Yes, of course they edited it but in the end I gave my approval or nothing would have been in. Here is the original:

Dear Sir,

How curious it is that the New York Times continues to run serial rants replete with inaccuracies and invective by Paul Krugman against Social Security reform and those who advocate individual accounts while only rarely allowing reformers a say on the op-ed page. What is the New York Times afraid of – a debate?

The Cato Institute certainly isn’t. That is why Michael Tanner, the director of the institute’s Project on Social Security Choice, accepted with alacrity the offer to debate Mr. Krugman on March 15 at an event hosted by the New York Society for Ethical Culture.

There Mr. Tanner will explain why Mr. Krugman is talking through his hat when he claims that Cato is unprepared to explain transition costs or how the reformed system would work. Mr. Krugman has need of the lesson because apparently he has neglected to read more than 20 years of detailed scholarship on the subject undertaken by Cato scholars.

I suppose Mr. Krugman’s neglect is hardly surprising since he seems oblivious of what is reported in the news pages of his own newspaper

The merits of individual accounts are indisputable and the intellectual argument for reform is compelling. That is unless, of course, you agree with Mr. Krugman that it is sensible to push payroll taxes ever higher, deprive Americans of better returns on their retirement savings and refuse to accept the principle that people have the right of ownership over what they pay into Social Security.

In his rant published on February 25 he sought to link Cato to a bigoted commercial put out by the USA Next group that in his words, accuses AARP, the anti-reform seniors organization, of being an “anti-solider, pro-gay marriage leftist front.” The day before Mr. Krugman’s column ran Mr. Tanner was quoted in the New York Times condemning the ad.

Social Security reform with individual accounts has great appeal for minorities and gays and women – indeed for all Americans. The debate over Social Security choice presents a great opportunity for political bridge-building and for gays and ethnic minorities to feel included in the national discussion. Those who seek to engage in the destructive politics of division, including Mr. Krugman, are doing a great disservice to the nation.

Jamie Dettmer
Director of Communications
Cato Institute
Washington DC.

Update... Reader Keith Mitchell chimes in:

Cheater...

You should have posted the Cato Institute's home page at http://www.cato.org/.

And yes, it takes exactly 2 clicks for those able to read English to get to 18 articles/position papers dealing with Transition Financing. One click on that link over on the left that says "Reforming Social Security" under HOT TOPICS. Then another click on "Transition Financing" under BROWSE BY TOPIC.

I got copied on this very interesting letter from Joseph Mann:

Dear Mr. Krugman,

I am the sole owner and manager of a 70-plus-year-old life insurance company that specializes in annuities. I’m looking for others to get in on the ground floor of this fantastic initial public offering and I’m starting with you since you might just help me spread the word; you’re one of the best salesman I know.

A very general business overview:

I offer annuities to my clients that begin payouts once they reach their mid sixties as long as they have made 10 years worth of premium payments before reaching the ‘payout’ age. The 10 years premium payments can be made during any time span and do not have to be made in consecutive years.

The law is on my side and requires that everyone becomes a client, so marketing and revenue do not seem to be an issue…more on this later. Clients that have not reached the ‘magical age’ will be sending me premium payments that are used to payout to my current clients that have reached the ‘magical age’. In fact, the premiums that I collect exceed the amount that I have to pay out to my clients and the operating costs of my business – let’s call this the surplus.

Since I am the lone shareholder I have no need to payout dividends or concern myself with share price appreciation. Besides, that’s not my goal or ambition. Here’s what I do do though…my company ‘special issues’ bonds and does not offer them for sale to anyone except me. So, my company uses the surplus money collected from client premiums (after paying current beneficiaries and operating costs) and buys the bonds that my very own company ‘special issued’. Neat trick, huh? Next, I take the now ‘freed-up’ money and I just simply give it away to charity. That’s right; just give it away! It feels so good to give in fact that I have no need to be concerned with share price appreciation because my reward comes from knowing that I will be liked. This charitable giving generates great PR for me and takes care of the marketing. Amazingly, the face value of the bonds that I ‘special issue’ correspond almost identically to the value of the premium surplus amount. These bonds do pay interest but as long as the premiums exceed the benefits then I’m cool. And, as an added bonus, I can raise the premiums any time I want to and, since it’s compulsory, the clients will pay it.

A little more general background:

- Like I’ve stated, the company has been in business over seventy years and I’m the fourth-generation owner.

- My company’s actuaries have made plenty of recommendations over the years regarding the mortality tables and disturbing demographic trends but I just generally ignore what they’re telling me. It’s all about customer service here!

- Over the years the company has increased the required percentage amount of the premium that must be contributed – the increase has been well over 1000%. The premium that the client pays depends on the amount of income that they make. It’s a little more complicated than that though but perhaps you’ve seen it…I know that you are a client of mine.

- The benefit payments to my ‘magical-aged’ clients are indexed to wage growth and not to consumer prices growth. Every time I consider changing that, they gnash their teeth and wail. I cannot afford to have my ‘magical-aged’ clients mad at me…it’s all about customer service.

So, are you interested in becoming part owner? If you don’t mind I’d rather not show you any of my financial reports; can’t you just ‘trust’ me on this one?

How many shares should I pencil you in for, Paul?

Parker had to think hard when asked if there was anyone on the contemporary scene capable of carrying on Galbraith's legacy.

