The American Spectator : Rick Santorum, Bad Economist

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Rick Santorum, Bad Economist

By Ross Kaminsky on 1.18.12 @ 6:11AM

Shortsightedness can leave you thinking like a Democrat.

During Monday's Republican debate (transcript) in Myrtle Beach, SC, former Speaker of the House Newt Gingrich offered a bold vision for allowing Americans to voluntarily contribute the "employee portion" of their Social Security payroll taxes into personal investment accounts, while the "employer portion" would continue to be paid into the Social Security Trust Fund -- a fund that only Al "Lockbox" Gore and Congressman Xavier Becerra (D-CA) think actually holds anything like real money.

Gingrich made accurate and important points that such a change would hugely benefit the country:

Now, what does it do? It gets the government out of telling you when to retire. It gets the government out of picking winners and losers. You save — it makes every American an investor when they first go to work. They all have a buildup of an estate, which you do not get in the current system.

And the estimate by Martin Feldstein at Harvard, who was Reagan's chief counsel and economic advisors, was you actually reduce wealth inequality in America by 50 percent over the next generation because everybody becomes a saver and an investor and you have a universal investing nation.

Former Senator Rick Santorum responded:

[T]here's nobody for the last 15 years that's been more in favor of personal savings accounts than I have for Social Security. But we were doing that when we had a surplus in Social Security. We are now running a deficit in Social Security. We are now running a huge deficit in this country.

Under Congressman Gingrich's proposals, if he's right, that 95 percent of younger workers taken, there will be hundreds of billions of dollars in increased debt, hundreds of billions of more debt being put on the books, which we can't simply — we're going to be borrowing money from China to fund these accounts, which is wrong. I'm for those accounts, but first we have to get our fiscal house in order, balance this budget and then create the opportunity that Newt wants. But the idea of doing that now, is fiscal insanity.

Santorum is epitomizing what Frederic Bastiat would have called "a bad economist." In his seminal 1848 essay on the difference between the bad economist, who considers only "that which is seen," and the good economist who "takes into account… those effects that must be foreseen," Bastiat presaged Monday's battle between Santorum, who didn't offer a vision past tomorrow, and Gingrich, who reminded us that whatever his other faults he remains the deepest thinker on the podium:

Yet this difference is tremendous; for it almost always happens that when the immediate consequence is favorable, the later consequences are disastrous, and vice versa. Whence it follows that the bad economist pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil.

It's true: The United States has a huge budget deficit and debt. Some of that is already due to Social Security because its payout requirements now exceed its income from payroll taxes. It's about to get much worse.

According to USA Today, based on the 2011 Social Security and Medicare Trustees Annual Report:

Social Security's long-term shortfall grows about $1.2 trillion annually — a sign of an imbalance between the number of young workers and older beneficiaries, according to the Social Security trustees' annual reports. The $21.4 trillion unfunded liability represents the difference between all taxes that will be paid and all benefits received over the lifetimes of everyone in the system now — workers and beneficiaries alike. This is the measure corporations and insurance companies use to assess financial adequacy of their retirement programs.

The number differs from the $6.5 trillion, 75-year shortfall that Congress uses to assess Social Security's health. Congress's 75-year figure is smaller because it counts taxes collected from future workers -- those toiling from 2050 to 2085, for example -- but doesn't count the benefits they will get in the 76th year and beyond.

In addition, Congress reduces its estimate of Social Security's shortfall by counting the $2.6 trillion in IOUs the government has issued to the program's trust fund. However, the government's audited books, issued by the Treasury Department, don't count that money as having any value to the federal government because it is a debt the government has issued to itself -- like paying off a car loan with a credit card.

In other words, if you believe Newt Gingrich's math -- and Santorum didn't challenge it -- that his plan of allowing voluntary personal accounts would make Social Security solvent in the long run, then Santorum is worried about a relatively paltry (by President Obama's spending standards) couple hundred billion dollars of additional annual deficit for some number of years in order to save as much as $20 trillion over the long term.

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About the Author

Ross Kaminsky is a self-employed trader and investor and is a senior fellow of the Heartland Institute. He blogs at Rossputin.com and is the host of The Ross Kaminsky Show on Denver's NewsRadio 850 KOA on Sundays from 11 AM to 2 PM.

Letter to the Editor View all comments (84) | Leave a comment

Bill Hussein O'Stalin| 1.18.12 @ 6:26AM

A claim for equality of material position can be met only by a government with totalitarian powers.
Friedrich August von Hayek

'Emergencies' have always been the pretext on which the safeguards of individual liberty have been eroded.
Friedrich August von Hayek

Even the striving for equality by means of a directed economy can result only in an officially enforced inequality - an authoritarian determination of the status of each individual in the new hierarchical order.
Friedrich August von Hayek

Jack in Wi.| 1.18.12 @ 6:50AM

Santorum has never had an honest job just like Gingrich. they have been feeding at the government trough their whole political career. both of them have made millions from lobbying for the most corrupt groups around, since being thrown out of Congress.

Vern Crisler| 1.18.12 @ 9:17AM

So it's okay for Romney to be a capitalist, but wrong for Newt to be a capitalist?

Bill Hussein O'Stalin| 1.18.12 @ 9:43AM

When was Newt a capitalist other than selling his services in lobbying efforts, then claiming he is not a lobbyist?

