Bernie Sanders is right to call out Biden’s objectionable record on cutting Social Security—no matter what Paul Krugman says.
The Krugman charge (and Biden’s defense) is patently false.
The 2020 Democratic primary took a new turn this week as Joe Biden came under fire from the Bernie Sanders campaign over his record on proposing cuts to Social Security. The two campaigns now have each released competing ads over the issue, with the Biden camp accusing Sanders of an unfair attack, and Sanders responding with a 30-second spot that quotes Biden saying, “When I argued if we should freeze federal spending, I meant Social Security as well.”
Right on cue, the mainstream media has waded into the issue, with the tenuously liberal Paul Krugman continuing his anti-Sanders jeremiads from the New York Times editorial page.
The latest Sanders atrocity alleged by Professor Krugman is that Sanders spread falsehoods about Joe Biden’s record in support of cuts to Social Security benefits.
It does not pay to get too worked up about political backbiting in a primary. In November, we will need everybody to defeat Donald Trump, so remarks that could have the effect of driving others to deny the eventual Democratic nominee their vote should be avoided.
Sanders himself has cautioned his supporters, “We don’t need to demonize those who may disagree with us.” A simple test for a genuine Sanders campaign supporter is whether they are marching in this direction.
Still, the Krugman charge (and Biden’s defense) is patently false.
The first shot in this brouhaha was an email released by the Sanders campaign that included clips of Biden on the floor of the U.S. Senate in 1995 touting his political courage by embracing cuts in Social Security benefits, ostensibly to save the program. Sanders argues that such cuts would be bad policy, and that Biden’s past advocacy would make him vulnerable to Trump in a presidential election. Sanders, for his part, has long advocated expanding Social Security and introduced a bill in Congress to do so last year.
Biden’s remarks placed him in good company. The Democratic Party establishment, including Presidents Bill Clinton and Barack Obama, as well as House Speaker Nancy Pelosi, have traditionally embraced the mainstream view of Social Security: namely that because it is out of balance, if viewed in isolation over the next 75 years, some combination of payroll tax increases and benefit cuts will be required to “protect” or “modernize” the program. A related objective is to reduce the federal budget deficit over the long term. The connection is that if Social Security revenues are not sufficient to finance benefits, the money must come from somewhere else.
This argument has been hashed out many times. There is a good political reason to view Social Security’s finances in isolation: it provides support if you accept that intakes from the widely accepted payroll tax must match outputs for program benefits. Such a view requires a belief that the revenues, largely from payroll taxes, must measure up to benefit obligations in real-time (annually, in other words). Such a restriction on Social Security’s finances is not applied similarly to other government spending. We don’t demand that the Department of Defense, for instance, be self-financing.
The advocacy of trimming benefits for the sake of protecting Social Security, or to reduce the budget deficit, is a respectable position, though I and many other progressive economists happen to believe it is completely wrong. Economists Dean Baker and Mark Weisbrot offer an extensive version of this case in their classic book Social Security: The Phony Crisis in which they argue, “there is no economic, demographic, or actuarial basis for the widespread belief that the program needs to be fixed.”
What “fixing the program” generally means is raising revenues (by reducing benefit costs) that won’t be needed for more than 15 years. Instead, they would be deposited into the Social Security Trust Fund, which in 2018 had reserves equivalent to 289% of annual program costs. By mid-range estimates, the fund is not projected to run out of money until 2036. By more optimistic assumptions, it would never run out. Even if it did, the federal government would still have payroll tax revenue and could easily supplement it to meet benefit obligations.
Enemies of the program like to say the Trust Fund is “going broke”—or isn’t real. In fact, the Trust Fund is quite real. It holds U.S. government securities, the safest financial asset in the world, backed up by the power to tax the richest country in the world.
The real agenda here is to use deficit panic to arrest any growth in the public sector. And it’s worked pretty well. For Fiscal Year 2019, federal outlays were 21.3% of GDP. Under Republican President Ronald Reagan, they were as high as 22.9%.
The game here is that Democrats do the hard work of cutting spending, outraging their constituents and losing elections, and then Republicans come in and set about blowing up the deficit all over again, with tax cuts for their rich donors. Bill Clinton and Barack Obama both fell into this trap—and Joe Biden was a steadfast ally. Krugman has written about all this eloquently, so he had to really stretch to gin up his attack on Sanders.
At the end of the Sanders campaign email, there is a brief reference to a speech Biden made at the Brookings Institution in 2018. Krugman seizes on this reference to claim that it does not substantiate Sanders’ criticisms, concluding that Sanders “flat-out lied.” In fact, while Biden’s language is less than forthright, he does push a position, popular among centrist Democrats, that has long been used to justify cuts to Social Security.
In his Brookings speech, Biden claimed that “Social Security and Medicare can stay—it still needs adjustments—but it can stay.” This is perfectly in line with the establishment deficit nagging discussed above, these days often criticized by Krugman himself. Even if you doubt that inference, the video clips, described by Biden as “doctored” (itself an…untruth, according to the New York Times), are unambiguous.
Here is Biden speaking to Meet the Press’s Tim Russert in 2007:
Tim Russert: Senator, we have a deficit. We have Social Security and Medicare looming. The number of people on Social Security and Medicare is now 40 million people. It’s going to be 80 million in 15 years. Would you consider looking at those programs, age of eligibility…
And Biden’s advocacy of Social Security cuts hasn’t just been theoretical. As David Dayen lays out, it’s had real consequences by popularizing the regressive “chained CPI” approach to calculating benefits.
To support his argument, Krugman links to a piece from PolitiFact, which has its own history of mangled economic analysis, according to no less than Paul Krugman!
PolitiFact’s argument is that Biden was aiming to “protect the program,” which, as noted above, is the time-honored excuse for austerity of all types. So, Krugman is wrong to affirm that Sanders lied about Biden’s support for benefit cuts, and dishonest to imply that the Brookings speech is a decisive refutation of that charge.
In summary, there should be no doubt that Joe Biden has long advocated cuts to Social Security. So have many other Democratic Party leaders, but, as they say, the times they are a-changin’. Biden is now supporting benefit increases. Again, in a spirit of comity, we should welcome all converts.
Krugman misled his readers by calling Sanders a liar on this issue. Going forward, the application of the liberal commentator’s formidable powers of economic analysis upon Sanders’ proposals should be received with circumspection.
Thankfully, Social Security appears to currently be out of the danger zone. But it will always be vulnerable due to delusions about the long-run dangers of budget deficits, and politicians willing to describe benefit cuts as measures to save the program. We shouldn’t buy it.
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