tag:blogger.com,1999:blog-7334408760351487944.post7457499353331068770..comments2023-11-12T06:43:00.060-05:00Comments on Notes on Social Security Reform: David Langer must have compromising pictures of the N.Y. Times letters editor Andrew G. Biggshttp://www.blogger.com/profile/16617460431856611873noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-7334408760351487944.post-31682829207017299812009-02-20T11:56:00.000-05:002009-02-20T11:56:00.000-05:00True, but there's no reason why Social Security co...True, but there's no reason why Social Security costs shouldn't be seen in the context of what Americans have traditionally been willing to pay for government. Over the past 50 years government has taken up around 20 percent of GDP, through periods run by Democrats and periods run by Republicans. To argue, as Langer does, for adding another 4 or 5 percent of GDP to the bill isn't mathematically wrong, but it's surely improbably.<BR/><BR/>Moreover, this also has to be seen within the context of the rest of the budget. Medicare is sure to increase significantly in size in coming years, as is Medicaid. Should we add increased Social Security costs as well?<BR/><BR/>Finally, there's a general rule in public finance that the 'deadweight loss' of a tax - effectively, the waste caused by the disincentives involved with taxation -- rise with the square of the tax rate. This implies that the economic distortions of taxing 30 percent of GDP will be a lot higher than taxing 20 percent. We're very unlikely to be able to foot that kind of bill with our current progressive tax code. To pay European levels of benefits we'd need a European type of tax system, which is generally less progressive than ours (by relying on higher payroll taxes and higher sales taxes).Andrew G. Biggshttps://www.blogger.com/profile/16617460431856611873noreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-10471287248835882922009-02-20T11:20:00.000-05:002009-02-20T11:20:00.000-05:00Our "budget constraint" is what we are willing to ...Our "budget constraint" is what we are willing to pay in taxes. The idea that we cannot afford more than what we pay today is not based on logic but preference.<BR/><BR/>You are unwilling to pay higher payroll taxes for ideological reasons and so you see it as a hard constraint today. In Europe they already pay twice what we pay fro more generous benefits.<BR/><BR/>These are choices that a self-governing society can and must make. But it's not like we are coming up against some immutable law of physics.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-7334408760351487944.post-26015663617070513482009-02-02T15:43:00.000-05:002009-02-02T15:43:00.000-05:00Perhaps a tad ironically, the The NY Times itself ...Perhaps a tad ironically, the The NY Times itself is getting a taste of the cost of entitlements to come. At a time when its business is shriveling, its bonds have been reduced to junk status, and it has just had to borrow $250 billion form Mexican billionaire Carlos Slim, its pension fund is underfunded by $625 billion.Anonymousnoreply@blogger.com