Selling books might qualify but he made the real money as a Washington insider.

Vern Crisler| 1.18.12 @ 10:21AM

Bill, you're now deciding on how a capitalist should make his money?

Bill Hussein O'Stalin| 1.18.12 @ 10:28AM

If someone makes their money honestly and out in the open who could have a problem with that?

The problem inside the beltway are the insidious lizards who leave Congress then cash in big at taxpayer's expense to keep the doors open at failing GSE's like Fannie/Freddie. Is that capitalism? Not in my book.

Vern Crisler| 1.18.12 @ 12:39PM

So capitalists can't make money off government? Wasn't Romney a governor at one time. Didn't he cash in on his influence?

Who decides who's a good capitalist and a bad capitalist?

Bill Hussein O'Stalin| 1.18.12 @ 12:49PM

It isn't a question of good or bad. It's a question of ethics.

If you feel safe and secure with all the lizards in DC who operate under the radar and sell a product referred to as influence peddling so be it. That's how we got to where we are today.

However, other than that what is Newt's capitalist experience?

Vern Crisler| 1.18.12 @ 12:58PM

Besides being a published author, here is some of Newt's bio:
"Newt Gingrich is Chairman of the Gingrich Group, a communications and consulting firm that specializes in transformational change, with offices in Atlanta and Washington, DC . He serves as a Senior Fellow at the American Enterprise Institute in Washington, DC, a Distinguished Visiting Fellow at the Hoover Institution at Stanford University in Palo Alto, California and is an Honorary Chairman of the NanoBusiness Alliance. Newt is also a news and political analyst for the Fox News Channel."

Capitalist enough?

Bill Hussein O'Stalin| 1.18.12 @ 3:15PM

No. You prove my point that's he a former congressman peddling influence. If that is your idea of a capitalist so be it.

Larry| 1.19.12 @ 12:56AM

Social Security is not broke....It has a $2.5 Trillion surplus invested in government bonds. That is real money. You just need to bust the cap---Take 5% out of all income with no upper limit...That solves the problem immediately....If you privatize Social Security, you won't have money coming in to pay benefits.
Medicare is a problem, but Social Security is fine. It's one of the few programs that is equal for all of us....No deductions, tax breaks, subsidies, etc. That's why many politicians want to mess with it, because it's far for all and they can't carve it up like they do with the income tax.

Redstateboy| 1.18.12 @ 9:34AM

Hey Jack.... I noticed you conveniently forgot to mention your saviour - Ron Paul. How many years has he been receiving his Gov't paycheck as a Congressmen?

Jack in Wi.| 1.18.12 @ 11:14AM

Ron Paul worked 30 years as a physcian. He made thousands of life and death discissions everyday. He turns back a large amount of his office expenses every year to the treasury. He refuses to participate in the lavish Federal Pension system, unlike the pigs at the trough Gingrich and Santorum. He has offered to turn back his salary as President, except for 39,000, until the budget is balanced. He plans to have the budget balanced in 3 years.

Doorgunner| 1.18.12 @ 1:07PM

Just Say No to Ronpaulstiltskin.

The Bruce| 1.19.12 @ 12:04AM

Jack, he only worked as a physician during the 1960s-1970s as a physician, not the 30 years you proclaim. And most of those were as a "flight surgeon," meaning he worked for the military in a contractual agreement (long enough for the government to "forgive" his student loan obligations in exchange for government service). Not that I'm diminishing his service, but doesn't he "claim" to be against the military-industrial complex???????? I guess he meant aside from his own benefit from it, right?

And explain how he made "thousands" of "life and death decisions everyday" as a GYNECOLOGIST??????????????? I would doubt that a gynecologist could make that many life and death decisions in an entire 20-year career. My brother-in-law has been a neurologist for the last 25 years and claims to haven't made that many.

I didn't realize that the vagina posed such a mortal threat to its human hosts. I better get my wife's removed (oh wait).

And to the final point -- yes, he claims to be against big government. And, yes, he votes against big government bills when the time comes.

So answer me this: If he's so against big government, why does he amend so many big-government projects and pork barrel spending into bills, which he later votes against?

I'll explain it to you. Because he knows the bills will pass anyway, yet he can go back to his constituents (and sheep like you) and, with an "honest" conscience, proclaim that he voted against "big government," although he was quintessential into introducing it into the (passed) bill in the first place.

Your career politician is hypocrite.

It's no wonder that the "younger" electorate support him. Our DoE has been dumbing down the electorate since 1979, and you're proof of it.

Who are you going to believe -- the truth or your own lying eyes????

Paul-Bots need to start seeing through the fog of BS that rest of us have been doing. Maybe once you start to differentiate between what he's saying and what he's doing, you'll wake up.

Peace.

VonMisesJr| 1.18.12 @ 10:58AM

Kudos Bill. Sounds like "Constitution of Liberty." This is actually a great read and much easier to digest than much of Hayek's, or my other fvorite Von Mises tomes. It should be designated our Conservative Bible."

