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  • For Wichita Eagle, no immediate Kansas budget solution

    For Wichita Eagle, no immediate Kansas budget solution

    The Wichita Eagle shows how its adherence to ideology misinforms Kansans and limits their exposure to practical solutions for governance.

    In an op-ed posted the day before election day, the editorial board of the Wichita Eagle wrote of the problems it believes the next Kansas governor will face:

    The candidates vying to be Kansas governor have lofty-sounding goals and campaign promises. But here’s the grim reality: Whoever wins Tuesday will spend the next several years trying to fill a budget hole.

    And that hole keeps growing deeper. (“Budget hole awaits winner,” November 3, 2014)

    The state has to make changes. We’ve cut taxes, but we’ve not yet met the challenge of cutting spending to match. The problem with this op-ed is the assertion that will take several years to fix. Here’s what I left in reply:

    I have to disagree. Kansas Policy Institute has examined the Kansas budget and found ways to make several structural changes that would immediately (within one year) balance the Kansas budget. This would preserve existing services and fully fund the increases in K-12 school spending and social service caseloads that Kansas Legislative Research has projected. The policy brief that KPI has prepared on this matter is only ten pages long and not difficult to comprehend.

    The changes that KPI recommends are specific adjustments to the way Kansas spends money. They are not the vague calls to eliminate waste that we see politicians campaign on. This is something that Kansas could do if both Democrats and Republicans have the will.

    Dave Trabert, president of Kansas Policy Institute, added this:

    Bob is right. And the Eagle is well aware of our budget plan but declines to let readers know that the budget can be balanced without service reductions or tax increases. It won’t take “several years” to fix the budget; our plan could be implemented by passing a few pieces of legislation.

    The policy brief I referenced may be downloaded from KPI at A Five-Year Budget Plan for the State of Kansas: How to balance the budget and have healthy ending balances without tax increases or service reductions or alternatively from Scribd here (may work better on mobile devices). A press release from KPI announcing the policy brief is at 5 Year Budget Plan Outlines Path To Protect Essential Services and Tax Reform.

  • Newspaper editorialists with an ideology? Not in Kansas, surely.

    Newspaper editorialists with an ideology? Not in Kansas, surely.

    Caution, Kansas newspaper editorialists. Your ideology is showing.

    Seeking to minimize the fallout from this week’s elections in Kansas, Kansas City Star editorialist Yael T. Abouhalkah warns the governor that this election didn’t really mean much, after all. (See No, Sam Brownback, Kansans didn’t give you a mandate for more tax cuts.)

    This op-ed, like many others that appear in Kansas newspapers, are useful for exposing the ideologies of their writers. Here’s an example from Abouhalkah: “Already, the first round of tax cuts have cost the state hundreds of millions of dollars in anticipated revenues.”

    The corollary of this is that Kansans have saved hundreds of millions of dollars in taxes. That’s money that has stayed in the productive private sector. For those who believe that government spends wisely and efficiently, I can understand how they think there’s a problem. Everyone else thinks it’s an improvement.

    The only framework — ideology? — in which tax cuts are a cost to government is if we believe that government has first claim to citizens’ money. This is a difference in fundamental beliefs. There is an ideology expressed here, one that says government spending is more important than people and their property rights.

    Here’s something else from Abouhalkah’s keyboard:

    And things could get worse, because the state already is more than $40 million short of its expected revenues for the current fiscal year, which is one-third of the way over.

    What does that mean? Budget cuts are ahead, and public education would top the list, given the large amount of spending provided by the state.

    This is the standard plaint, also voiced by the editorial board of the Wichita Eagle. Because tax revenues are lower, budget cuts are ahead. Except by budget cuts, these advocates of government spending really mean to say that government services will be cut.

    It doesn’t have to be this way. There is a plan — a policy brief — for balancing the Kansas budget immediately. This plan fully funds the increases in school spending and social welfare caseloads that the non-partisan official state agency Kansas Legislative Research Department projects for the future.

    But there’s a problem.

    As they lambaste conservatives for blind adherence to ideology, the editorial writers at the Kansas City Star and Wichita Eagle have their own ideological blind spots. In particular, they’re not likely to read anything produced by Kansas Policy Institute, much less give it the consideration it deserves.

    Oh well. It’s all about the kids, after all.

