Paul Krugman Says Social Security Is Sustainable. It’s Really Not.

For The New York Times‘ Paul Krugman, the real crisis facing America’s entitlement programs is that the media isn’t working hard enough to ignore their impending collapse.

“I’ve seen numerous declarations from mainstream media that of course Medicare and Social Security can’t be sustained in their present form,” Krugman wrote in a Times op-ed this week. “And not just in the opinion pages.”

Perhaps that’s because the unsustainable trajectories of Social Security and Medicare aren’t a matter of opinion. They’re factual realities, supported by the most recent annual reports of the programs’ trustees and the independent analysis of the Congressional Budget Office (CBO). Social Security’s main trust fund will hit insolvency somewhere between 2033 and 2035, according to those projections, while one of the main trust funds in Medicare will be insolvent before the end of this decade. When insolvency hits, there will be mandatory across-the-board benefit cuts—for Social Security, that’s likely to translate into a roughly 20 percent reduction in promised benefits.

Nevertheless, Krugman says he’s got a solution that “need not involve benefit cuts.”

His argument boils down to three points. First, Krugman says the CBO’s projections about future costs in Social Security and Medicare might be wrong. Second, he speculates that they might be wrong because life expectancy won’t continue to increase. Finally, if those first two things turn out to be at least partially true, then it’s possible that cost growth will be limited to only about 3 percent of gross domestic product (GDP) over the next three decades and we’ll just raise taxes to cover that.

“America has the lowest taxes of any advanced nation; given the political will, of course we could come up with 3 percent more of G.D.P. in revenue,” he writes. “We can keep these programs, which are so deeply embedded in American society, if we want to. Killing them would be a choice.”

It’s notable that Krugman sees benefit cuts as “a choice” but believes that implementing a massive tax increase on American employers and workers would be “of course” no big deal.

But that hardly addresses the substance of what he gets wrong. Let’s take each of his three arguments in order and show why they’re incorrect.

First, he says the CBO’s projections about future costs for the two programs might be inaccurate because the a