Pete| 1.18.12 @ 12:11PM

Spock said it best." Equal, you mean like two slaves under the same whip?"

rhortus| 1.18.12 @ 6:46PM

Truth about the Left and Right- well written and documented by the author:
http://www.amazon.com/Leftism-.....005&sr=8-1

Dan| 1.18.12 @ 6:29AM

Don't forget too Santorum's pathetic pandering for the black vote on MLK day, by suggesting that we were somehow duty bound to extend the franchise to felons.

I'm not inclined to swell the Democrat vote total by allowing former and present criminals and prisoners to vote Democrat.

Dai Alanye| 1.18.12 @ 10:59AM

Criticize Santorum's positions, if you will, but don't distort them. "Present prisoners" was Romney's false claim, "paid their debt to society" was Santorum's.

Pete| 1.18.12 @ 12:13PM

Doesn't matter, why would a Republican want to give felons, who are about 80 percent democrat the vote. It is like granting illegals amnesty so they can vote Democrat.

Dai Alanye| 1.18.12 @ 12:43PM

Perhaps it has something to do with arcane matters such as "justice" or "equity." Those are still conservative principles, aren't they?

The Bruce| 1.19.12 @ 12:46AM

Thankfully, Dia, those ARE still conservative principles. I think our friend Pete is more interested in political expedience than with the Constitution or the Bill of Rights.

Notice he frames his argument in a "Republican" context. It tells me that he's more invested in party interests than the rule of law or the Constitution.

I guess all we can do is pity him.

The Bruce| 1.19.12 @ 12:41AM

So you're putting political concerns above Constitutional matters???

I can certainly understand that prisoners shouldn't have the right to vote (they surrender most of their rights while in jail), but can you make the Constitutional justification as to why they can't vote, once they've served their debt to society?

After all, once they're released from prison they regain their right to free speech, religion, due process, etc, etc. Why should voting be any different?

What's the justification for denying a person the right to voter representation in his or her government once his or her debt has been paid to society? Does a person deserve the lifetime forfeiture of his or her Constitutional Rights because of a mistake made earlier in life?

Again, please make the Constitutional argument, or are you just so afraid, politically, that most former felons tend to vote Democrat?

A Republican you may be, but a Conservative you most certainly are not.

And your argument regarding illegal immigrants vs. former felons (U.S. CITIZENS) is ridiculous, at best.

Imagine a country in which you were denied the right to vote because you were caught breaking the speed limit some time ago. Imagine being denied your vote (for life) because you made some stupid choice early in life?

Is that the kind of society you want? Not me. Once a person has paid his/her "debt" to society, they're (once again) part of our society and entitled to all the rights and protections that our Constitution provides.

Sorry if you feel otherwise. Doesn't anyone deserve a second chance in our limited lifetime???

Clint| 1.18.12 @ 7:15AM

" Q: Is Social Security a Ponzi scheme?

Dr. Ron Paul,
Well, I agree that Social Security is broke. We spent all the money and it's on its last legs unless we do something. One bill that I had in Congress --never got passed--was to prevent the Congress from spending any of that money on the wars and all the nonsense that we do around the world. Now the other thing that I would like to see done is a transition. I think it's terrible that the Social Security system has the problems it has, but if people wouldn't have spent the money we would be OK. Now, what I would like to do is to allow all the young people to get out of Social Security and go on their own. Now, the big question is, is how would the funding occur? "

The Tea Party Rebellion Is In South Carolina.

Dai Alanye| 1.18.12 @ 11:42AM

So RonPaul endorses Santorum's method of saving Social Security? I never would have guessed. but then, RonPaul says so many things, so often contradictory of his previous statements.

Clint| 1.18.12 @ 7:43PM

Do Your Homework,Israel; Firster Dai Job.

In contrast to Santorum, Ron Paul suggest a more progressive change to the Social Security program. Ron Paul has said that "My plan explicitly protects the elderly and the sick in the transition."

The Tea Party Rebellion Is In South Carolina.

Con Chef (NB)| 1.18.12 @ 10:12PM

"The Tea Party Rebellion Is In South Carolina."

And damned near getting booed off the stage. Ain't it great?!

mjs_pa| 1.18.12 @ 8:20AM

Santorum is absolutely right.

The American credit card (just like Europe's is now) is about to be cut into little pieces by the bond market. There soon will be no more borrowing to sustain these deficits.

We need to make immediate changes to the Social Security/Medicare systems and to the overall budget now. Spending must be cut immediately.

This certainly isn't the time to suck billions if not trillions of dollars out of a system teetering on financial collapse.

Once the ship is righted, then longer term measures can be taken.

What this author and Newt proposes is financial and political suicide.

Mike 3/505| 1.18.12 @ 10:53AM

Santorum and you are 100 percent...wrong. Your argument presupposes that the current system is moral and legal. It isn't. Is is in fact, a Ponzi scheme. We need to wean ourselves off of it...starting, yesterday. The longer we wait, the harder it will be.

mjs_pa| 1.18.12 @ 11:06AM

So it would be "moral and legal" to bankrupt a system that millions of seniors depend on and by the way have paid into their entire life. They have already gotten a very poor return on their investment, and now you propose leaving them destitute.

Santorum proposes "immediate" changes on the eligibility and spending side of these programs to shore up their finances. He is the only one brave enough to call for immediate changes realizing there is no time left on the clock.

What Newt and the author of this article are calling for are more deficits and more debt.