    The policy brief I referenced may be downloaded from KPI at A Five-Year Budget Plan for the State of Kansas: How to balance the budget and have healthy ending balances without tax increases or service reductions or alternatively from Scribd here (may work better on mobile devices). A press release from KPI announcing the policy brief is at 5 Year Budget Plan Outlines Path To Protect Essential Services and Tax Reform.

  • What we can learn from the piano

    What we can learn from the piano

    The purchase of a piano by a Kansas school district teaches us a lesson. Instead of a system in which schools raise money voluntarily — a system in which customers are happy to buy, donors are happy to give, and schools are grateful to receive — we have strife.

    A Kansas City, Kansas school has spent $48,000 to purchase a new piano, replacing one in use for many years. Critics of school spending, even Governor Brownback, point to this as an example of school spending out of control. How can schools want more money, they say, if one school can spend $48,000 on a piano?

    We can learn a few things about our public schools from this.

    Piano piano-558452_1280First, there is no way to tell whether this purchase was wise. There are several reasons. First, the school is not spending its own money. The school is spending other people’s money, and in a near vacuum. It’s spending in circumstances that are not amenable to wise purchases. Milton Friedman has developed a grid of the ways that money may be spent. The purchase of the piano falls into category III, which is spending someone else’s money on yourself.

    Second, the school is spending this money in an uncompetitive environment. In Kansas, the public schools have a near-monopoly on the use of public funds for schools. No matter how bad the public schools may be, not matter how wasteful of funds, public schools know that parents have few alternatives. Yes, there are private schools in Kansas, but if parents choose them, they still have to pay the public schools. Who else can do that?

    Competition is important because it provides accountability. It provides a framework for making decisions about the allocation of resources. If we see, say, a grocery store spending lavishly on fixtures and furnishings, we may surmise that the store is trying to attract customers. The ultimate test of the strategy is profit. Do customers appreciate the store’s investment enough to shop there? If so, profits may be earned. If not, there will be losses, and store management has learned a lesson.

    Similarly, if Kansas public schools faced meaningful competition for students, schools would have a framework for making spending decisions, as well as for making many other decisions. But with no meaningful competition, Kansas schools are operating in the dark. They do not have the benefit of market competition and profit to let them know if they are making wise decisions as to the allocation of resources.

    Market competition is not competition like a life-and-death struggle in the jungle or sea, where the winners eat the losers. It is also not a contrived event, as is a sporting event. Instead, market competition refers to a discovery process, where through mountains of voluntary transactions we learn what works and what doesn’t. We don’t have that learning process in Kansas public schools.

    Kansas City school district spending. Click for larger version.
    Kansas City school district spending. Click for larger version.
    The purchase of the piano has also stimulated much rancorous debate. People are yelling at each other, and over the education of children. Instead of fighting and strife, we should be celebrating children, schools, and education. But that’s not the way government works. Money is taken through taxes. (I realize it’s considered impolite in some circles to say this, but taxes are taken by the threat of force.) Then tax money is spent by people who pretty much say “screw you” to taxpayers. That is the tone of an article written by the superintendent of the school district that bought the piano. The real problem, she contends, is that the people of Kansas are not taxed enough.
    Employment ratios in Kansas City schools. Click for larger version.
    Employment ratios in Kansas City schools. Click for larger version.
    No matter that spending per student in this school district is $15,388. That’s down from 2009 when it nearly touched $18,000, but much higher than the early years of this century when it was around $11,000. (These are inflation-adjusted, per student figures.) Employment ratios in this district have improved, and unspent fund balances, not including bond and capital funds, have risen.

    Unspent funds in Kansas City schools, not including bond and capital. Click for larger version.
    Unspent funds in Kansas City schools, not including bond and capital. Click for larger version.
    Despite these improvements, the Kansas City school superintendent says Kansans do not pay enough taxes to her schools. I get the sense that she wants to fight for more.

    Do we fight over which grocery store is best? Do we fight over how much to spend on building and operating grocery stores? No. People peacefully and freely choose the store they like. Sometimes they choose several stores at the same time.

    Civil society is dying. Instead of a system in which schools raise money voluntarily — a system in which customers are happy to buy, donors are happy to give, and schools are grateful to receive — we have strife. Instead of a Kansas school superintendent saying “thank you” to taxpayers for the new piano and $15,388 to spend each year on each student, we have something else. We have the gnashing of teeth, and that’s a shame.

