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In the last few days and weeks we’ve been hearing a lot about the payroll tax hike/cut.  Lately the pitch has ramped up for two reasons.  One, the Senate was ale to negotiate a bipartisan agreement to extend the tax cuts.

For 2 months.

Now, most recently, the House Republicans have declined to accept that compromise.  They voted Tuesday to reject the Senate deal and are asking for the two bodies to meet in committee.  We’ll see who blinks.

However, for me, what has been lost in all of this is why the Democrats are fighting for a tax cut to begin with?  I certainly understand the whole “We-They” thing, after all, the whole payroll tax cut idea was the Democrats brain child.  But why, at all, do the tax more, big state liberals want ANY tax cut?  Especially one that funds their most precious social program, Social Security?

Why?  Because Social Security is SO broken, so in debt and so “no chance of survival” that the Democrats feel they have little to lose.  In fact, they KNOW the government will “bail out” Social Security.  So, in some perverse way, the payroll tax cut can be seen to be a stimulus program.  Albeit not a perfect one.  For starters the more you make the more it benefits you.  And, you have to actually be working to benefit.  But other than that, any money not sent to Social Security is just added to the bill that Congress will eventually pay.

Rascally Rabbits!

So, conservatives are seeking to over turn Obamacare on the basis that the government can not force you to purchase a product.  I agree with this stance.  If Obama can force me to purchase health insurance, control what that insurance looks like and even who sells that insurance, there is nothing to stop him from forcing me to purchase tickets to the Raleigh Philharmonic Orchestra.  Or a car from GM.  Or organic carrots from Democrat farmers.

But, as conservatives, we have to answer to our stance on Social Security.

Our answer to the current mess that is Social Security is to continue to collect 6.5% from the employer and the employee.  BUT we want some % of that 13% to go to personal private investment accounts.  These accounts would belong to the tax payer and he could even manage those accounts.

In short, we would be enabling the government to force us to buy a product; an investment account.

It seems there is no discernible difference.

Because I think that the debate over taxes has been going on for a long time, and while continue to go on through the election, we should take a break and chuckle:

Even though this pokes fun at my side, I enjoy a good laugh just as much as the next guy.

But let’s be very clear here as well.  There is simply no reasonable argument that can be made that we have a revenue issue that’s contributing to our nation’s debt.  The problem always has and always will be spending.

Further, the idea that Reagan and Obama share the same economic philosophy is laughable.  Even more so than that cute clever video.  Reagan believed in less government.  He felt that government could not and never could, be the solution.  It was government that WAS the problem.  Obama?  Well, he feels very different.  The more that government gets involved, the better off the people of this nation will be is center to Obama’s thinking.

We simply disagree.  And we can’t compromise on that.  How do you compromise with someone who wants to rob your house?  Is it a moral victory to let him “only take” your TV while you get to keep the rest of your property?

No.

Last, the House Republicans led by the fiscal conservatives are doing yeoman’s work.  Obama and the Democrats know that they have no chance what-so-ever of passing nonsense through the House.  So the aren’t even trying.  The bills they craft are being written in such a way that they HOPE they get through.  If the House were less conservative, Obama’s bill would be even worse than they are today.  But, BUT, I feel my comrades are making two critical errors:

  1. Refusing to add revenue simply on principle.
  2. Missing the opportunity to “cash out”.

First, if we can raise revenue without raising rates simply by making the code easier and removing crazy-ass “loopholes”, DO IT!  For gawd’s sake man, take “W”.

Second, i was very distressed to see all Republican candidates raise their hand during one of the debates when asked if the would reject a plan that had 10-1 spending to tax ratios.  Dude, take the flippin’ deal and push away from the table.  Especially if these guys are offering up Social Security and Medi-X.  In fact, if they let me reform either or both of those programs I’d give on taxes in a second.

Anyway.  Enjoy Obama quoting Reagan!

Ask your Google who said this:

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).

I’ll give you a clue.  His name starts with Paul and ends with Krugman.

Rick Perry made waves; lot’s of waves.  He compared Social Security to a Ponzi Scheme.  And in so doing, open a massive wave of defense for the gentle program.  I suspect that more people have issue with the implicit, or explicit, slight on Social Security than they do with the actual definitions of the scheme itself.

In other words, I firmly believe that people are afraid to admit that their faith in the program called Social Security is more based on emotion than on actual facts.  This can be demonstrated whenever you enter into a conversation with anyone on the topic of Social Security reform.

Anyway.  I was willing to let sleeping dogs lie, but then I found these two gems, back to back, in the Letters to the Editor page of my local newspaper.

Ugh.

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It’s ‘prolly not fair, but after just one debate I don’t think I’m a Perry fan.  I don’t think that he necessarily believes what he’s sayin’ and, in order to SHOW that he does, he defends it so vehemently that I don’t see an ability to … “flex”.  Be that as it may, he made a comment, or rather a collection of statements, that seems to have the interlinks a’buzz.

Social Security is a Ponzi scheme.

Interesting.  Never thought of it that way, bt now that ya mention it; sure.

Let’s check the tape:

  • A swindle in which a quick return, made up of money from new investors, on an initial investment lures the victim into much bigger risks.
  • A fraudulent investment operation that pays quick returns to initial contributors using money from subsequent contributors rather than profit.
  • Investment scam by which early investors are paid off from the contributions of later ones, 1957, in ref. to Charles Ponzi, who perpetrated such a scam in U.S., 1919-20.
  • An investment swindle in which early investors are paid with sums obtained from later ones in order to create the illusion of profitability.

A general characterization of the Ponzi scheme seems to be the fact that there is an illusion or an act deception.  If you take away the deception that Social Security is solvent, which we can do for this argument, then the comparison doesn’t hold water.  Social Security is up front about the fact that we are contributing today in order to care for the retirement of others.  And later, when we need that same care, the workers of tomorrow will be there for us.