Have you looked at the balance sheet of the government recently?

There is no "long run" if we don't immediately take steps to balance our books today!

Pete| 1.18.12 @ 12:17PM

Given that Social Security and Medicare need to continue for seniors, its a matter of how can you just tax the younger works if they think it will not be their when they are seniors. You can't so the Gingrich plan may actually produce a short fall of its own, but could be necessary for the long haul. Its trying to make the lemonade from the lemons.

Dai Alanye| 1.18.12 @ 11:38AM

I'm highly appreciative of this column by Ross Kaminsky, as it assures me I should continue to look to Ric Edelman for investment advice, and never ever consider any from Kaminsky.

Santorum advises us to get our financial house in order before going further into debt, which is both the most practical and the most conservative position. Santorum is saying, in effect, repair that old car and get by with it for awhile before laying out $40,000 on the wonderful new Studmobile that will save $500/year in fuel costs. Santorum recommends delaying gratification, while Gingrich (and Kaminsky) are claiming we can have it all, right now today.

I can't believe Kaminsky is quite such an idiot as to actually believe such bilge -- that when deeply in debt we should go further into debt to salvage the situation. That's Obama's scheme, after all, the attitude that brought about "Stimulus" and "Quarterly Easing." Good grief! Even Jimmy Carter couldn't be so stupid. I'll suggest (for which there is other evidence) that Kaminsky dislikes Santorum for personal reasons or other policy matters. Perhaps it has to do with homosexual marriage, perhaps with letting ex-felons regain voting rights, perhaps something to do with Right to Life. Who knows? I failed Mind Reading 101, but it's easy to detect irrational bias.

The best way to handle the coming disaster in Social Security (though I'm open to other thoughts) is in an evolutionary fashion, perhaps by increasing withholding 1% to begin with, and that amount to be invested in bonds or equities. In the meantime outgo must be trimmed by some reasonable method.

Over years as investments compound, that 1% could be incrementally increased while the direct Social Security "donation" to the Treasury could be slowly cut. This would, unfortunately, look like a tax increase at first, but increasing balances should eventually reconcile contributors.

But we should never dream that we can spend our way out of major debt. That way lies inflation and anarchy.

Vern Crisler| 1.18.12 @ 12:41PM

If you wait for government to get its house in order, nothing will ever change.

Dai Alanye| 1.18.12 @ 12:52PM

It's not a case of "waiting" but of avoiding catastrophe. Correct the problem in an evolutionary manner rather than a revolutionary one. We don't want to go further into general debt in a possibly vain attempt to fix one debt problem.

Newt's difficulty isn't a lack of good ideas but a lack of judgment. As an adviser to a strong President he could be highly valuable. And by "strong President" I mean the type who can say, "You're full of crap on this one, Newt. Let's move on to item two."

Doug| 1.18.12 @ 1:22PM

So we just need to immediately cut Social Security payments by $1 trillion. Is that your solution?

JimH| 1.18.12 @ 8:27AM

Interesting the other day when Mitt estimated his tax rate. He said the rate was as low as it was because the majority of his income is from investments rather than any kind of salary. A nice bit of honesty, though I wonder how well it will sit with most people. What it does do is point out the need for some form of flat tax. The tax code should not be used as a means for social engineering.

Adjoran| 1.18.12 @ 8:27AM

Shucks, just a few hundred billion a year added to the deficit . . . no problem!

The fact is Social Security can be salvaged with some common sense steps like extending the retirement age - doesn't make it a good deal, but gets past the demographic crunch. Medicare is the freight train bearing down on us hard right now.

Make the election about private SS accounts, the Democrats and the media demagogue it like they always have and we lose.

Why make it easy for Obama?

Clint| 1.18.12 @ 8:28AM

Big Government Ricky Santorum's Record On Voting For Earmarks, Even The Bridge To Nowhere, His Support For The Lobbyist "K-Street Project" , His Tariff Votes, Medicare Prescription Drugs, No Child Left Behind,Etc. Is Gonna Sink Him With Tea Party Patriots.

The Tea Party Rebellion Is In South Carolina.

bill| 1.18.12 @ 8:57AM

Rick Santorum is a "big government PA moderate." His records:
-voted for raising the debt ceiling 8 times
-voted for NCLB
-voted for "Bridge to nowhere"
AND
-VOTED AGAINST "Right-to-Work" bill, favoring big labors and their Fat-Cats over free-enterprise and consumers
SC is a "Right-to-Wort" state, and Santorum has no chance winning in SC.
His refusal to fix the Social Security shows his lack of leadership and cowardliness.
Santorum is a "dead man walking."
Newt Gingrich is far better candidate than Santorum or Romney.

Peter McGrath| 1.18.12 @ 9:13AM

For me, this latter position taken by Santorum disqualifies him for consideration. Government labor unions are the source of much of this country's fiscal malaise. From the Federal to the State to the local counties and municipalities, ALL government employee unions MUST be decertified.

W| 1.18.12 @ 9:28AM

Labor unions can be decertified only by a vote of the employees represented by the unions.
A state may pass a law to prohibit public employees from forming a labor union because each state has a law to provide for public employee unions. This is a matter for the states to decide.The federal government can eliminate or restrict only federal employee unions, such as the letter carriers (mailmen).

