Republican Debate: Some Quick Reactions
Tonight's was the first Republican primary debate I watched start to finish. My bottom line is that, based on this performance, only Mitt Romney and Jon Huntsman looked like viable candidates in the general election. I was underwhelmed by Rick Perry, and sadly disappointed in the discussion of Social Security as a Ponzi scheme. There is a difference between a Ponzi scheme and a pay-as-you-go system. The Social Security Administration provides a very clear explanation here. The key excerpt:
There is a superficial analogy between pyramid or Ponzi schemes and pay-as-you-go programs in that in both money from later participants goes to pay the benefits of earlier participants. But that is where the similarity ends. A pay-as-you-go system can be visualized as a simple pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end.
So we could image that at any given time there might be, say, 40 million people receiving benefits at the back end of the pipeline; and as long as we had 40 million people paying taxes in the front end of the pipe, the program could be sustained forever. It does not require a doubling of participants every time a payment is made to a current beneficiary, or a geometric increase in the number of participants. (There does not have to be precisely the same number of workers and beneficiaries at a given time--there just needs to be a fairly stable relationship between the two.) As long as the amount of money coming in the front end of the pipe maintains a rough balance with the money paid out, the system can continue forever. There is no unsustainable progression driving the mechanism of a pay-as-you-go pension system and so it is not a pyramid or Ponzi scheme.
The problem with Social Security is that over the long-term, the flow into the pipeline is projected to be less than the flow out of the pipeline. Republican candidates should have been talking about ways to gradually phase in progressive reductions in that outflow to match the inflow. If instead they want to fix the projected imbalance with new revenues, they should have been talking about ways to separate that money from the rest of the government's budget with personal accounts.
In case anyone cared about the facts ...
ON SS deficits
I was reading the coda of Alter's A Defining Moment on the original SS bill, and it said at that time they thought that SS would have financial trouble about 1980, and it turns out they were about right on that one. Of course no one thought we would ever get into the demographic situation we are in now, that population would continue to increase. (The thirties had low birth rate but that was thought to be due to the economy, now other factors have come up).
"Republican candidates should
"Republican candidates should have been talking about ways to gradually phase in progressive reductions in that outflow to match the inflow."
That's certainly one option. Another would be gradually phasing in progressive increases in the inflow to match the outflow--for example, by raising the payroll tax cap. I know this is anathema to Republicans because (freedom!!1!! Reagan!! 9/11!! job-creators!1! drillbabydrill!!1!). But it is, logically, an option.
Nothing new since early
Nothing new since early Reagan.
Big government bad.
SS is socialism which like communism is contrary to liberty.
There are "leeches" on the body politic.
Regulations cause financial ruin, not greed.
All old and all a scam.
Truth will get in the way of Reagan thought.
In case anyone cared about
In case anyone cared about the facts ...
HAHAHAHAHAH! Dude, this was a Republican primary debate. The people they are pandering to are delusional moral and intellectual degenerates that don't even believe that such things as "facts"--i.e., objectively verifiable true statements about the world outside of their own minds--*exist*.
You are right about that. I
You are right about that. I was posting to a discussion board while the debate was going and people were commenting in real time. Newt talked about Reagan's job creation record and I simply stated that the fact that the rate of job creation slowed under Reagan. I posted the following numbers to back it up:
nonfarm payroll job growth
Jan 1977 80692
Jan 1981 91031 3.06% a year under Carter
Jan 1989 107133 2.05% a year under Reagan
Excluding Fed tightening years (80-82)
Jan 1983 - Jan 1989
88981 107133 ----- 3.1% a year
Jan 1977 - Jan 1980
80692 90800 ----- 4.01% a year
Then in case there was any doubt, I posted a link to a Forbes article ranking Presidents and prosperity:
Forbes - Presidents and Prosperity
"Most surprising is that Carter ranks first in job creation as 10 million jobs were added during his four years in office, more on an annualized basis than Clinton or Reagan."
http://www.forbes.com/2004/07/20/cx_da_0720presidents.html
The response was so hostile they kicked me off a message board for trolling. Seriously, people would not accept the numerically verifiable fact that Carter created jobs at a faster rate than Reagan.
There have to be late entrants
After the clown show last night, I have to believe GOP leadership will prod and cajole a few more potentials to enter the race.
Perry was terrible. He was a horrible speaker. He should have known in advance that his "Texas miracle" jobs claims had already been dissected, analyzed, and proven false. His Ponzi scheme comments were a huge miscalculation on his part - designed to play to his Tea Party base, but failing to take into account their age. He displayed no charisma at all.
Romney did better than Perry, but still wasn't very impressive.
Bachmann is done.
Paul let everything hand out with his "abolish the FDA and consumer safety regulation" comment. I saw a remark the other day that "Ron Paul is an Internet meme, not a candidate." That became even more obvious last night.
