The First Republican Debate

The Republican Debate at Reagan Library was an unqualified success for the lead in to future debates and the deconstruction of the nanny-state, socialism and the Democrat’s cradle to grave philosophy – assuming our candidates are not stuck on “trickle down.”

I suggest they add “rise up” to “trickle down” to solve the country’s economic and social problems. It is the moral, constitutional and free-market thing to do. In the process our state of “dependency” will evaporate to be replaced by the hope and change embodied in the phrase “of the people, by the people and for the people.”

Thanks to Newt Gingrich the media got a slap down trying to turn candidate against candidate. Thanks to Rick Perry and Herman Cain a dialog on the replacement of Social Security by a personal investment account has begun. We even saw Romney get off the bench and bark at Perry. The testosterone in the room overwhelmed Michele Bachman which provides a lead in to the possibility of the “big girl” entry of Sarah Palin.

However, my hat goes off to Ron Paul that 18th Century isolationist. He made his case that his form of liberty without mandates can be compassionate. Unfortunately he supported in the wrong way.

Under Rise Up the poor and middle-class use personal investment accounts to achieve personal liberty – the only way to get there quickly. Using the non-taxability of stock appreciation every American can become a millionaire at retirement thereby achieving the liquidity promised in the American Dream.

Rather than go into detail anyone wanting to understand Rise Up can go to http://www.riseupamerica.us and catch up. Now let’s get to the dialog of the second debate.

The Democrat pundits jumped all over Perry for calling Social Security a “Ponzi” scheme. Rick didn’t do himself any favors and even Karl Rove chimed in and said that was a “toxic” thing to say. In the debate Perry only supported his claim by calling all supporters liars and focused in on only the unsustainability of the program. He has now set up his opponents for the big shoot out at the OK corral.

Now in the second debate the candidates could get to a solution to many problems in the country by “privatizing” or “individualizing” Social Security and other entitlement mandates. To the questions we know are coming here is how Republicans can answer.

JOBS. It is said that 75% of the new private sector jobs are created by businesses that are five years old or less. Therefore to create new jobs in the private sector we need new investment capital. By privatizing payroll taxes we invest that $100 million or more a month into the stock market which in turn finances new businesses which will create 20 million new jobs in three years not in 20 years as some are predicting. This will work where stimulus programs by government always fail.

DESTROYING SOCIAL SECURITY. We will keep Social Security, Disability and Medicare benefits that exist today as the floor on benefits to all future citizens. No one will ever get less than is paid today.

STOCK MARKET TOO RISKY. Let’s get real folks. Every pension and retirement program in the country invests their funds in the stock market. The federal government has personal investment accounts for all government workers similar to what Rise Up suggests and all those funds are invested in the stock market. The stock market has been seriously hurt by government interference from time to time but over the years the S&P 500 has earned an average rate of return of almost 10% for 40-year investments since 1871. Yes one and two year investments are too risky – 40 year investments are not.

PRIVATIZING HURTS THE MOST VULNERABLE. No, that is not true. Social Security and the promise of Social Security have lured the people into believing there is nothing better. Rise Up promises a million-dollar nest egg at retirement. Social Security provides none.

PEOPLE RELY ON MONTHLY SS CHECKS. Listen the average America household today earns $50,000 a year and pays $7,500 in payroll taxes. In their 40 year working life they will have invested $300,000. Now if they had invested those funds in the stock market their personal investment account would have soared to $4 million. If they continued to earn that annual 10% they would be able to get a $33,000 a month check out of their account without cutting into the $4 million until they die. Now how does that stack up with the current Social Security in which the taxpayer has no nest egg and a $1,300 monthly check?

CAN YOU TRUST PEOPLE TO INVEST THEIR OWN MONEY? The quick answer is no. People will spend that extra money just like they always do. So let’s adopt the Federal government’s Thrift Savings Plan model. You invest the money in one or more of the various stock funds they have created and you can’t get to the money until you retire. That is a spendthrift plan that will insure that no worker will ever have to go on government welfare at retirement.

CAN WE AFFORD TO DO BOTH? The question is can we afford to pay the old entitlements benefits forever as well as invest all payroll taxes in the taxpayer’s personal investment account? The answer is yes. The benefits under the old plans run about $1 trillion a year. We have $4.7 trillion in bonds in the Social Security “fund” we can cash and use those funds for the first four years without increasing the deficit. After four years if increased income tax receipts and the cost saving squeezed out of privatization of the federal government doesn’t cover the shortfall we can always print money to cover it. We won’t have to print it for long as our GDP should be shooting into the ionosphere and government tax receipts with it.

OTHER THOUGHTS. At the website you can get hundreds of other talking points like the financial emancipation of women, the capability of every person’s ability to get the best medical care on the planet, the end to the demographic winter, the restoration of “hope” in the minority communities, making domestic corporation more cost competitive with their foreign rivals, the eventual reduction in crime, the end to endemic poverty, the end to labor-management disputes on pensions, the solution to the bankruptcy of governmental entities because of their inability to pay pensions and literally hundreds of other solutions that emanate from one simple step – privatizing the entitlements. Many of these will provide the gunfire to shoot down socialism.

Vodpod videos no longer available.

Dick McDonald
9-8-11

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