Doug| 1.18.12 @ 1:24PM

It took a Presidential signature to allow Federal employee unions. All it takes is another one to stop the practice.

bill| 1.18.12 @ 9:29AM

Mr. McGrath, thanks for your comment on this important issue.
It's a big deal because states having budget deficit owing to big labors and their members "unsustainable salaries and bonuses. The Collective Bargain Pact is the culprit.
Santorum defended his opposition against "Right-to-Work" law saying that, "I'm from PA, PA is not a right-to-work state, and so I voted against the bill." Santorum is a "big government PA moderate RINO." He is anything but a conservative. He is "dead man walking" in SC.

W| 1.18.12 @ 10:36AM

The issue of right to work applies to private employers, not public employers. Public employees do not have to join a union but they have to pay a fair share, not the full union dues, for the bargaining and representation work of the union. They do not have to pay for the political activities of the unions, the unions are to calculate a fair share dues that does not include the political activities.

Doug| 1.18.12 @ 1:25PM

And how many unions do this? Why are the unions fighting Walker in Wisconsin so strongly for just making those "rights" you list more transparent?

W| 1.18.12 @ 2:24PM

It is obvious why the unions are fighting Walker. He has reduced the items subject to negotiations and therefore reduced the power of the unions.

All unions are required to do that. If the employees do not exercise their rights to enforce this, then that is their problem. Most employees never attend union meetings and do not participate.

Also, even in private employee unions, a member can request that the union calculate how much of the dues is used for political activity, and get a refund, or not pay that portion. It is called the Beck case. Problem is most employees don't care or make the effort, just like many people do not vote, or do not educate themselves to make an informed vote, and then just complain.

bill| 1.18.12 @ 9:55AM

Please help Gov. Scott Walker (WI).

Hello, America!

The Democratic Governors Association (DGA) and the big labors have been recalling Gov. Walker, in favor of bureaucrats and the big labors.
Gov. Walker implemented reforms and balanced the budget, projecting surplus and prompting efficiency and transparency in the public sector.
That infuriated the bureaucrats and big labors, and they are causing chaos in WI, disrupting Gov. Walker's reform initiatives.
We must help Gov. Walker and fend off big labors and DGA efforts to ousting Gov. Walker from the office.
Do not let those liberals win.
We must act now. Everybody should contribute and help Gov. Walker hold onto his office, and stop the big labors and DGA.

2Anglico| 1.18.12 @ 10:31AM

Being self-employed, I already pay BOTH halves of FICA. I would gladly forego the "benefits" of SS if I were allowed to put that 15% into my own account from now till I decide to retire.
Congress can take away this SS "entitlement" at any time. It is NOT insurance and it is not a promise to pay, it is just another government welfare program. The Supreme Court said so back in the 1930's and '40's.

Redstateboy| 1.18.12 @ 10:41AM

Santorum was on FOX this morning and when asked to comment on Romney's 15% tax rate (from Cap. gains income) Santorum - who was just given a perfect opportunity to explain to me his ideas on tax reform (he avoided the pitfall of slamming Romney and thus coming off as anti-capitalist - which was good) fumbled! He stammered, his vision, his thoughts, his explination for a better tax system seemed to come from someone who didn't quite expect the question! I think both Newt and Romney have a clearer sense of how they'll fix our F'd up system.

bill| 1.18.12 @ 12:10PM

Santorum is a "big government New England PA moderate RINO," who is hurting Gingrich and Perry, taking away their fair share of social conservative votes, and helping Romney, in the long run. Santorum cannot win in SC because he opposed "Right-to-Work" law.

Pete| 1.18.12 @ 12:18PM

Perry is hurting Gingrich also. Lets face it we can only get 1 of Gingrich, Perry, Newt past Romney. Two must drop out soon.

bill| 1.18.12 @ 1:39PM

Pete,Thanks for your comment. Here is the fact:

Perry has resources and organization. Gingrich lacks both. Gingrich may topple Romney in SC, but he will have hard time getting out message in a large media market state, FL. Romney is already airing ads in FL. We need Gingrich in SC to beat Romney. We need Perry in FL to beat Romney.
After the FL primary, it will be a three men race: Perry (winner of FL), Gingrich (winner of SC), and Romney (winner of IA and NH).
We just have to wait for the Super Tuesday.

Sean| 1.18.12 @ 11:02AM

Santorum's election would also give us a creepy first lady.

http://www.nydailynews.com/new.....bled=false

I have seen this story in a few different places now. Santorum's wife dating and living with one of PA's first abortion doctors for six years. During that time she had no problem with what he did. For a pro-lifer like me this would be like having a first lady that had a fling with someone like a Dr. Mengele?

VonMisesJr| 1.18.12 @ 11:04AM

Ross has a terrific point. The "unseen" in Santorum's analysis is the over $100 trillion in promises that we do not have the money to pay already. So if all other things equal, Newt is saying that if we can't pay off the current credit card bill, stop spending frivolously by buying more of the same. At least privatizing SS would let the next generations invest in a solvent system.

