I do have something good to say. The just-released June issue of Harper’s has a must-read symposium on the coming entitlement crisis. The panel features a stellar cast. On the conservative side, we have Glenn Hubbard, head of the Council of Economic Advisors during President George W. Bush’s first term. Speaking for the left, we have Paul Krugman. And from the economic center, there’s Pete Peterson, former Nixon Secretary of Commerce, and deficit hawk extraordinaire. This is a superb debate–an honest discussion of the issues that offers a true picture of the basic alternatives. Outrageous as Harper’s often is, I think it’s provided a real service with this symposium.
After reading this debate, the reason for the Democrats’ silence on Social Security is clear. The only alternative to the President’s plan is a massive tax increase. If we were honestly debating the entitlement crisis, the Democrats would be out there asking for a huge tax hike, a single payer system of national health insurance, and health care rationing. Naturally, the Democrats don’t want to do that. So instead they pretend the president is the bad guy for telling the truth about the need to curb the out-of-control growth of benefits.
Among other things, this symposium makes it clear that an economic crisis (“hard landing”) is the key issue. It isn’t just a question of when Social Security goes into the red. What matters is what we do now to give the markets confidence in what is likely to be a difficult future. If we don’t fix Social Security now, politics is going to make it impossible to do anything until the possible second term of the new president. The markets could get spooked long before then by entitlement-driven deficits and political gridlock.
There’s a lot more here. The most interesting turn is when Hubbard catches Krugman in a major flip. Throughout the symposium, Krugman accepts the basic idea that Social Security has a serious problem that needs to be addressed in some form. When Hubbard points this out, Krugman denies it, and does his best to justify the Democrats’ current stonewall tactics.
Well, the Social Security stonewall by congressional Democrats and the left-punditariat is shameful, as this symposium shows. Fortunately, the Harper’s story also shows that the stone wall is cracking. Between the Diamond-Orszag plan the Wexler proposal, and now the Harper’s symposium, it’s clear that there is a serious Social Security problem–and equally clear that the Democrats are someday going to try to deal with it through an unprecedented tax hike.