It's just become a little more painful to read Donald Luskin. He's no longer satisfied with just critiquing Paul Krugman's stated arguments. He's now decided to interpret those arguments as the evasion of far more sinister arguments and critique those. In any case, his articles continue to contain more erroneous and misleading statements than the articles that he's addressing. Such is the case with his National Review article titled The English Patient, a critique of Krugman's New York Times article titled Maestro of Chutzpah.
After interpreting much of Krugman's article, supposedly by using "The Evasion English Dictionary", Luskin states the following:
Krugman is irked at Greenspan's suggestion to cut Social Security benefits, arguing that the Social Security crisis is "nonexistent." He argues that "the program is fully financed at least through 2042."
In Evasion English, "nonexistent" means "existent," and "fully financed" means "$4.9 trillion in the hole." That's the difference between the present values of projected income and expenses, according to the 2003 Financial Report of the United States Government, just released by the Treasury Department.
In fact, the 2003 Financial Report that Luskin cites states on page 83 that "according to the 2003 Social Security Trustees Report, the OASDI Trust Funds are projected to remain solvent until 2042", the year that Krugman cites. Where then does Luskin's numbers come from? Table 6 on page 84 shows that the present value of the projected Social Security shortfall over the next 75 years is $4.9 trillion if the trust fund is not included. If the trust fund is included, the shortfall is $3.55 trillion. Hence, Luskin is scolding Krugman because his apple doesn't equal Luskin's orange. In any case, Luskin continues:
Krugman goes on to suggest that whatever problems Social Security may have, they are swamped by Bush's tax cuts: "The cost of securing the program's future for many decades after that would be modest — a small fraction of the revenue that will be lost if the Bush tax cuts are made permanent."
In Evasion English, "modest" means "soak the rich — they can afford it." And "a small fraction" means "more than 100 percent."
No, according to a Center on Budget and Policy Priorities study published on March 20, 2003, "a small fraction" means "less than a third". This study looked at the Administration’s tax proposals that included 'making the 2001 tax cut permanent, enacting tax breaks for dividends, creating new tax-free savings accounts, and various other tax cuts, some of which are part of a “growth” package'. It estimated that the present value over the next 75 years of these tax provisions was between $12.1 trillion to $14.2 trillion, over three times the Social Security shortfall of $3.8 trillion.
Luskin continues:
At least that's what Krugman believed last March, when it served his purposes at the moment to take a position on Social Security precisely opposite to the one he's taking now. Then he wrote that "because of the future liabilities of Social Security and Medicare," even "[w]ithout the Bush tax cuts, it would have been difficult to cope with the fiscal implications of an aging population."
If Luskin had read a little closer, he would have noticed that, in March, Krugman was talking about "Social Security and Medicare" whereas now he is talking just about Social Security. According to Table 6 of the source that Luskin cited, the projected shortfall for Medicare is $15.8 trillion (not including the trust fund), over three times Social Security's projected shortfall of $4.9 trillion. Hence, Luskin is scolding Krugman because his current apple doesn't equal his prior orange.
It might be tempting to accuse Luskin of using "Evasive Math" as well as "Evasive English". But, in fact, it's enough to determine that most of his arguments and math are simply wrong.