I like Santorum, but he does seem to be the Republican's statist. What is the difference in big government picking manufacturers to be corporate tax free, as opposed to Obama giving subordinated loans to green energy; except Rick has morals and is not doing it out of corruption but simply ignorance. In the end, we still get government picking winners and losers.

mjs_pa| 1.18.12 @ 11:36AM

If the government/country can't figure out a way to meet its existing obligations, it doesn't matter what sort of long term changes you put in place. We are looking at systematic collapse and private accounts will be worthless along with just about every thing else.

This was the point Santorum was making.

He has in the past and said he would in the future support personal accounts but we need to get our fiscal house in order first .

There is a huge difference in giving tax breaks to manufacturer as opposed to giving loans to near bankrupt companies like Solyndra.

First, each manufacturing job produces up to four jobs in other sectors of the economy. Each $1 produced in manufacturing produces $1.43 in other sectors. The economic benefits of encouraging manufacturing are tremendous.

Santorum proposes to give the lower tax rates to all manufacturers. He's not picking winners and losers among manufacturers. He's encouraging a return to America's roots of producing not just consuming.

By providing lower tax rates, only successful/profitable companies will benefit. Rather than handing out money to sure losers, these manufacturers will actually have to produce and sell a product while making a profit at it.

In essence, this policy rewards success, production, economic growth, and capital investment/savings. It moves more of the tax burden to the consumption side of the economy.

VonMisesJr| 1.18.12 @ 1:10PM

Manufacturers are leaving and not hiring because of the uncertainty of ObamaCare, Dodd Frank, the EPA and NLRB, not because they need a 15% corporate tax break. So if you believe in getting to the root of the problem, it is not re-engineering government programs to help favored businesses.

Manufacturers must also sell their products. The market does not operate in a vacuum. If people do not have jobs in other industries, getting one sector working is not the total solution.

Your points are well taken, but the answer is what Perry promotes. Get government out of the way, not to change the laws and regulations to favor the other side of the equation. I made the point that Solyndra was not comparable since it is political corruption, not investment that drives liberal politicians to help their friends. But perhaps you put too much faith in the Republicans who seem to be willing to maintain earmarks, farm subsidies and the other levers to their power.

DRed| 1.18.12 @ 4:12PM

http://online.wsj.com/article/.....21224.html

It's interesting then, to read that the number of manufacturing jobs in the US increased for the first time in a decade last year. How is that possible with the NLRB and the EPA?

VonMisesJr| 1.18.12 @ 6:42PM

If you read the article you cited, 6 million jobs have been lost since 1997. If we had a 1.2% gain in 2011 that crated 136,000 manufacturing jobs, you apparently are not very good at math.

The combination of both parties poor governance has left us down approximately 5,864,000 jobs and you cite a miniscule improvement as a victory. G0d bless you for trying.

Is that the Democrat platform for 2012?

DRed| 1.18.12 @ 7:21PM

You claim we're losing manufacturing jobs "because of the uncertainty of ObamaCare, Dodd Frank, the EPA and NLRB". Factually, the economy is gaining, not losing, manufacturing jobs. I was just pointing out that you were wrong.

Bob K.| 1.19.12 @ 12:42AM

Alas! Ross quotes Bastiat who says that economists must be able to foresee future effects ("takes into account........those effects which must be foreseen") and clearly Santorum has no foresight.

Does this mean he is not a prophet? Does it mean that Newt is?

Foresee future effects!

tdiinva| 1.18.12 @ 11:09AM

Santorum's reputation as a staunch conservative comes from his social views which are informed by his Catholicism. His political and economic values are also come from the same source. That makes him less conservative than Mitt.

mjs_pa| 1.18.12 @ 11:45AM

Catholics, like Santorum, believe in subsidiarity. This doesn't make them less conservative it makes them more conservative.

Subsidiarity is the belief that individuals should self-govern themselves using the values they learn from their family, primarily, but also from other local institutions like the Church.

This would be one reason why the Santorum's have home-schooled their children.

Mitt Romney bragged that he was more liberal than Ted Kennedy (an unfaithful Catholic). His own words speak volumes on the subject.

Pete| 1.18.12 @ 12:21PM

I like the tone of the debate on this topic. Its a worthy debate worth having no matter who gets the candidacy.

Con Chef (NB)| 1.18.12 @ 1:42PM

As a Santorum supporter, I think this is a good argument to be made & a point that should be brought up to him.

As someone who's worked since he was 15, my feelings on Social Insolvency is this:

The inherent IDEA, to me, is unconstitutional, simply for the reason that it FORCEABLY taxes the individual for something that barely works. However, I'm not one to shake my fist at history & cry about it. It is what it is.

That being said, I also believe that things can be changed. As it stands right now, I've pretty much written off the money I've been taxed on SSI. Its my feeling that I'm not gonna see a damned dime of it anyways.

I'm no fan of Newt's, but I've thought what he has for a LONG time. Allow people the CHOICE in how to run their retirement accounts. If people think the old system works for them, fine, keep it. If people want to "privatize" their SSI (if we're still gonna have it as part our payroll taxes) by incorporating the government contributions to an account run by a financial planner that they can hire themselves. Then the taxpayer can GROW their money over time instead of relying on what the gub-ment leviathan thinks the payout should be.

The possibilities after that are pretty good. If a person already HAS an IRA or 401k, then they can fold THOSE into their Social Security accounts. Enacting a reform of this nature is about the ONLY thing that would make me rethink my feeling that the money I've already paid into Social Insolvency has been pissed down the proverbial rat hole.