  • To Kansas school spending advocates, criticism comes fast and loose

    As the debate over the funding of Kansas public schools goes on, sometimes facts get lost in the shuffle, and school spending advocates sometimes invent “facts” in order to score political points by criticizing those working to bring inconvenient facts to light.

    Besides spending advocates, journalists can get caught up in this. In a recent news story in the Hays Daily News, the paper reported a claim made by Linda Kenne, Victoria USD 432 superintendent. Here it is:

    One particular corporation seems to drive the efforts. Kenne said, “Koch Industries’ address is the same as the Kansas Policy Institute.” “Do you want the state to be owned by Koch Industries?” she asked.

    The reporter of this story, Dawne Leiker, quoted a government official who said something. I guess that constitutes news. But responsible reporting and journalism requires that there be at least some factual basis underlying the statement, or the reporter needs to say so. In this case, the facts are that the two organizations do not share the same address.

    It’s worth noting that Leiker writes for the leftist blogs Everyday Citizen and Kansas Free Press. At Everyday Citizen you may read her poem Ode to Conservatism, in which she likens conservatives to “pit bulls, bedecked with luscious lips” who are offended by the existence of poor people, and that opportunity goes to those who beg for it, presumably from rich conservatives.

    It’s tempting to feel a little empathy for school spending advocates like superintendent Kenne, as Kansas Policy Institute has uncovered and given publicity to large fund balances that schools could be using if they want to. And it’s not just KPI that says so. Kansas Deputy Commissioner of Schools Dale Dennis agrees.

    But that’s not an excuse for playing fast and loose with facts.

    Kenne may be taking her cue from the Kansas National Education Association (or KNEA, the teachers union). It, along with the Kansas Association of School Boards (KASB), is at the forefront of defending the status quo in Kansas public school spending — that being a rapid rise. Their lobbyists and publications also show little regard for facts when scoring political points by criticizing those who uncover facts inconvenient for them.

    As an example, a recent edition of “Under the Dome Today” referred to the “Kansas Policy Institute whose board of directors includes Koch Industries executives.” The facts are that of the members of the KPI Board of Trustees, two are former Koch industries employees. Neither has worked there for many years.

    Misreporting simple facts like this should give us reason to question the facts used to support their larger and more important arguments.

    Underlying this is the puzzle as to why Wichita-based Koch Industries is the subject of so much criticism from Kansas school spending advocates. With some 2,100 employees in Wichita and owning a large amount of property, Koch Industries and its employees pay many millions in taxes that go to school districts and other functions of government.

    The company is involved in other ways, too. In 1991, Charles and Elizabeth Koch founded (and a Koch Family Foundation continues to fund) Youth Entrepreneurs Kansas, which “teaches free enterprise fundamentals through hands-on experiences and encourages students to start their own business, enhance their business skills for future career opportunities and continue into higher education.” YEK is present in many Wichita and surrounding area public schools.

    As another example of Koch Foundation generosity, a page on the Wichita public school website tells of Education EDGE Koch Focus mini-grants given to support classroom projects in several areas.

    Further, a recent letter appearing in the Wichita Eagle told of this: “Thanks to the support of USD 259’s administration, the financial generosity of the Koch foundation, and the expertise of Gilder Lehrman and the Bill of Rights Institute, programs such as these are having a profound positive impact on history and civics education.”

    We need to carefully examine the facts and arguments advanced by school spending advocates. They could also learn to say “thank you” now and then.

  • A Return to republican (small “r”) government

    Writing from Miami, Florida

    Would you rather live in a republic or a democracy?

    In an article by the economist Walter E. Williams (Are we a republic or a democracy?) we discover the difference between a republic and a democracy:

    So what’s the difference between republican and democratic forms of government? John Adams captured the essence of the difference when he said, “You have rights antecedent to all earthly governments; rights that cannot be repealed or restrained by human laws; rights derived from the Great Legislator of the Universe.” Nothing in our Constitution suggests that government is a grantor of rights. Instead, government is a protector of rights.

    In recognition that it’s Congress that poses the greatest threat to our liberties, the framers used negative phrases against Congress throughout the Constitution such as: shall not abridge, infringe, deny, disparage, and shall not be violated, nor be denied. In a republican form of government, there is rule of law. All citizens, including government officials, are accountable to the same laws. Government power is limited and decentralized through a system of checks and balances. Government intervenes in civil society to protect its citizens against force and fraud but does not intervene in the cases of peaceable, voluntary exchange.

