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Area leaders will be discussing the issues of the day beginning. The first show will feature Senator Al DeKruif (MN Senate 25) and Representative Kelby Woodard (MN House 25B).

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Tune in weekly  to hear “The Right Discussion”!

Ortman’s counterpart in the House, Taxes Chair Greg Davids, threw cold water on that idea [eliminating tax breaks] Tuesday, declaring that “getting rid of tax expenditures is a tax increase.” His comments came after his committee considered a round of new tax expenditures to give breaks to military veterans.

I have argued with anyone who toes the “no earmarks” line that tax expenditures, like earmarks, are part of the poison that is polluting our political process. Tax expenditures are nicely explained (admittedly from across the political divide) at the Center for American Progress site as having advantages over the usual and transparent means of allocating government spending, which is through direct grants and programs. Martin Feldstein at the Wall Street Journal agrees that tax expenditures are behind much of our spending woes. The primary advantage touted, that they are “tax cuts” is one that we, as Republicans, normally embrace.  But a reduction in taxes that only goes to some is only spending disguised as a tax cut. Uunless it is across the board, it just does not qualify as a “tax cut”, which means that we are duped into thinking it is a good thing by the labeling.

A tax expenditure is not a tax cut. It is simply pork used to buy votes and spun to look like a tax cut. Chair Greg Davids needs to step up to the issue and realize that while Republicans believe that higher taxes are in general a bad idea, claiming to lower taxes through targeted tax cuts violates an even more important Republican principle, which is that we should all be equal under the law.

- Bruce W. Morlan, Major, USAF (Retired) and State Central Delegate, Rice-Scott BPOU

[An aside] A specific tax expenditure being proposed would directly impact the author. The expenditure being considered would remove some or all of the state’s tax claim on military pay and retirement. While this sounds nice, as a retired veteran I object on two grounds. The first is that such tax expenditures are in fact morally equivalent to earmarks and as such I am opposed to them on principle. The second is that I am insulted that anyone thinks my vote is for sale at any price.

“a project of the St. Petersburg Times to help you find the truth in American politics. Reporters and editors from the Times fact-check statements by members of Congress, the White House, lobbyists and interest groups and rate them on our Truth-O-Meter. We’re also tracking more than 500 of Barack Obama’s campaign promises and are rating their progress on our new Obameter.”

Politifact is one of a new class of websites, claiming impartiality and through that claim gaining followers who trust them to be fair and balanced. And while we applaud the effort, and enjoy the sight of pompous politicians being pummeled by the own pronouncements, we must remember that to call a statement a “pants on fire” lie requires that you know what the truth is. We took exception to Politifact’s understanding of our use of the Ponzi scheme as a lesson for understanding Social Security.

Politifact Texas said

In September, PolitiFact Wisconsin rated Barely True GOP U.S. Senate candidate Ron Johnson’s statement that Washington politicians “run Social Security like a Ponzi scheme.” Despite a superficial similarity, Social Security is obligated to pay benefits, a commitment the shysters who run Ponzi schemes do not share. What”s more, participants are aware of how the system is operating. It”s all public. In a Ponzi scheme, investors have no clue where their money is going and are told lies by its promoters.

This comment completely misstates the reason we call Social Security a Ponzi scheme. The essence of the Ponzi scheme is that it pays current beneficiaries using funds that by the very nature of the mathematics of income and payouts cannot be sustained forever. An interesting and instructive example appeared in the mid 20th century. In those times, nearly everyone collected S&H green stamps. In the early 1960′s chain letters were common, and offering a bonanza in S&H green stamps was one of the schemes that would surface from time to time. The basic idea was simple, you received a letter with 5 names on it. You were supposed to send the person on the top of the list (or send each person on the list) a book of S&H Green stamps. You then removed the top name, put your name and address on the bottom and sent the list to five of your friends. The mathematics were simple, if each recipient played along you could receive 3125 (or 3905) books in return. A veritable king’s ransom! This was the first introduction of the baby boomers to the sort of Ponzi scheme that you could set up if the victims did not understand the limits to growth of such schemes posed by the finite population of possible payers.

When activists refer to Social Security as a Ponzi scheme, it is this mathematical certainty, that population growth is limited, that drives their concerns. Unfortunately for us, our political leaders (especially populist Democrats) either do not understand these limits or are willing to lie to us rather than change those plans (for example, as a starter, from defined benefit to defined contribution plans). With a certain amount of charity, we assume it is because they neither think about nor understand the mathematics.  It is the growth in the entitlement programs without the necessary savings to fund them that represents the Federal equivalent of sending out that letter with our kids names at the bottom of the list. And that is why we stand against the politicians who ignore that problem.

- Bruce W. Morlan is a delegate to State Central Committee of the Republican Party of Minnesota

More reading …

• What If the GOP Embraced Paul Ryan’s Entitlement Plan? Jim Powell, CATO Institute
• A Roadmap for America’s Future. Rep Paul Ryan.