Oh, & can we PLEASE STOP TAXING SOCIAL SECURITY BENNIES AS INCOME?! The only reason I know about this is from my Mom, who's a widow. Oh, & it'd be nice if we let people who're ON Social Security to WORK if they want to & not risk losing their bennies.

David| 1.18.12 @ 1:57PM

ConChef, good comments; however, I believe what Gingrich is proposing is not complete privitization for those who want to opt out of SS. What he wants to do is let workers KEEP THEIR contribution to the system, but the EMPLOYER still has PAY ITS SHARE into the system. It may work. It may cause some problems.

The time to have done something was when Bush proposed it at the beginning of his second term, but neither he nor the repubs would fight for the changes, so once again, nothing was done.

I believe that what Santorum proposed is reasonable. We all know he has been a staunch supporter of private accounts and that is still his ultimate goal. He wants to put things in place that will allow the economy to grow and the umemployment rate to drop.

I think Santorum is being very prudent to want to slow down just a little before we jump into drastic changes on a system that is alreay so weak. Let's see just how bad things are when the repub admin gets into power so there are no surprises.

Blasting full speed ahead reminds me of .............well, how Romneycare and Obamacare were passed.

SS and Medicare are difficult problems and major changes are required. I think Santorum has the right idea.

Con Chef (NB)| 1.18.12 @ 2:28PM

I see your point. Like I said, at where I stand, about to turn 33 in March, the money I've paid in is just gone. Gone in the same manner as it would be if I had wasted it at a casino. Unless something is done sooner (after consideration, as you mentioned), rather than later, it will be a certainty that will happen.

David| 1.18.12 @ 2:04PM

Sean, what do mean Santorum's wife would be a creepy first lady??? Do you know her, or know much about her?

As to creepy first ladies, I would like to remind you that while Reagan, the Elder Bush, the Younger Bush were all anti-abortion, their wives were all pro-abortion............period. I think the only candidates we have had or presidents we have had in recent memory who wives were not pro-abortion were probably Bob and Elizabeth Dole - can't recall Cindy McCain's position on it.

So Sean, please stop the smear. For all we know, her boyfriend's pro-abortion job is what caused the break-up.

Rocco| 1.18.12 @ 2:26PM

Mr. Santorum should read what Chile did in the 1980's when it privatized Social Security there. To sum up, actuaries determined how much SS was necessary for workers over 45 years old, did a net present value, then sold a special class of T-bonds to finance current benefits, so workers under 45 could fund their own private accounts. Those over 45 came under the old govt system. In just over 15 years, Chile had created such a pool of capital, that the country ended up investing elsewhere in South America, becoming a net provider of funds and not a big borrower like its neighbors. It's a case study that should be read.

bill| 1.18.12 @ 2:37PM

Ron Paul's Hypocracy:

In the SC debate, Ron Paul decried American Judicial System and Black suffrage.
He has become the father of black liberation theology. He's "talking black" and trashing America. He's a liar. Since SC has a large number of black voters, he was just trying to get their endorsements. Ron Paul miserably failed, and is pathetic. I do not trust him any more.
There is nothing wrong with the American Judicial Sytem. It's fair and balanced. It rewards redemption and hard work. Blacks don't believe in justice and liberty, they seek big government and freebies. They consider themselves the victims, and treats Whites to be the agressor. This is a "pious balony." Here are the facts: Majority of blacks are uneducated and unemployed, and live on welfare and poverty, and committ 90% of all crimes. Blacks are incarcartaed in a higher number than Whites, logically. Also, 2/3 of blacks being incarcarated are repeated offenders, and they are threats to our community.
In my humble opinion, it's just politics. The truth is that poverty does not stir crime, it's lack of education and moral character that prompts violence. Majority of blacks are lazy and seek food-stamps, instead of paychecks.
GOP must expel Ron Paul, and he can join NAACP.

aware| 1.19.12 @ 6:00AM

Paul derangement syndrome. Hey Bill, aren't you saying the exact same thing that the Paul newsletters were saying? And weren't you and the other deranged around here accusing him of racism for it?

So let's see, first Paul is a racist then he is a closet black liberation theology practitioner. And either way he should be "expelled". I wish you neocons would pass out programs so we could know which side you will be playing in the show.

David| 1.18.12 @ 2:45PM

Rocco, I believe I specifically recall Santorum citing Chile as an example during his many years of pushing Congress to do something on SS. I think the guy just wants to get the economy turned around and headed in the right direction before doing anyting major. I am confident that he will get it done as prez. He is very persausive and can make the case to older folks so they don't bolt and revolt against any changes as has happened in the past.

Joe D.| 1.18.12 @ 4:41PM

Ross, since when are you a well know economist. I would prefer to listen to your associate economist Peter Ferrera who knows your RINO from the northeast Romney is no great business man. Santurum may not be perfect but is much better then the RINO compromiser Romney.

Ross Kaminsky| 1.18.12 @ 5:51PM

Joe, I guess it depends on your definition of "economist."

No, I am not an economist by profession. However I have studied a lot of economics. More importantly, I trade financial markets for a living so I imagine I read and think about more economics in a week than you read in a year.

