Governor Rick Perry of Texas is being attacked by two rivals in the GOP presidential race. His sin, if you can believe it, is that he told the truth (as acknowledged by everyone from Paul Krugman to Milton Friedman) about Social Security being a Ponzi scheme.
Here’s an excerpt from Philip Klein’s column in the Examiner, looking at how Mitt Romney is criticizing Perry.
Mitt Romney doubled down on his attack against Texas Gov. Rick Perry this afternoon, warning in an interview with Sean Hannity that his critique of Social Security amounted to “terrible politics” that would cost Republicans the election. Romney’s decision to pile on suggests that he’s willing to play the “granny card” against Perry if it will help him get elected, a tactic more becoming of the likes of DNC chairwoman Debbie Wasserman Schultz than a potential Republican nominee.
And here’s a Byron York column from the Examiner looking at how Michele Bachmann is taking the same approach.
…another Republican rival, Michele Bachmann, is preparing to hit Perry on the same issue. “Bernie Madoff deals with Ponzi schemes, not the grandparents of America,” says a Bachmann adviser. “Clearly she feels differently about the value of Social Security than Gov. Perry does. She believes Social Security needs to be saved, that it’s an important safety net for Americans who have paid into it all their lives.” … “She strongly disagrees with his position on that…”
Shame on Romney and Bachmann. With an inflation-adjusted long-run shortfall of about $28 trillion, Social Security is a Ponzi scheme on steroids.
But as I explain in this video, that’s just part of the problem. The program also is a terrible deal for workers, particularly young people and minorities.
Here’s what’s so frustrating. Romney and Bachmann almost certainly understand that Social Security is actuarially bankrupt. And they probably realize that personal retirement accounts are the only long-run answer.
But they’re letting political ambition lure them into saying things that they know are not true. Why? Because they think Perry will lose votes and they can improve their respective chances of getting the GOP nomination.
Sounds like a smart approach, assuming truth and morality don’t matter.
But here’s what’s so ironic. The Romney and Bachmann strategy is only astute if Social Security is sacrosanct and personal accounts are political poison.
But as I noted last year, the American public supports personal accounts by a hefty margin. And former President Bush won two elections while supporting Social Security reform. And election-day polls confirmed that voters supported personal accounts.
I’m not a political scientist, so maybe something has changed, but I wouldn’t be surprised if Perry benefited from the left-wing demagoguery being utilized by Romney and Bachmann.
P.S. This does not mean Perry has the right answer. As far as I know, he hasn’t endorsed personal accounts. But at least he’s telling the truth about Social Security being unsustainable.
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On a more serous note, I would not call Social Security a generalized Ponzi Scheme. It is only a Ponzi scheme for the first generation that voted itself the benefit and received 4x,10x,100x their initial investment — for some apparently, merely the effort to get out of bed and go vote for FDR — and the last generation at the back end, which will remain empty handed when the program runs out of money. Of course, that will only happen if Social Security is terminated abruptly – which is how I interpret Michelle Bachman’s comment about following through and granting some substantial portion of benefits for those unfortunate enough to be already significantly vested into the entitlement. The idea to spread out the deception of the first generation to a few sunset generations at the end, as the program fades away, does not seem unreasonable – which is what Michelle Bachman may be referring to when she says that those who have already contributed significant sums must at least get some significant portion of promised benefits. Otherwise the moral hazard of broken promises may be even worse than the cure (or will it?)
Now as far as Romney goes, he IS the pragmatist, who in essence says that there is no way in hell that Americans will avoid the fate of Francification, so he might as well be elected and preside over the sunset Crony Capitalism / Final Redistribution years of the once prosperous empire — the same philosophy he used as Massachusetts Governor.
So, alas, none of the Perry or Bachman scenarios will transpire. There will be no time for all that. America’s path to Francification is now firmly rooted. An indication of that, is that the Ryan Plan – which was a plan by no means sufficient to enshrine American excellence, but merely a path that gave American exceptionalism a fair chance of survival – was soundly rejected by the American People. Americans have set enough of Mitchell’s law into motion to make any real corrective action impossible — and thus their once enviable status of top prosperity is now doomed.
So Americans are now in the relative calm phase where they are simply awaiting the fundamental economic arithmetic of decreased incentives to produce to come to a head, probably through a series of crises that will take them to their terminal near-inert state of Francification. The crises are just around the corner scheduled to appear out of the blue as unfair calamities to be blamed for the unjust decline of a once prosperous nation.
More specifically, the Increased Borrowing Costs Spiral of Decline may be just around the corner. As the Stimuli I, II, III.. QE 1,2,3,…, Prime Rate Zero, Industry Nationalization, Bailout etc. Krugmanesque high trans-fat free-lunch debt dam finally breaks, and borrowing costs start spiraling. As our creditors realize that there just is no possible scenario left under which America maintains the virtuous cycle of most prosperous nation supported by unaffected incentives to produce — there will be little time to react. Certainly as the country reaches a fiscal brick wall, the crisis will be (or promoted to be) the least appropriate time for long term 5 year liberalization plans that will increase incentives to produce and lift America out of the crisis through growth, thus maintaining the unique position of 6x average world citizen prosperity that Americans now enjoy — have become accustomed to — take for granted — and think will last forever – even if they copy the naturally human, irresistible and stagnant socioeconomic environments of Europe.
…all that if collectivism does not bring something much worse, as it did in Europe and the world in 1914 and 1939 — even before the earth gains another calamitous 0.5C in temperature.
One aspect that is seldom mentioned is that Social security is a scheme where the unlucky short-lived are forced to subsidize the lucky long-lived. So if you are unlucky enough to die before collecting a penny, you also die knowing that those lucky longer-lived also took your money on their Caribbean cruise.
Give me 20 extra years of life and I’ll happily live them in Bohemian poverty. I’ll use them to finally read all those great copyright-expired classics of literature that mankind has produced over the millennia. Heck, I’ll even read the works of great French Socialist thinkers — or would that be premature purgatory?
Ponzi scheme? No, though one way to fix it would be to demote the benefits of those underperforming retiree associates who fail to bring at least two offsprings into the arrangement during their reproductive years …
Perry is the only one who has the fortitude to tell us the truth. I am on SS, but I still think he is right to tell it like it is. I admire him for that. I hope he does more of this. Americans are pining for a president who isn’t afraid to tell the truth and who does not want to compromise on conservative principals.
In the 1980s, the duopoly devised a scheme to “save” social security: they would collect a surplus from the worker and his boss over what was paid out in benefits (the Ponzi) and “invest” this “surplus” in US Government Treasury bonds.
Naturally, the mealy mouths in the Congress spent every penny of the surplus on everything from battleships to honey production and then placed a Treasury IOU in the Social Security “lockbox.” Baby Boomers, click HERE to see a photo of the actual “lockbox” where the IOUs that define your future are kept.
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