I won't argue here with his general rant on Bush's plans for Social Security. There are many others who defend the overhaul who know much more than I about the topic. But when he starts talking about Argentina, his ignorance becomes clear.
Add borrowing for privatization to the mix, and the budget deficit might well exceed 8 percent of G.D.P. at some time during the next decade. That's a deficit that would make Carlos Menem's Argentina look like a model of responsibility.In other words, if we ever were to have a deficit like Argentina's we'd be up sh*ts creek. Well guess what Dick Tracy, the U.S. has always had a larger deficit as a percentage of GDP than Argentina.
The (Argentine - ed.) budget goes from a surplus of $2.7 billion pesos (1.2 percent of GDP) in 1993 to a deficit of $6.8 billion (2.4 percent of GDP) in 2000. This is a significant change in the government's fiscal position, although it is worth emphasizing that a deficit of 2.4 percent of GDP, the largest in this period, is still relatively modest for a nation in a deep recession, with more than 16 percent unemployment. For comparison, the United States ran a budget deficit amounting to 4.7 percent of our economy (or GDP) coming out of the last recession; 1983, at the end of a more serious downturn, the deficit was 6 percent of GDP.So how come we don't have 15% unemployment and a 50% poverty rate Professor Krugman? Doesnt a large deficit mean disaster? Guess not.
Just ask the Argentines: their version of Social Security privatization was also supposed to save money in the long run, but all it did was move forward the date of their crisis.To blame Argentina's economic crisis directly on the partial privatization of their pension system is ridiculous. There are so many other causes it's almost hard to keep track....the 1998 collapse of several currencies in Asia, political instability, dwindling foreign investments, IMF/World Bank restrictions, implacable labor unions and government corruption in general.
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