For the record, I think Peter Ferrara is excellent, and I've had him as a guest on my radio show twice so far.

And for the record, I never claimed to be well-known.

And finally, Romney is not "mine". I have not endorsed him (or anyone else.) I have simply said that I think he has the best chance of beating Obama, and that I have to consider that an important factor when comparing candidates.

aware| 1.19.12 @ 6:08AM

Ross, I for one am impressed you know Bastiat and read him. I would suggest you move to his "The Law" if you haven't read it already. Beats the hell out of pretenders with squeaky voices like Levin and his shallow tomes.

Romney may have the
"best" chance but he will lose just the same.

Purp| 1.18.12 @ 5:31PM

Get off of Social Security - it is not broke, it's not broken, it works. It's like saying because we have a budget problem right now, we should dismantle the Armed Forces - how stupid. It's not efficient, not even economically profitable - but what a poorer country we would be without it.
Not to mention, the Social Security Trust fund has Trillions in it and if Bush had followed the "Lock Box" approach everyone joked about from Gore - we would not even be discussing this. And you want to blame Santorum, who made a reasonable statement, for talking like a Democrat? You are so full of s* ... 1848? You have to compare today with 1848? Are you insane? Do they pay you for your articles? They sure shouldn't.

Ross Kaminsky| 1.18.12 @ 5:48PM

The Social Security Trust Fund has paper in it. That paper can only be turned into cash by the Federal Government borrowing more money since the politicians spent all the prior Social Security surpluses.

Social Security has worked...just the same way all Ponzi schemes work early on. But the music is stopping, if you'll pardon the additional metaphor.

Anyone who thinks that Social Security is not broke simply doesn't have a clue as to what is going on.

Purp| 1.18.12 @ 6:36PM

No s* Sherlock ... and EVERY Treasury Bill and Treasury Bond is EXACTLY the same way - if the United States does not pay what it owes - it is default. You do know what that is, don't you?
It is not a Ponzi scheme for a few at the top to get rich at the expense of those on the bottom (that is the definition, btw). Ponzi schemes are illegal. Discuss Bernie Madoff, if you want to discuss a Ponzi scheme. An 80 year Ponzi scheme? Are you really that dumb?
It isn't Social Security that is broke - it's Congress, a Congress that cannot get it's act together and tax what they MUST and cut what they CAN without dismantling our economic engine or caring for our people and commitments.
Geesh, get a clue or stop writing articles with misinformation and misdirection from the real problem. Otherwise, it's pure propaganda and pushing an agenda, and the good people out here deserve more than that, don't you think?

cicero| 1.18.12 @ 5:31PM

Newt's idea on SS makes sense. Everyone seems to be looking for a solution to solve the problem all at once, and immediately. That cannot happen. The actuarials show that, on the current track, SS goes broke pretty quickly, and the forecast deficit is not sustainable. However, if the age for eligibility is raised, and those under 55 have a choice of personal savings account, on the Chile model, the prognosis changes. With the rise in the eligibility age, people work longer, collect over a shorter period of time, thereby changing the actuarial calculations. Time and economics heal all. Those currently receiving SS checks have paid into the system for 40 to 50 years. Even so, they should be praised for and encouraged to stay in the work force. That way they continue to contribute even while they draw what they are due. Finally, with a balanced budget, and Washington no longer borrowing all of the money from SS, in return for IOU's, the future will be fine.
At this point of the primaries, those with the weakest positions are saying what they think they have to to stay in the race. I laugh at those who think that nobody should criticise Romney. Newt tried that in Iowa, and see where that got him. Romney's PAC spenbt $17 million on negative adds directedd at Newt, and Romney stood there with a shit eating grin on his face, saying, "who, me?"
I believe it is timee to start considering a Romney/Gingrich ticket. If Newt is going to be on a top ticket, it has to be now. The Republican establishment will not support him for the top slot, because he made too many enemies while in the House. Besides, I laugh out loud every time I even think of a Gingrich/Biden debate.

Dmac| 1.18.12 @ 5:35PM

The quickest way to shore up social security is to get it back to what it was designed to do. Supplement ones retirement. It is now being used to pay survivors benefits, disabilities and a whole slew of other things it was never intended to do. Also, there are other government agencies that pay duplicate benefits. There's pleantyof money to be saved in social security and just about every other government agency. We just don't have politicians that up tp the task.

Purp| 1.18.12 @ 6:39PM

Actually, Social Security is in position to pay 75% of benefits forever ... as far as any of us can see. It's reaching the 100% target that needs some adjusting ...

rhortus| 1.18.12 @ 6:54PM

75% ? what model? If the birth rate declines more than the model, if the number of immigrants declines more than the model, fewer workers paying into the system means higher FICA taxes or bankruptcy or both.

Anders13| 1.18.12 @ 9:38PM

Don't you recall!? In the Debate, Romney agreed with Santorum about Newt's plan. Maybe Romney knows business but not macro economics.

Jeff Perren| 1.19.12 @ 2:28PM

Even when solvent, Social Security is by its nature immoral, impractical, and unconstitutional.

Why should the Federal government relieve individuals of their property by force only to return part of that money to some now and those victims later?

Phase it out; leave individuals responsible for their own welfare, as they should be.