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In defense of Rick Perry's "Ponzi scheme" comments

Ryan Streeter
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Rick Perry’s comments over the weekend that Social Security is a “Ponzi scheme” and a “monstrous lie” have drawn predictable fire.

It seems like it’s taking the media awhile to recogize that Rick Perry employs a verbal art called "hyperbole" rather comfortably. 

The funny thing about the ordeal is that the Ponzi scheme expression isn’t really all that hyperbolic, at least not when you pay attention to what Perry said:

It is a Ponzi scheme for these young people. The idea that they’re working and paying into Social Security today, that the current program is going to be there for them, is a lie…It is a monstrous lie on this generation, and we can’t do that to them.

First of all, aside from the point about the hyperbolic arts, we all ought to thank a candidate who talks about the inherent unfairness of Social Security for the young, rather than the usual approach of reassuring seniors that everything will be okay. On this front, Perry's being bold and accurate.

And with regard to the the Ponzi analogy, he is certainly speaking hyperbolically (a "monstrous lie" is a bit over the top), but his point isn’t all that far off the mark. You know those statements you get from the Social Security Administration that make it look like you’re paying into an account? They aren’t too different than the statements an “investor” into a Ponzi scheme gets who thinks his money is truly invested when it’s being used to fund the returns for some earlier investor.

The Wikipedia page on Ponzi schemes details three ways the schemes can break down. Here’s the second one:

Since the scheme requires a continual stream of investments to fund higher returns, once investment slows down, the scheme will begin to collapse under its own weight as the promoter starts having problems paying the promised returns (the higher the returns, the greater the risk of the Ponzi scheme collapsing). Such liquidity crises often trigger panics, as more people start asking for their money, similar to a bank run.

We could tweak this a bit, and it would sound like Wikipedia entry on Social Security in a couple of decades:

Since Social Security the scheme requires a continual stream of investments of worker’s payroll taxes to fund benefits for seniors higher returns, once investment tax revenue slows down as there are fewer workers per retiree, the scheme program will begin to collapse under its own weight as the government promoter starts having problems paying the promised benefits returns (the higher the benefits returns, the greater the risk of the program Ponzi scheme collapsing). Such liquidity crises often trigger panics (and sometimes riots), as more people start asking for their where the money they thought they were paying into the program has gone.

I'm pretty sure most non-hyperbolic, sober-minded assessments of Social Security's underlying problems sound something like that.

Obama kills al Qaeda's second-in-command, sees approval ratings fall

Ryan Streeter
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Now, of course, there's no causal connection here. The news of the CIA drone strikes that killed Atiyah Abd al-Rahman hadn't likely reached those queried in the latest daily Gallup tracker, but still - these two events show just how much voters see America's domestic health (or lack thereof) as a referendum on Obama's presidency.

Obama's approval stands at 38% and his disapproval 55%.

He's also racking up quite a record knocking off terrorists these days. So much so that John Sexton at Verum Serum offers this humorous take, suggesting that when Rick Perry wins the Presidency, he should appoint Obama as his CIA director. And then he lays out the Obama record:

• April 2009 – In the first few months of his administration, Obama sent a team of SEALs to kill Somali pirates who’d taken a ship’s captain hostage. Three pirates were shot in the head, one was captured alive.
• August 2009 – Drones kill militant Baitullah Mehsud along with his wife and family.
• October 2009 – Abu Ayyub al-Masri an Al Qaeda explosives expert is killed in Pakistan.
• March 2010 – Hussein al-Yemeni an Al Qaeda planner is killed by a drone strike.
• May 2010 – Saeed al-Masri, Al Qaeda’s 3rd in command is killed by drone strikes.
• June 2010 – Al Qaeda leader Abu Ahmed Tarkash is killed in a drone strike.
• April 2011 – Obama authorizes a SEAL mission that killed Osama bin Laden.
• June 2011 – Suspected senior Al Qaeda operative Ilyas Kashmiri is killed in a drone strike in Pakistan.
• August 2011 – Drones kill the aforementioned Atiyah Abd al-Rahman.
• Since taking office Obama’s drone strikes have reportedly killed at least 1,300 in Pakistan, most of them terrorists.