He rattled off the names of several well-known economists — Paul Krugman, who writes for the New York Times; Jeffrey Sachs, who heads the United Nations' Millennium Project, and Nobel laureate Joseph Stiglitz — but admitted that none has Galbraith's stature or vision.

Then he settled on an unlikely candidate. "You know, I think the cultural equivalent today would be (Irish rock star) Bono," he said. "When I look at the causes a 30-year-old Galbraith would be drawn to today, he is the one speaking out."

Parker is not sure his buttoned-down students at Harvard are listening.

The Cato Institute and the Heritage Foundation have spent decades campaigning for privatization. Yet they weren't ready to answer even the most obvious questions about how it would work - like how benefits could be maintained for older Americans without a dangerous increase in debt.

Here's Cato's response:

To the Editor:

Paul Krugman is talking through his hat when he claims that the Cato Institute is unprepared to explain Social Security transition costs or how the reformed system would work ("Kansas on My Mind," column, Feb. 25). Hasn't he read more than 20 years of detailed scholarship on the subject undertaken by Cato scholars?

The merits of individual accounts are indisputable, and the intellectual argument for reform is compelling. That is unless, of course, you agree with Mr. Krugman that it is sensible to push payroll taxes ever higher, deprive Americans of better returns on their retirement savings and refuse to accept the principle that people have the right of ownership over what they pay into Social Security.

Jamie Dettmer
Washington, Feb. 25, 2005
The writer is director of communications, Cato Institute.

March 3rd, 2005 - WASHINGTON, D.C. – U.S. Senate Majority Leader Bill Frist, M.D. (R-TN) today made the following statement on the Senate floor regarding Social Security reform:

"Social Security is a critically important program which serves as the cornerstone of support for senior citizens. But it now faces challenges that threaten its long-term stability and well-being. The facts are crystal clear. They're grounded in demographics that were defined two generations ago, and those demographics can't be changed.

"In three years the baby boomers arrive on the Social Security rolls. That will begin a 30 year period where we're going to have a doubling of the number of seniors compared to what it is today – up to 77 million Americans who will begin to collect Social Security benefits.

"Meanwhile, there are fewer and fewer workers paying into the system, a fact that is also driven by demographics. Forty years ago we had 16 people paying in for every retiree. Today, we have three people paying in for every retiree. Those are the facts, and the facts simply cannot be changed.

"This President and this Congress are facing this challenge and the challenge is to fix Social Security for seniors, for near retirees, and for the next generation. We need to do it this year. Not next year, but this year.

"Our majority has worked aggressively and thoroughly to fully understand the nature of the problem. We've worked hard to begin to engage the American people in a dialogue about the program. We've had town meetings all across the country. We talk about social security in our conferences. We are interacting with administration officials. We have interacted with leading experts on the Social Security system. And our members are hard at work to fix the underlying problems at the heart of the challenge in this 70 year old program.

"Mr. President, my colleagues and the President agree that retirees and near-retirees will not see benefit changes.

"We also agree that we must harness the power of the market and give younger Americans the choice of personal retirement accounts whose rate of growth, and ultimately rate of benefits, will grow faster than traditional Social Security.

"And finally, we all agree that all ideas should be on the table. It is too early for people to be drawing rigid lines in the sand and, thus, we would encourage people to continue the discussion, the debate, and the understanding of the issue and not put it off to the future.

"For those who insist there is no problem, I simply say, look at the facts. And as people increasingly look at the facts, and we're seeing the response around the country, people see that the problem is real, that it is significant, and that it is growing.

"For those who say we don't need to take action, if you have a problem that's growing, it's much easier to act now to cure the problem than it is to have radical surgery in the future. We need to explore the solutions to the problem and in a free and public debate. And we need to put those ideas to a vote. Ultimately, the people must judge.

"I say all of this to let the people know that our majority is hard at work every day on this vital issue. We are in ongoing consultation with the administration and with the House of Representatives. And we will continue to bring before the Senate meaningful solutions that will make a difference in the lives of our seniors.

"The assurances of Social Security should be guaranteed. To be able to guarantee those assurances, we must diagnose the problem and then we must act. We must govern with meaningful solutions, and that is exactly what this Congress will do.

"Mr. President, I yield the floor."

Like so many other Internet start-ups, MoveOn has raised -- and burned through -- tens of millions of dollars, innovating without producing many concrete results. Any reasonable analysis shows its stock may be dangerously overvalued. Those banking on MoveOn had better hope it is more Google than Pets.com. Because should the group flame out, the Democrats could be in for a fall of Nasdaq proportions.

It's in the nature of an opinion writer to advance arguments, and sometimes to generate opposition. But a good opinion writer deals with the arguments of those with whom he disagrees fully and fairly, then goes on to explain the merits of his position. Tierney's record, at least when he addresses major national policy issues -- which are what, presumably, he'd be focusing on for the Times op-ed page -- suggests a different modus operandi.

The Times famously gives its op-ed columnists a large degree of leeway. That's why the job requires someone who has demonstrated a willingness to deal genuinely with opponents' arguments. Tierney is an innovative and an engaging writer, but that sort of honest deliberation doesn't appear to be his strong suit.

Thanks to reader Jameson Campaigne for the link.

Posted by Donald L. Luskin at 10:11 PM | link  

Posted by Donald L. Luskin at 7:35 PM | link