However, the later definitions rely less on the illusion and more on the method of paying out.  And in this regard, Social Security is EXACTLY the definition of a Ponzi scheme.  Investors are paid out with money obtained by later ones.

This later point is taken up by Shika Dalmia over at Reason.com:

A Ponzi scheme collects money from new investors and uses it to pay  previous investors—minus a fee. But Social Security collects money from new investors, uses some of it to pay previous investors, and spends the surplus on programs for politically favored groups—minus the cost of supporting a massive bureaucracy. Over the years, trillions of dollars have been spent on these groups and bureaucrats.

Shika goes on to make a second point that I think is much weaker:

Two, participation in Ponzi schemes is voluntary. Not so with Social Security. The government automatically withholds payroll taxes and “invests” them for you.

It would be hard to say that participation in a Ponzi scheme is strictly voluntary.  The “fund” is founded on fraud.  Few would invest if they knew the truth.

And finally, his third point is close, he doesn’t go far enough:

When a Ponzi scheme can’t con new investors in sufficient numbers to pay the previous investors, it collapses. But when Social Security runs low on investors—also called poor working stiffs—it raises taxes.

What this means, of course, is that when a Ponzi scheme runs out of clients, it’s sunk.  But when Social Security runs out of clients, it just walks over to their house, draws their gun and forces EXISTING clients to up their investment.

Now, to be sure, there are those who wouldn’t agree with said characterization.  Kevin Drum offers his over at Mother Jones:

Here’s how Social Security works: every month we take in taxes from working people and every month we turn around and distribute those taxes to retirees. That’s it. That’s how it works, and everyone who actually knows anything about the program knows that’s how it works. Taxes come in, benefits go out. And the key to solvency is simple: making sure that those taxes and benefits are in balance.

Emphasis Kevin’s.

So his defense that Social Security isn’t a scheme is to demonstrate that it works JUST like a scheme.  Except that because it’s done in the light of day, it’s apparently okay.  After all, when you tax people for an Army man, you pay the Army man.  So, see?  No scheme here.

He continues this like of thinking:

For example: we have an obligation to today’s seniors to fund the Pentagon and keep them safe from al-Qaeda. After all, they did their bit and funded the Pentagon back when we needed to kick Hitler’s butt and stop the commies from taking over the world.

But this isn’t an equivalent.  He’s trying to connect the fact that I am paying into a system that doesn’t benefit me now in the hopes that it’ll benefit me later to a program that I pay into now for a definite benefit now.  After all, when the seniors funded the Pentagon way back then, they received the benefit of a Pentagon.  They continue to pay today and, as it so happens, continue to realize the same benefit.

I’m not saying that in this case that Social Security being a Ponzi scheme is bad; it may very well not be.  Personally, I’d like to see some more privacy associated with the money so that we can’t just spend it out from our investors, but whatever.  The point isn’t the worthiness of the scheme, only if it IS one.

And it is.

Only caught a little bit of the boys from Greensboro this morning.  What I did hear caught me by surprise.

I’m accustomed to the typical view from the Left with a bit of arrogance thrown in for spice; that’s my breakfast.  But this morning I found myself agreeing with ’em.  And twice!

They began the hour discussing the House Republicans promise to reduce spending by $100 billion dollars in the first year.  Since they’ve won and especially as they begin to take office, they’ve scaled that back by half, and possibly even more.  Some folks have ’em saying that they’ll only be able to achieve $30 billion.

1 word for ’em:

Un-effin-acceptable.

We didn’t do what we did to get you in office to act like Democrats  at worst and old-time Republicans like best.  You stood there, looked us in the eye and PROMISED us you would cut spending this first year.

This nonsense that we’re half way through the budget year ain’t cuttin’ it.  Either you were so shortsighted to NOT know that was the case or you DID know and know you’re just shinin’ me.  Either case gives me pause for concern.

Cut the spending.

Okay, that felt good.  Now, the second case we agreed this morning came during a conversation surrounding social security.  We all know it’s not sustainable.  A combination of all the money being spent AND the fact that we are gonna retire a ton of people in the coming years means we just don’t have the money.  And we’re gonna have to change the way we pay out.

During the conversation, Britt offered the insight that no one is able to make suggestions with respect to social security because the election ads will demonize him for “cutting social security benefits”.  Further, Britt acknowledged that that strategy is one that has been perfected by Democrats.

Wow.  I couldn’t believe it.  It was nice to hear.

Keep it up fellas!

I honestly think that most people want things to work out for the better.  That the decisions they make, the things they do, the hopes and dreams they have, will, in the end, make not only their llives better but the lives of folks around ’em too.

So, when I rage against Leftists it’s not because their heart is in the wrong place–it’s because their HEAD is in the wrong place.

For example, when a Liberal fights to establish a minimum wage, it’s because they wanna help the folks who are poor and can’t pay their bills.

When they fight for Social Security, they really REALLY wanna help provide for the elderly in their times of need.

And when they build ethanol plants they do it because they really seriously think that going green is the way to go.

But they’re wrong.

On minimum wage, on Social Security and on ethanol plants. Read More

Look, I get it.  The new popularity of the conservative movement is that we have to reduce the size of the government.  We have to Spend Less, Tax Tess.  Reduce spending and reduce taxes.

I get it.  I do.

But we can NOT reduce taxes right now UNLESS we reduce spending.

Now, I AM a proponent of the idea that when taxes are raised it acts as an economic inhibitor.  That businesses will grow slower or even shrink.  That as taxes rise, the amount of money we bring in is actually less than the amount we could have brought in.

But there is a limit.

So, where would you cut?

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