Social Security is Not a Ponzi Scheme, Mr. Perry

[Toro]

You seem to ignore the fact the money is missing. Try being a private company and spend all the investment money on another project.

That's a bad analogy. The "money" isn't missing and a pension fund isn't a private company, nor does it operate like one.

A pension fund has assets and liabilities. The assets are the investments. The liabilities are what it has to pay out. The assets of the pension fund are stocks, bonds, real estate, commodities, etc. and that includes government bonds. I don't think there is a pension in the entire country that doesn't invest in government bonds.

Government bonds are government liabilities. The assets of the SS trusts are also government liabilities, except that they aren't traded like Treasury bonds. However, from an economic standpoint, they are no different. They are liabilities of the US Treasury. The SS trusts invest 100% in government liabilities whereas a typical pension fund invests 10%-40% of its assets in government liabilities.

 

[The T]

And by the way? Taxation should come from taxing commerce...NOT incomes of citizens. That's how the Founders had it set up, and it needs to go back to that way.

Practically everyone was a farmer of some sort back then. I don't think the comparison is meaningful.

Of course you don't. You might as well point out that everyone wore knickers in those days, so anything they did in government can't work now.

He has to stay true to the Statist line.

 

[OohPooPahDoo]

Because I listened to his campaign dildohead. The healthcare plan he laid out in his campaign is clearly very different from the one Congress let him pass.

He who?

Just in case you are thinking that Obama actually had something to do with Obamacare/PPACA, all he did was beg people to pass something to help make him look good.

It is. Its part of the IRS code.

You obviously think that you know what you are talking about.

FYI, there is one thing that every single judge that has ruled on has agreed upon, the penalty is not a tax. That means that I have to choose between your opinion, and the unanimous legal opinion of multiple federal and appellate judges.

Guess which one I choose.

You'll choose the judges when they agree with you and cry "judicial activism" when they don't. Not that hard to figure out!

 

[Oddball]

The argument made by the Reason piece in the OP is that it's worse than a Ponzi scheme...It has the added benefit of being 100% correct.

 

[JakeStarkey]

QPW always accuses those he disagrees with of judicial activism, while accepting his own brand of it very happily.

 

[The T]

You want a government where all taxation is voluntary? How would that work, exactly?

Let me ask you as a progressive would you be against an optional opt as for those that wish not to participate in SS?

Only if I get to decide how much tax I pay that goes to the military.

Wrong answer numbnutz. Socialist Security isn't part of the Constitutional mandate. The Military is.

 

[OohPooPahDoo]

How does SS assume the risk of old age?

If you get old - it pays.


SSI isn't funded from FICA revenues, and it pays a lot less than the OASDI that people pay for with FICA.



Yeah. I am. That I in OASI stands for INSURANCE.


Uhh. NO. I already posted the fucking link, I have to do it again? DO YOU FUCKING READ ANYTHING I POST?

The number of work credits needed for disability benefits depends on your age when you become disabled. Generally you need 40 credits, 20 of which were earned in the last 10 years ending with the year you become disabled. However, younger workers may qualify with fewer credits.

The rules are as follows:

Before age 24--You may qualify if you have 6 credits earned in the 3-year period ending when your disability starts.

Age 24 to 31--You may qualify if you have credit for working half the time between age 21 and the time you become disabled. For example, if you become disabled at age 27, you would need credit for 3 years of work (12 credits) out of the past 6 years (between ages 21 and 27).

Age 31 or older--In general, you need to have the number of work credits shown in the chart below. Unless you are blind, you must have earned at least 20 of the credits in the 10 years immediately before you became disabled.

Work credits needed for disability benefits

IS IT BIG ENOUGH FOR YOU TO READ NOW YOU RETARD?

SSDI ONLY PAYS TO THOSE WHO PAY INTO IT

Really?

I checked the website, and it is theoretically possible for a person to get injured the very first day he is ever employed and still be covered under SSDI. type as large as you want, it will not change the facts.

Only for those under age 22 - and then their parents must have paid enough credits.

What if the parent never worked?

No benefits would be payable on the record of a parent who never worked.

http://www.ssa.gov/dibplan/dacpage.shtml

BTW - did you know its possible to get injured your very first day of work and collect workman's comp? I know the concept of insurance escapes you - but many forms of insurance begin as soon you start paying in. That's the whole idea - you're paying for risk coverage, not for a rainy day account.