    Contrast the framers’ vision of a republic with that of a democracy. In a democracy, the majority rules either directly or through its elected representatives. As in a monarchy, the law is whatever the government determines it to be. Laws do not represent reason. They represent power. The restraint is upon the individual instead of government. Unlike that envisioned under a republican form of government, rights are seen as privileges and permissions that are granted by government and can be rescinded by government.

    I suppose that if you happen to hold the same beliefs as the majority in a democracy, you’re in a good position — unless you want to let others believe and live differently.

    Another good article by Dr. Williams on this subject is How to create conflict.

  • Kansas Legislator offers more rebuttal of Kansas Senate President Morris

    Recently Kansas Senate President Stephen Morris wrote an op-ed in which he explained the legislature’s reasons for passing a one cent per dollar increase in the statewide sales tax. That tax started on July 1. His piece may be read at State of the State KS.

    Not everyone agrees with Morris. Derrick Sontag of the Kansas Chapter of Americans for Prosperity weighed in at For Kansas Senate President Stephen Morris, raising taxes is responsible.

    Now Kansas House of Representatives member Steve Brunk, a Republican from Bel Aire, offers another rebuttal of Morris in his article Tax increase was neither necessary nor responsible.

    Brunk mentions two sources of revenue that could have been tapped to help the state make it through a shortfall: utilizing unused fund balances and selling a small portion of state-owned assets. Advocates of government spending opposed both proposals.

    Tax increase was neither necessary nor responsible

    By Steve Brunk

    In a recent editorial, “Legislature took responsible path,” State Senator Stephen Morris from Hugoton wanted to set the record straight regarding the final budget and tax increase enacted by the legislature for next year. He concluded that after listening to Kansans in every corner of the state the only responsible way to move forward was with a tax increase. He also stated that some lawmakers chose not to be part of the solution and are spreading false information to frighten Kansans.

    I would like to offer a different viewpoint.

    It’s true that during this recession the state faced revenue shortfalls from the proposed budgets approved by the Governor. But that doesn’t tell the whole story.

    Continue reading at Kansas Liberty

  • Rep. Steve Brunk on Kansas taxes and spending

    Speaking to the Wichita Pachyderm Club on Friday, Kansas Representative Steve Brunk (Republican from Bel Aire) addressed taxation and spending in Kansas government.

    Brunk said “We need more taxpayers, not more and higher taxes.” In evaluating legislation, he said he asks these questions: Does this help the state of Kansas bring companies to the state, and does it offer encouragement to companies already here?

    Kansas is usually just about in the middle of all states in ability to attract companies to the state. We should be able to better than that, and a way to do better is to reform our taxing environment.

    Some of our taxes should go away. The franchise tax is in the process of being phased out. That money is now available to make capital investment and create more jobs.

    The corporate income tax should be eliminated, he said. The death tax or inheritance tax is inherently unfair, as people should be able to pass their estates to heirs without being tax.

    Also, the capital gains tax is punitive, he said. It should be reduced or eliminated.

    “We need a low and predictable tax base, so that we can attract businesses to Kansas to provide jobs without having to offer special and unique incentives.”

    When revenues have increased in Kansas, we spent it rather than setting some aside in a rainy day fund. When revenues have not increased as quickly, it causes problems with the budget. Today, we’re probably facing a period of slow growth.

    Brunk showed a chart of Kansas spending as compared to the inflation rate. Spending increased much faster, almost four times faster, he said, adding that this is unsustainable.

    So Brunk has proposed what he termed a “speed limit.”

    The spending problem is due to Republicans and Democrats alike, although Brunk said Republicans are amateurs at spending compared to Democrats. Without Republican help, budgets could be passed. There is a core of about 55 or so conservatives in the Kansas House of Representatives. The rest of the House Republicans are willing to spend along with the Democrats.

    To this end, Brunk has proposed a constitutional amendment that he calls the REAL Act: Revenue and Expenditure and Assessment Limitations.

    One thing this act does, he says, is to limit the rate of growth of spending to the rate of inflation. This would force the state to prioritize what it spends on, and to take a look at finding excess spending. Existing programs would be reviewed.

    The REAL act would also limit the ability to increase taxes or start new taxes by requiring a two-thirds majority in the legislature.

