Tag Archives: mitt romney

Despite Brantley’s view,Social Security really is a Ponzi scheme (Part 1) (jh1d)

Social Security is a Ponzi scheme (Part 1)

Governor Rick Perry got in trouble for calling Social Security a Ponzi scheme and I totally agree with that. Max Brantley wants to keep insisting that this will be Perry’s downfall but  think that truth will win out this time around. This is a series of articles that look at this issue.

Is Social Security a Ponzi Scheme?

by  on September 10, 2011 at 12:47 pm in Economics | Permalink

Matt Yglesias says anyone who thinks social security is a Ponzi scheme is nuts. So let’s take a look at some of these nuts. First up is Nobel prize winner Paul Samuelson who wrote:

Social Security is a Ponzi Scheme that Works

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.

…A growing nation is the greatest Ponzi game ever contrived.

Samuelson wrote that in 1967 riffing off his classic paper of 1958. By “as far as the eye cannot see” he apparently meant not very far because it soon became clear that the system could not count on waves of youths or rapid productivity growth to generate the actuarially unsound returns that made the program so popular in the early years.

Milton Friedman and Paul Samuelson rarely agreed on much but Friedman also called social security a Ponzi scheme. In fact, he called it The Biggest Ponzi Scheme on Earth but perhaps Yglesias puts Friedman in the nut category so let’s go for a third Nobel prize winner who recognizes the Ponzi like nature of social security, none other than…..Paul Krugman (writing in 1996):

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). (ital added, AT)

Of these, I agree the most with Krugman. Social Security is not necessarily a Ponzi scheme but it only generated massive returns in the past because of its Ponzi-like aspects. The Ponzi-like aspects are now over and social security is turning into what is essentially a forced savings/welfare program with, as Krugman recognizes, crummy returns for average workers. Social security is thus a Ponzi scheme which has not gone bust but it has gone flat.

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So here you have it. Both liberals and conservatives can take a calm look at the issue of social security and recognize how Ponzi like it is.

2012 Presidential Republican Primary Debate In Iowa pt.8

2012 Presidential Republican Primary Debate In Iowa pt.8

Iowa debate turns Minnesota nasty
By: Alexander Burns
August 11, 2011 10:14 PM EDT
AMES, Iowa — The simmering rivalry between Tim Pawlenty and Michele Bachmannerupted at Thursday night’s Republican primary debate here, transforming Iowa’s first 2012 forum into a full-blown slugfest.The Minnesota duo have been in a low-grade tug of war for months over the affections of Iowa conservatives. With a crucial test looming for both at the Ames Straw Pollthis Saturday, the Pawlenty-Bachmann rivalry turned so intense that it threatened to crowd out the other candidates completely.The charges were familiar: Pawlenty once again called Bachmann’s accomplishments “nonexistent.” Bachmann wielded well-worn attacks on Pawlenty’s tenure as governor.But this was their most ferocious exchange to date — with more than a hint of desperation visible for both.

“She speaks of leading these [conservative] efforts in Washington and Minnesota,” Pawlenty lashed out. “Leading and failing is not the objective.”

Bachmann assailed Pawlenty with a litany of alleged deviations from conservative orthodoxy, blasting: “When you were governor, you implemented cap-and-trade in our state and you praised the unconstitutional individual mandate.

“You said the era of small government is over. That sounds a lot more like Barack Obama if you ask me,” Bachmann said.

The caustic exchanges were no accident: A defeat on Saturday could snap Bachmann’s momentum in the race, or seal Pawlenty’s fate as a 2012 also-ran.

For the race beyond the straw poll, however, neither the candidates nor the moderators did much to draw blood from national front-runner Mitt Romney, who sauntered unscathed through his second consecutive debate.

The questions from Fox News and the Washington Examiner lobbed potentially difficult questions at Romney, asking him to defend his record on taxes in Massachusetts and his near-absence from the recent debate over whether to raise the federal debt ceiling.

On both issues, Romney stuck to narrow talking points, declaring that his support for the conservative Cut, Cap and Balance pledge told voters all they needed to know about his views on the debt ceiling.

Asked about a presentation his administration once gave to Standard & Poor’s, saying that Massachusetts deserved a credit rating upgrade in part because it raised taxes, Romney sidestepped the issue entirely.

Romney was barely challenged on his carefully parsed answers. With Pawlenty and Bachmann focused on each other, and several of the other candidates flailing in their attempts to stand out from the crowd, Romney took little heat from his fellow Republicans.

Indeed, virtually all of the candidates helped confirm — in one form or another — that Romney will likely face a tougher political challenge from a late-announcing candidate like Texas Gov. Rick Perry than from any of his currently declared rivals.

 

With the exception of raucous back-and-forths between Rick Santorum and Ron Paul on Iran and marriage, they did little to capture the spotlight.

Jon Huntsman, who was making his first performance in a 2012 presidential debate, fell short of his campaign’s recent promises that he would take a more aggressive approach to delivering his message to draw contrasts with his rivals. On Thursday night, the former Utah governor delivered only the softest and most implicit of criticism of his opponents, alluding to candidates who want to “run from their record,” in an apparent reference to Mitt Romney.

For the most part, Huntsman spoke softly and carried an exceedingly well-mannered set of talking points reminiscent of the civil campaign he promised when he launched last month.

None of the other candidates seemed to have a moment on stage to give them an extra head of steam going into the straw poll, though Paul drew repeated rounds of applause from his enthusiastic fans as he delivered his distinctive libertarian message.

Perhaps the most memorable moment of the night — outside the Bachmann-Pawlenty blowups — wasn’t instigated by a candidate at all, but rather by Byron York.

The Washington Examiner columnist queried Bachmann about a story she once told, relating how she decided to become a tax lawyer at her husband’s urging, out of a belief that wives should be “submissive” to their spouses.

Would Bachmann, York asked, be submissive to her husband if she were president?

Bachmann paused as a murmur ran through the crowd, and then began her answer: “Thank you for that question, Byron.”

“Marcus and I will have been married for 33 years this Sept. 10,” Bachmann said, explaining that to her and her husband, being submissive “means respect.”

“I respect my husband,” she said. “And he respects me as his wife. That’s how we operate our marriage. We respect each other. We love each other.”

Gingrich, too, won a moment of applause by pushing back at the moderators, in a blunter way than Bachmann.

Asked for the umpteenth time to explain the mass exodus of campaign staffers in June by Fox’s Chris Wallace, the former House speaker fumed: “I took seriously [Fox anchor] Bret [Baier]’s injunction to put aside the talking points. I wish you would put aside the gotcha questions.”

At times, Gingrich displayed the kind of fluency with issues that earned him a reputation as the GOP’s ideas man. He cut the professorial, wonky profile he cultivated for years before deciding to seek the White House, seeming closer to finding a comfortable role for himself in the 2012 field.

Still, overshadowing the whole debate was anticipation of a new strong candidate — Perry — entering the 2012 field Saturday.

And as the moderators noted, at least two other prominent Republicans, Sarah Palin and Rudy Giuliani, have not ruled out campaigns of their own. Palin is scheduled to visit the Iowa State Fair on Friday.

The candidates professed indifference at the prospect of new competition.

“Welcome to the contest,” Herman Cain said when he was asked about a potential Perry campaign. “From my perspective, it doesn’t bother us or my campaign. That’s just one more politician and that makes this business problem solver stand out that much more.”