Resources to Help Paul Krugman Understand the Cost of Delay
In his blog this weekend, Paul Krugman suggested the cost of waiting to address our mounting national debt is relatively minor. He asks “why, exactly, is [cutting future entitlement costs] something that must be done immediately? If you state the supposed logic, it seems to be that to avoid future benefit cuts, we must cut future benefits. I’ve asked for further clarification many times, and never gotten it.”
Well Paul, we promise to provide you some clarification as to why, in the words of CBO Director Douglas Elmendorf, “There is certainly a cost to waiting.”
While we are working on this clarification, however, we thought Krugman might benefit from prior explanations on the cost of waiting to address the debt and reform Social Security from us and others. We recommend the following readings:
- Congressional Budget Office (CBO), Economic Impacts of Waiting to Resolve the Long-Term Budget Imbalance
- Committee for a Responsible Federal Budget (CRFB), Quantifying the Cost of Waiting to Address the Debt
- Congressional Budget Office (CBO), The 2014 Long-Term Budget Outlook (pages 11-13)
- The Social Security Trustees, The 2014 Annual Trustees Report (pages 23-25)
- Committee for a Responsible Federal Budget (CRFB), Social Security Reform and the Cost of Delay
The reports show that the costs of inaction accumulate over time, with delayed action requiring changes that are larger, more painful, and more disruptive.
We’ll explain costs of delay in more detail soon. But it is clear that those who believe that the primary reason to act now is based on the logic “that to avoid future benefit cuts, we must cut future benefits” simply don’t appreciate the serious costs of waiting.