    The REAL act also provides for a rainy day fund, sometimes called a budget stabilization fund. The money in this fund could be used only to stabilize the budget when revenue drops below the rate of inflation growth. After this fund is full, an emergency fund would be created and funded for dealing with disasters such as the Greensburg tornado or the southeast Kansas floods.

    We also need to avoid download state spending to counties, he said. There could be no mandates with accompanying funding.

    Turning to property taxes, Brunk mentioned Proposition K, an effort to stabilize property taxes. Introduced in this year’s legislative session, the measure was referred to a tax subcommittee that didn’t do much to advance the proposal. Based on feedback and concerns, he’s going to adjust Proposition K and introduce it again.

    Responding to a question from the audience, Brunk said that he conceptually likes the idea of a Fair Tax, a tax based on consumption rather than income or property ownership. Later, someone else asked, in jest, if an exemption for cigars could be part of a consumption tax law.

    Answering another question, Brunk said that a problem with Kansas budgeting is that we have “add-on” budgeting instead of zero-based budgeting. Each year agencies must justify not their entire budget, but only the additional amount that they’re asking for this year.

    Analysis

    The REAL Act, as described on The Kansas Real Act page, is much like the Taxpayer Bill of Rights proposals, in that it limits spending to inflation plus population growth. These measures are universally and vigorously attacked by government spending advocates such as teachers unions and public employee unions, as they, amongst others, live off of ever-increasing government spending.

    In my opinion, the components of the REAL act — limits on tax increases, the requirement of a supermajority to increase taxes, and a rainy day fund — are eminently sensible. Whether these measures can be passed as a package as a constitutional amendment is difficult to answer. In Kansas, such amendments require passage by two-thirds of the Kansas House and Senate, and then by a majority vote of the people. Action by the governor is not required, not can the governor block an amendment, except through persuasion of the legislature or the people.

    An amendment to the constitution is required for any laws of this type to be truly effective. Kansas law already requires that the state hold ending balances of 7.5% in its funds. But each year the legislature decides to waive or ignore this law. That can’t be done, to my knowledge, to measures that exist in the constitution. Similarly, the Kansas Supreme Court can’t overrule the constitution and order the legislature to take action, as it has done with K-12 school spending.

    The difficulty in passing clear and coherent laws was illustrated by the question about the exemption for cigars. Although proposed in jest, there will be constituencies that will be quite serious about exemptions to nearly any law that is passed.

  • Thoughts on Constitution Day

    Although Constitution Day has passed for this year, the article below contains important ideas for us to remember every day of the year. Thank you to Al Terwelp of Overbrook for authoring this submission. I apologize for missing it on Constitution Day.

    Thoughts on Constitution Day

    Today, September 17, is a little-remembered date in Kansas and arguably a day that eclipses even Independence Day in significance. On this day in 1787, occurred the signing of the U.S. Constitution. Not since the Magna Carta, (June 15, 1215) had there been such a progression by the purpose, mind and hand of mankind to peacefully join together to complete for themselves and their heirs guarantees of security against oppression.

    After the Revolutionary War was newly won our infant nation soon became adrift. Shey’s Rebellion in 1786 was evidence that we needed to jealously protect liberty and build a strong self government requiring secure checks and balances. The founders wanted a Republic ruled by law and purposefully avoided the tyranny of a superior few found in a monarchy or oligarchy and the overbearing force of the mob majority in a democracy.

    Unsatisfied with the Constitution’s original shortcomings and flaws, in 1789 anti-federalists and James Madison would introduce additional safeguards to the rights of man in a series of ten articles known as the Bill of Rights and would ultimately lead to the successfully completed ratification of the Constitution in 1790. Our Constitution has since been continually improved by a total of 27 amendments and has survived many challenges to become a near perfect example of governance and reference to human conduct. The result is the most unlikely, rare, opportunity and achievement in the chronicle of humankind.

    The American State Papers, (Declaration of Independence, Articles of Confederation, Constitution, Bill of Rights, Amendments), are a clearly written exhibition of the virtues given to us by our creator. This acquired and instilled virtue is infused via the action of our Constitutional laws thus additionally preserving and fostering it in our citizens. No government through its temporal laws can make good citizens. We have free will. Neither was the Constitution’s intention to create laws that forbid all vices in men. Why should it. Our Constitution does however, dictate reason and facilitate the virtue by which we chose to be governed thus habitualizing good behavior in the people.