Pretty impressive stuff. And none of this will help Obama in November 2012.

Three important reads as we anticipate Obama's jobs plan and Republicans' response to it

Ryan Streeter
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As Obama gears up for his jobs speech by nominating Alan Krueger to head his Council of Economic Advisors, and as the Republican Study Committee prepares to offer a competing growth agenda, here are three important reads from the past few days:

Why Obama cannot propose a real jobs program. Paul Roderick Gregory writes at Forbes: “Obama cannot propose a real jobs program. His constituents would rebel. A real jobs program attacks too many of the core beliefs of his party, such as minimum wages and higher taxes on the better off.” Gregory goes on to suggest a fairly detailed 5-point plan that Obama could offer, if he really cared about jobs.

Why Obama’s existing budget will soak small businesses and counter his so-called jobs push. Scott Shane writes at The American: “Among the tax increases that would hit small company owners proposed in the president’s budget are a higher marginal tax rate on income from sole proprietorships, Subchapter S corporations, and other pass-through entities; increased capital gains taxes on investments by high earners; repeal of the last-in-first-out approach to inventory accounting (LIFO); and treatment of private equity and venture capital carried interest as ordinary income.”

Any growth agenda needs to focus on spurring more new (not just small) business creation. Edward Muller and Larry Zimpleman offer a list of recommendations from the Kauffman Foundation in today’s WSJ and say: “There is no hope of giving consumers renewed confidence in America unless governments at all levels mount a vigorous effort to get rid of rules that discourage entrepreneurs from launching and growing new businesses.”

Party of Change, and the Party of Stasis: Three things that should be separating Republicans from Democrats going into 2012

Ryan Streeter
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In yesterday’s Washington Examiner, Michael Barone wrote:

[Obama] blithely ignored the recommendations of his own commission headed by Erskine Bowles and Alan Simpson. He has said since he would take a look at raising the Medicare eligibility age -- it's now lower than the Social Security age.

But anyone can take a look at a proposal. We pay presidents a good salary to lead, not just to look.

So far the Republican presidential candidates have not done much leading on entitlements either. They have tended to take a gingerly approach to Paul Ryan's Medicare proposal and Newt Gingrich even trashed it.

The conventional wisdom is that this is simple political prudence. Don't give the other side a juicy target.

But we are faced not only with a huge short-term budget problem but with the prospect of a Western European future of an enlarged government, ever higher taxes and lower growth. Is that really what American voters want?

President Obama has shown zero interest in reforming what everyone knows is the greatest threat to America’s fiscal future: entitlements’ growing burden on our economy. He has had numerous opportunities to confront this growing crisis and has hid under the covers each time.

Congressional Democrats, who grow more left-wing with each passing month it seems, show no signs of doing anything differently than Obama on this issue.

The Democrats have today become the Part of Stasis – that is, the party that keeps things as they are. Terms like “progressive” mean nothing anymore for a party bent on defending the status quo at all costs.

On entitlements (keep them as they are), tax policy (raise taxes on the rich), and job-creation (spend federal dollars to “stimulate” the economy), they have no interest in doing anything that resembles a solution to today's problems. 

As Barone points out, the current GOP presidential candidates are not doing much better on this front when it comes to entitlements. Faced with town hall questions on Medicare and protestors holding signs such as “Hands off Medicare and Social Security,” they walk delicately around these issues. The web sites of the two frontrunners, Romney and Perry, offer only vague generalities on entitlement reform. Everyone knows why: as Barone points out, it’s a matter of “political prudence.”

But Republicans have become the Party of Change, whether some of them like it or not, especially on entitlement reform. After the Paul Ryan budget passed the House in April, the Republicans became the party of policy activism on entitlement and tax reform. Republican presidential candidates should take advantage of this new reality.

