The cost of doing nothing: future growth

Don Luskin

Holman Jenkins makes a chilling point in his Wall Street Journal column this morning. He recalls Alan Greenspan's recent Senate testimony, in which the maestro expressed prudent concern for how the bond market would respond to making some the debt implicit in Social Security's unfunded liabilities into explicit bonded debt. Holman wonders, though, how the bond market will react if we do nothing!

"So where are we now? Interest rates remain near historic lows despite a growing deficit and a massive overhang of old-age liabilities. Others shouldn't be reluctant to interpret this, even if Mr. Greenspan is: What the bond market is telling us is that the penalty for Washington failing to tackle entitlements would not be higher inflation and higher interest rates, but higher taxes and lower economic growth."
 

Posted by Don Luskin on March 2, 2005 8:50 AM to Social Security Choice