Friday, December 03, 2004

Mankiw news

Via Brad Delong. Of course we are all wondering why the Keynsian Mankiw is still in the Bush administration. But at least he has some sense:
Calling the current system of Social Security benefits unsustainable, a top economic adviser to President Bush on Thursday strongly implied that any overhaul of the system would have to include major cuts in guaranteed benefits for future retirees.

"Let me state clearly that there are no free lunches here," said N. Gregory Mankiw, chairman of the Council of Economic Advisers, at a conference on tax policy here.

"The benefits now scheduled for future generations under current law are not sustainable given the projected path of payroll tax revenue," he added. "They are empty promises."

...

In what seemed an effort to anticipate complaints that a new system would reduce future benefits, Mr. Mankiw warned that the benefits promised under current law are fictitious because they cannot be afforded.

"Be wary of comparisons between a new, reformed Social Security system and current law," Mr. Mankiw said. "Unless a listener is discerning, empty promises will always have a superficial appeal."

Let's hope he asks the right question, which is "given that benefits cannot be afforded, what can we do to ease the burden on those who are retiring in the next two decades?"

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