Krugman Should Know Better

I guess I should be flattered to be big enough to be bashed by Paul Krugman, (although I confess to being mystified by what it means to being called a “troll.”)

And perhaps I should be hesitant to tangle with a Nobel Prize winning economist. But I don’t think he would win the same award for his accounting prowess.

Let me start by conceding that portions of his blog post that were accurate (more than he did for me.) Most importantly, he is absolutely correct that on a consolidated basis, the Affordable Care Act improves the nation’s fiscal position.

But that is not how we view (or should view) Medicare and Social Security. Since their inception, those programs have had their own separate accounts funded by distinct taxes. And each year, the bipartisan trustees issue solemn reports about the state of the programs’ funding.

There is a logic to this. Just like any pension program or insurance plan, each cohort of beneficiaries should save (via taxation) for its own retirement and medical needs. Otherwise, we would simply be saddling our children and grandchildren with the responsibility for caring for us in our old age. (Apparently, this is what Krugman wants, since he concedes in his post that Medicare will eventually have to be funded out of “general revenues.”)

What the ACA does is use Medicare revenues and cost savings to fund an entirely separate (and commendable) activity: extending health care coverage to those near the bottom of the economic ladder. That is seemingly fine with Krugman. But I am confident that if President Bush had proposed using Medicare money to pay for the war in Iraq (or Afghanistan), Krugman would have been the first to scream that the Medicare trust funds were being invaded.

We can argue about that principle until the moon is proved to be made of Swiss cheese. Here’s where he is incontrovertibly wrong: Contrary to his assertion that “the Obama Administration has never claimed that a dollar of savings somehow counts twice,” that is exactly where the Obama Administration has argued.