February 07, 2005, 9:38 a.m.
An Off-track Rowback of the Clawback
The Paul Krugman Social Security madness continues.

Shortly following our vivisection of Paul Krugman’s New York Times column last Friday, America’s most dangerous liberal pundit was forced to run a lengthy correction of his errors about President Bush’s Social Security reform proposal.

But did Krugman have the integrity to run it on the pages of America’s “paper of record”? No. Instead he ran it as a letter to the ultra-leftist blogger “Atrios,” signed with the name “P. K.” How classy, how brave — a pseudonymous letter to a pseudonymous blogger.

And was Krugman man enough to admit he’d made a mistake? No. Instead, he began his correction,

My column this morning wasn’t the finest — sometimes the magic works, sometimes it doesn’t.

What Krugman means by “sometimes the magic works” is that, usually, he can get away with it — the lies, distortions, errors, and misquotations — or at least get away with it in the adoring eyes of his angry liberal readers. What he means by “sometimes it doesn’t” is that, every once in a while, the Krugman Truth Squad nails him so totally dead to rights that he has no choice but to deal with it.

Krugman’s error in this latest case was to grotesquely mischaracterize the benefit offset provision in the president’s Social Security personal-account proposal. This is the provision that would require those who opt for a personal account to forgo some of their regular benefits. It’s simply a trade-off — and it’s necessary to prevent double-dipping by both having a personal account and drawing full benefits. But instead of reading the White House briefing on how the provision really works, Krugman relied on a deeply flawed Washington Post story that was later substantially corrected. So Krugman ended up characterizing the benefit offset as a “loan” that would encourage “speculation on margin,” even going so far as to quote a passage in the Post story that had been deleted from the corrected version.

“P. K.” didn’t have the guts to acknowledge any of those specific errors in his letter to “Atrios.” Instead, his correction took the form of what Times public editor Dan Okrent calls a “rowback”. This is when a new-and-improved version is offered without reference to the errors in the original. Never mind the magnitude of the policy decision at stake here. By resorting to a face-saving rowback, Krugman “didn’t have to admit to a mistake; to do the right thing, all he had to do was ‘clarify’ his previous remarks. … But isn’t it worth accepting some brief personal embarrassment in order to head off a looming policy disaster that you yourself have helped create? Apparently not.”

That quotation, by the way, comes from Krugman’s excoriation in the Times of Alan Greenspan for not admitting error in endorsing Bush’s 2001 tax cuts.

But in “clarifying” his most recent remarks Krugman has made even more errors.

In his letter to Atrios, Krugman offers “a better explanation of how the clawback works.” But the benefit offset option is not a “clawback” at all, any more than it is a “loan.” The word “clawback” is another error from the original version of the Washington Post story — the term is eliminated from the corrected version.

The president’s plan would be a clawback if profits in your Social Security personal account above a certain level were recaptured by the government. Suppose, for example, your personal account earned a return of 50 percent. A clawback provision would only let you keep the return up to some maximum, say 35 percent (the difference of 15 percent would go to the government). Obviously such a provision would take away much of the incentive to have a personal account in the first place.

But there is, in fact, no clawback mechanism whatsoever in the president’s proposal. None. The holder of a Social Security account would be able to keep every single penny of earnings, from first to last.

Why won’t Krugman correct his errors honestly on the pages the New York Times? In part it’s because many of Krugman’s errors aren’t errors at all — they are deliberate lies and distortions. And in part it’s because Krugman has an “infallibility complex,” an “inability to admit ever making a mistake” — as Krugman himself once said of the Bush administration.

But this episode is just as much the Times’s fault. Krugman knows that his bosses on the editorial page — Gail Collins and public editor Dan Okrent — don’t dare or won’t bother to challenge him. I know from corresponding with Okrent that whenever there’s a complaint from a critic like me, Krugman just stonewalls Collins and Collins just stonewalls Okrent.

For this reason I no longer bother to send e-mails to Okrent, who seems rather deluded over at the Times. He recently wrote,

The Op-Ed columnists for the first time operate under a formal corrections policy, and if you haven’t been seeing tons of corrections on the page, it may be for the best of reasons: judging by the shrinking volume of complaints I receive from readers, columnists’ errors have become much less frequent.

I made an exception in this case and e-mailed Okrent. I wanted to be sure he knows that the Times’s “formal corrections policy” permits op-ed columnists to quote errors from other newspapers — including errors that are subsequently corrected in those papers — and to deal with such mistakes with nothing more than a rowback on an idiot-fringe leftist website.

But I don’t expect to hear back from Okrent. And I certainly don’t expect to see Paul Krugman do the honorable thing and correct his errors in the pages of what was once America’s newspaper of record.

— Donald Luskin is chief investment officer of Trend Macrolytics LLC, an independent economics and investment-research firm. He welcomes your visit to his blog and your comments at don@trendmacro.com.