Gingrich is a polished speaker, and certainly one of the more intelligent men on the stage, but he's washed up and unelectable.
Huntsman was the only one on stage I could actually envision as a President, but I don't see how he can make it through the primaries.
Huntsman Isn't Really Running for 2012
A friend was telling me about Huntsman's tax "plan", so I visited Huntsman's website to get some details. There's a little outline of his proposal, with no details. This is typical of the entire site. There's little content, depth, or substance. These guys are not running for President in 2012. They are learning about the process so they can make a real run in 2016, or perhaps decide to do something else. IMHO this reflects well on Huntsman.
Especially since SS is
Especially since SS is already stingy compared to pension systems in civilized countries.
The REAL problem with Social
The REAL problem with Social Security is that unless it is gutted, income taxes will have to be raised. The CBO projected that the surpluses Clinton left for Bush were enough to pay off the entire US debt by the time that the Social Security/Medicare trust funds would have to be amortized for beneficiary payments, all without having to raise taxes to pay for the amortization of those trust funds. These “surpluses” were made up entirely of excess payroll taxes building up the trust funds. Bush took those excess payroll tax receipts and gave them “back” as income tax reductions, heavily weighted to the wealthy–who didn’t create those surpluses in the first place. By doing this, Bush guaranteed that taxes would have to be raised in order to amortize the trust funds.
At least the incentives
At least the incentives remind me of the 2008 Democratic nominating race. Then, the chances of the Democrat prevailing were so good that getting the nomination was worth practically doing anything. Recall that as Obama limped to the convention on a sizeable losing streak and Clinton was well within the "superdelegate" votes of taking the nomination, the Obama team uniformly responded about how undemocratic it would be for the superdelegates to swing the nomination away from their man. A reasonable argument, except that precise freedom was the entire theory of the superdelegates to begin with! This feels kind of the same: with respect to Mr. Samwick, a dead dog would stand a real good chance of beating Barack Obama next year, but only the dog that can please the Republican primary participants will get that chance.
bmz hit the nail on the head
bmz has it absolutely right. And, it's disgusting how the only place to have a sane conversation about this is right here. You never hear this on the news, where, frankly, this factoid belongs.
Wait, what?
" If instead they want to fix the projected imbalance with new revenues, they should have been talking about ways to separate that money from the rest of the government's budget"
Nevermind the "personal accounts" nonsense - this is ALREADY the case, no matter how often the Pain Caucus lies and asserts otherwise. Stick an axe in that zombie lie already.
There is no difference
There is no difference between a paygo scheme and a Ponzi scheme when the scheme itself is intergenerational. All the people putting money into the system now have ZERO chance of even collecting what they are putting in. A less than zero percent return. Even the SS trustees admit this (using actuarial language rather than plain English).
And when an entire class of "contributors" -- and everyone from that point on -- is guaranteed to lose money, by design, then that is a Ponzi scheme.
And it is not Republicans who first used the term "Ponzi" in connection with SS. It was the old textbook-writing Keynesian leftist - Paul Samuelson - in 1967
The beauty of social insurance is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in -- exceed his payments by more than ten times (or five times counting employer payments)!
How is it possible? It stems from the fact that the national product is growing at a compound interest rate and can be expected to do so for as far ahead as the eye cannot see. Always there are more youths than old folks in a growing population.
More important, with real income going up at 3% per year, the taxable base on which benefits rest is always much greater than the taxes paid historically by the generation now retired.
Social Security is squarely based on what has been called the eighth wonder of the world -- compound interest. A growing nation is the greatest Ponzi game ever contrived. --- Paul Samuelson writing in Newsweek
No person under 40 should be submitting to this theft called "Social Security". They are completely justified in reneging on any such "social insurance contract". And bluntly, in resorting to violence to get out of something that they have been involuntarily enslaved into paying for. Fortunately (for the minions of govt and the elderly), the young are too freaking stupid to understand this. Thank you public schools!
The Samuelson quote
The Samuelson quote contradicts your claim that there is "ZERO chance of even collecting what they are putting in."
He says: Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in -- exceed his payments by more than ten times (or five times counting employer payments)!
He used the phrase Ponzi scheme to praise the program in the way someone might call a good basketball player "gravity defying."
No. He used in the exact same
No. He used in the exact same sense that Paul Krugman also described it - 30 years after Samuelson - in 1997.
Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today's young may well get less than they put in). _ Paul Krugman from http://www.bostonreview.net/BR21.6/krugmann.html
So that is TWO leftist Keynesian Nobel Prize winners who describe it as a Ponzi scheme. But hey - when a Republican candidate for Prez dares to use the same phrase to describe the same scheme, the media/commentariat/apparatachiks/tools/etc all act shocked and jump all over each other to impugn the candidate.