Why hasn’t more attention been given to this passage from Paul Krugman’s column from earlier this week …
Even with the most favorable assumptions, the benefits of privatization wouldn’t kick in until most of the baby boomers were long gone. For the next 45 years, privatization would cost much more money than it saved.
Advocates of privatization almost always pretend that all we have to do is borrow a bit of money up front, and then the system will become self-sustaining. The Wehner memo talks of borrowing $1 trillion to $2 trillion “to cover transition costs.” Similar numbers have been widely reported in the news media.
But that’s just the borrowing over the next decade. Privatization would cost an additional $3 trillion in its second decade, $5 trillion in the decade after that and another $5 trillion in the decade after that. By the time privatization started to save money, if it ever did, the federal government would have run up around $15 trillion in extra debt.
These numbers are based on a Congressional Budget Office analysis of Plan 2, which was devised by a special presidential commission in 2001 and is widely expected to be the basis for President Bush’s plan.
No doubt, the work of the <$NoAd$> Bush-bashers at CBO …
Late Update: Reps. Spratt and Hoyer are now on the case.