    Lovers of liberty see the virtue in our founding documents and the advantage that exists in being obedient to reason. The Constitution’s chain of reasoning serves as our foundation of principles and the intellectual origins which guide the destinies of our lives. Like the Ten Commandments, the Constitution provides us knowledge that proceeds from theoretical deduction and gives us simple black and white reference points to be used as a compass star to pilot a world of complex, confusing, gray issues.

    The Constitution and the other state papers are also established and accepted statements of a new system of knowledge. One based not only on legal rights and human laws but on natural rights, natural laws and their demonstrated conclusions. All people are born with these universal rights and they are not contingent on human law or acquired from government. These are the truths that Jefferson held to be self-evident and unalienable. These endorsements of truth give us not only knowledge about a belief, but continually communicate to us when to hold a belief to be true. This unsurrenderable document that framed laws by men not perfect in virtue is much more than a contract from which government limits and derives its authority. Its words ultimately bind us in conscience from a higher eternal law.

  • Social Security trust fund: a problem in disguise

    A situation that must be resolved soon first requires some understanding and an honest assessment of the facts: Social Security and its trust fund.

    Over the years, the Social Security Administration has collected more in payroll taxes than it has needed to spend on benefits. (Last year that wasn’t the case.) The surplus represents the trust fund.

    But there is disagreement as to the economic meaning of the trust fund. From a naive and uncritical accounting perspective, there seems to be no problem. SSA purchases a special series of bonds from the U.S. Treasury, and these bonds make up the investments of the trust fund. What could go wrong with holding government bonds?

    To answer that question, we have to look at what the government did with the proceeds of selling the bonds. The answer is that government spent the money. There are no bills in a vault. There are no bank deposits. There is only the promise of the U.S. Government to repay the bonds when the SSA needs them. A recent publication by Veronique de Rugy and Jason J. Fichtner of the Mercatus Center (Can We Trust the Social Security Trust Funds?) explains:

    However, the way the federal government accounts for the trust funds masks the true size of costs passing on to future generations. While bonds are real assets to the private market, future generations of taxpayers or borrowers will have to cover the future redemptions of bonds issued today because the federal government has used the money it has received from Social Security to pay for education, wars, and other items. In other words, the government has already spent the money it received in exchange for the IOUs. This is explained in the president’s 2011 federal budget: “The existence of large trust fund balances, therefore, does not, by itself, increase the government’s ability to pay benefits.” (emphasis added)

    But not everyone believes or understands the meaning of having spent the money in the trust fund. The SSA itself seems to, at least a little bit. A document titled Trust Fund FAQs produced by the SSA states: “As stated above, money flowing into the trust funds is invested in U.S. Government securities. Because the government spends this borrowed cash, some people see the current increase in the trust fund assets as an accumulation of securities that the government will be unable to make good on in the future.” So here we have the U.S. Government admitting that the money in the trust fund has been spent.

    So is this a problem? No, says the SSA as it continues: “Far from being ‘worthless IOUs,’ the investments held by the trust funds are backed by the full faith and credit of the U.S. Government.” What the SSA doesn’t tell us here — and it’s not really its job to do so — is that the way these investments will be repaid is by one of three means: more taxes, less spending, or more borrowing.

    It’s good to see the federal government at least starting to recognize the truth behind the trust fund, even if it can’t bring itself to recognize its implication. Most liberal — “progressive,” excuse me — organizations refuse to see the truth. An example is The Center for American Progress, which produced a 72-page report last December titled Building It Up, Not Tearing It Down: A Progressive Approach to Strengthening Social Security. The document mentions the trust fund many times and that the fund is invested in safe government bonds. Never does the report mention that these funds have already been spent on something other than Social Security benefits.

    I can understand how CAP doesn’t want to mention this. The funds have been spent — under both Republican and Democratic administrations — to support the government spending programs that CAP supports. The fact that the spent funds in the trust fund will have to be paid back, possibly through higher taxes? High taxes and progressive taxation don’t bother CAP — that’s its platform.

    Paul Krugman of the New York Times also doesn’t think the trust fund presents a problem: “The Social Security system won’t be in trouble: it will, in fact, still have a growing trust fund, because of the interest that the trust earns on its accumulated surplus. The only way Social Security gets in trouble is if Congress votes not to honor U.S. government bonds held by Social Security. That’s not going to happen.”

    And how does Congress honor the bonds? More taxes, less spending, or more borrowing. Or some combination.

    This is the future we face if we don’t recognize the problem and take steps to start reform now.

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