Three years after Barack Obama ran on the theme of change, he’s standing guard over failed policies of the previous century. Republicans are advocating 21^st century ideas. Candidates should make that point over and again, especially in three main ways:

Ask Americans to help save the future. First, use the attention of the national media to explain to the American people that our current path today means higher taxes, even fewer jobs, and desperation tomorrow. It’s a given, not open to interpretation. And then ask everyone under 55 to be the generation of reform, the next "greatest generation," the generation that saves America. Ask citizens to embrace the kind of change that will save our economy for ourselves when we’re older, and our children when they reach our age. Call on Americans to live with a new tax code that gives out fewer favors in exchange for rates everyone can live with. Barack Obama never asked anything of people other than to vote for him when he talked about "change" in 2008. Republicans should call on Americans to help be part of the change, to embrace reform that affects their lives, to participate in rescuing the future.

Demand fairness in our entitlement programs. Right now, the Democrats discriminate against the young. They also favor welfare for the wealthy. Let’s change that. Republicans are offering ideas that require the wealthy to bear more of their retirement security and all of us to play a more active role in choosing future healthcare options as a way to reduce the costs that young workers have to bear. Explain these points over and over. Republicans favor fairness as a way to save the future, while Democrats discriminate in ways that will wreck the future.

Demand fairness in the tax code. End loopholes and lower rates. Those should be the only two battle cries. If, through ending a series of loopholes and exemptions, some portion of the affluent population sees a slight net increase in what they pay overall, so be it. It’s time to worry less about the pledge most congressional Republicans have signed not to raise taxes and more about a tax system that is clear, predictable, and favorable to growth.

Right now, Republican candidates do not want to rock the boat - especially on entitlement reform, but also on tax reform to some degree (i.e., what it will really mean to close loopholes, etc.). Everyone is sure that rocking it will lead to electoral disaster. But Obama and the Democrats will use Mediscare tactics anyway. That ship has sailed and will keep sailing. Republicans should beat them to the punch, get out in front of the issue, and talk straight about America's future with voters - who will be more likely to reward candidates than one might think.

We must do better: Nine states still lagging behind when it comes to combating human trafficking

Natalie Gonnella
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A leader in the fight against modern-day slavery, and one of the most prominent anti-trafficking organizations in the US and Japan, Polaris Project this week released the 2011 update to their annual state ratings, which tracks the presence /absence of 10 key statutes they believe to be integral to combating exploitation across the US.

Sadly, despite human trafficking being one of the largest and fastest growing criminal enterprises in the world, less than a dozen states come close to meeting all 10 conditions, with Alaska, Arkansas, Colorado, Massachusetts, Montana, South Carolina, South Dakota, West Virginia, and Wyoming, sorely lagging behind:

7-9 conditions met | 5-6 conditions met | 3-4 conditions met | 0-2 contions met

While there have been significant improvements across the country, the fact that most states continue to overlook a number of the suggested statutes remains extremely worrying. As Polaris Project's Policy Director Mary Ellison said in regards to the report's release:

Every day we are identifying an alarming number of victims from every state through the National Human Trafficking Resource Center hotline. Ten years after the passage of the federal anti-trafficking law, forty-five states, including D.C., now have sex trafficking criminal statutes, and forty-eight states have labor trafficking criminal statutes...Continuing to improve the legal framework at the state level by enacting critically important statutes will literally save lives.

With over 100,000 US minors at risk of commercial sexual exploitation each year alone, we must do better.

Further information on Polaris Project's 2011 analysis is available to view here.

Cain comes out on top in home state straw poll

Natalie Gonnella
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Rick Perry may have quickly taken the lead in the latest Gallup presidential poll, but when it comes to Georgia Republicans (for the moment) they're standing behind a home state candidate.

Just as 'Iowan' Michele Bachmann edged out her competition to take the Ames straw poll earlier this month, in a smaller showing on Saturday at the annual Georgia GOP fish fry, Herman Cain narrowly topped Ron Paul to take the latest 2012 straw poll title.

With Cain edging out both Paul, Perry and fellow Georgian Newt Gingrich, here's a look at the rest of the field fared in yesterday's poll, as reported by the GA GOP's second vice president, B.J. VanGundy:

• Herman Cain 26%
• Ron Paul 25.7%
• Rick Perry 20%
• Newt Gingrich 18%
• Mitt Romney 6%
• Michele Bachman 3%
• Rick Santorum 0.4%
• Jon Huntsman 0.3%
• Thad McCotter 0.1%
• Buddy Roemer 0%
• Gary Johnson 0%

US official: Al Qaeda no. 2 killed In Pakistan

Natalie Gonnella
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In another major blow to Al Qaeda, a senior US official says the terrorist group's second-in-command (Atiyah Abd al-Rahman) has been killed in Pakistan. CBS News reports:

Al Qaeda's second-in-command, Atiyah Abd al-Rahman, has been killed in Pakistan, delivering another big blow to a terrorist group that the U.S. believes to be on the verge of defeat, a senior Obama administration official said Saturday.

The Libyan national who was the network's former operational leader rose to al Qaeda's No. 2 spot after the U.S. killed al Qaeda leader Osama bin Laden during a raid on his Pakistan compound in May.

Al-Rahman was killed Aug. 22 in the lawless Pakistani tribal region of Waziristan, according to the official, who insisted on anonymity to discuss intelligence issues.

Awaiting Irene's arrival, Americans increasingly turn to social media to stay up to date during disaster situations

Natalie Gonnella
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As the East Coast nervously awaits Hurricane Irene's arrival, and with crucial lessons from Katrina fresh on the minds of many, Americans are increasing turning to social media as a key means to get the most up to date information during emergency situations.

According to Trevor Riggen, the Senior Director of Disaster Services:

Traditional media such as television and radio are still important ways to reach people with emergency information but the social web offers a chance for emergency responders to understand in real time what their communities care about and need – and to become part of the fabric of the community.

The third most popular method for getting information during a disaster (after TV and radio), from contacting emergency responders to checking in on family and friends, here's a look at how the average American uses social media during an emergency situation (c/o a new study from the American Red Cross):

 

Sticking up for states' rights: Majority of voters believe governors should have the right to opt out of federal programs

Natalie Gonnella
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As GOP governors weighs their options on what to do about Obamacare funds, a new opinion survey shows that when it comes to states' rights, a majority of voters side with the states.

According to the latest telephone poll from Rasmussen Reports, 54% of Americans believe that states should have the right to opt out of federal programs. And on initiatives imposed without federal compensation, support for states’ rights soars even higher, with nearly two-thirds of voters insisting that states should be able to ignore the mandates. With this in mind, unsurprisingly, when it comes to the Affordable Care Act:

Fifty-four percent (54%) think states should have the right to opt out of the new national health care law or any portion of it that they disagree with, [while] fifty-six percent (56%) of voters say letting states compete to determine the most effective standards and guidelines would do more to reduce health care costs than having the federal government calling the shots. Most voters also continue to favorrepeal of the health care law as they have every week but one since its passage by Congress in March 2010.

As the debate continues to escalate over the constitutionality of Obamacare, the full analysis from Rasmussen's latest poll is available to view here.

America's economy, summed up: "We are paying an unexpected price for decades of controlled and managed economic performance

Ryan Streeter
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As usual, Walter Russell Mead is full of insight:

The rise of entitlements and transfer payments in advanced countries tends to turn national governments into passive economic spectators.  The demographic decline and structural economic changes make those welfare states unsustainable and saddle advanced countries with almost incalculably large unfunded liabilities looking ahead.  This means that governments have much less fiscal running room than they did twenty or even ten years ago...

The lack of "running room" has finally caught up with our economic growth. This is a problem. Mead continues:

[W]e are paying an unexpected price for decades of controlled and managed economic performance in the proliferation of moral hazard at all levels of the economy.  People have come to believe that governments can and will backstop the economy.  This leads them to underestimate and underprice risk, and it has contributed to the series of expensive asset price bubbles of the last twenty years.  People have lived in a bubble of artificial safety based on the belief that technocratic Keynesian management of a fiat money system can deliver semi-permanent prosperity without the disorienting booms and busts that made our great-grandparents so cautious and crabbed in their thinking.

We take risks as a country because we believe that the government will "backstop the economy." This decreases the government's ability to backstop the economy. It's a terrible circle. And it's where we are.

The only way out of this is to redefine the social contract. And the only proposal to do so right now is the Republicans' budget in the House. And that has been rejected by the ruling elite in Washington who prefer instead to promote the government's unsustainable capacity for backstopping the economy.