 

[OohPooPahDoo]

I posted the info that shows, those that pay the least, tend to benefit the most.

No you didn't.

SS is not part of an intelligent investors chosen portfolio...rather it is the mandated portfolio by government for suckers...and supported as sound and good by lemmings.

You wouldn't know what an intelligent investors portfolio is.

 

[OohPooPahDoo]

The argument made by the Reason piece in the OP is that it's worse than a Ponzi scheme...It has the added benefit of being 100% correct.

What other Ponzi scheme has made payments as they come due for 75 years?

 

[JakeStarkey]

If Perry uses this langauge in the Florida debate, the polling will knock him on his ass, and it will be the last time he uses it.

Why? It's not a ponzi scheme, and the elderly in America know that very well.

 

[Oddball]

The argument made by the Reason piece in the OP is that it's worse than a Ponzi scheme...It has the added benefit of being 100% correct.

What other Ponzi scheme has made payments as they come due for 75 years?

What other Ponzi scheme had the power if the IRS behind it, to compel the participation of more "investors", under threat of imprisonment?

 

[pete]

For the SS is not a Ponzi scheme crowd.

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

Social Security is Not a Ponzi Scheme, Mr. Perry - Hit & Run : Reason Magazine

Isn't it also a fraud .... If at the time it was put in place the average American was living to the ripe old age of 65 and retirement was set at 65, then who did they plan on paying? The gamble was hopefully we will collect more than we payout

 

[JakeStarkey]

What other Ponzi scheme has made payments as they come due for 75 years?

SS is no more a ponzi scheme than you know what you are talking about. Your nattering comments about whatever are sooooooooo boooooooorrrrrrrrrriiiiiiiiiiiiing. Learn, please.

 

[kaz]

If you are old, $1,800.00 a month is nothing to sneeze at.

And bank robbery is OK because the bank robbers like it...

 

[kaz]

What other Ponzi scheme has made payments as they come due for 75 years?

SS is no more a ponzi scheme than you know what you are talking about. Your nattering comments about whatever are sooooooooo boooooooorrrrrrrrrriiiiiiiiiiiiing. Learn, please.

Current "retirees" are paid purely from funds from new investors and new investors can only be paid as money is confiscated from future workers. The rest of the incoming money is simply spent by government. And with increasing "benefits" and fewer workers per "retiree" it is unsustainable. You can't find a more pure example of a ponzi scheme.

 

[Full-Auto]

What other Ponzi scheme has made payments as they come due for 75 years?

SS is no more a ponzi scheme than you know what you are talking about. Your nattering comments about whatever are sooooooooo boooooooorrrrrrrrrriiiiiiiiiiiiing. Learn, please.

dufus the similarities is what is being discussed.

You can get all butt hurt. The fact remains there is no money in it, and what is collected goes the general fund

 

[Toro]

Charles Ponzi was a legendary Boston swindler who promised investors 100 percent returns in 90 days if they joined a scheme to buy and sell international postal coupons. In 1920, after roughly seven months of easy riches, he was exposed as a fraud and arrested.

Social Security is a government-run insurance program that provides the typical retiree with single-digit returns on contributions deducted from their paychecks over the course of their working lives. The program has operated for 76 years amid praise from presidents of both parties. In 1983, even as staunch a critic of big government as President Ronald Reagan vowed: “The Social Security system must be preserved.”

To presidential hopeful Texas Governor Rick Perry, however, the country’s most expensive entitlement program is a financial con that would have made Charles Ponzi blush. “It is a Ponzi scheme to tell our kids that are 25 or 30 years old today, you’re paying into a program that’s going to be there,” Perry said during a Sept. 7 debate of the Republican presidential candidates, reprising a theme from his 2010 book “Fed Up.”

Experts on both Ponzi schemes and Social Security say Perry is wrong. “Ponzi schemes are, by definition, fraud,” said Mitchell Zuckoff, author of “Ponzi’s Scheme: The True Story of a Financial Legend.”

“Social Security is above board,” he added. “We can argue about whether it’s a good system. But you can’t call it a fraud.”
Changes Needed

Peter Diamond, a Nobel Prize-winning economist at the Massachusetts Institute of Technology in Cambridge, said changes are needed to make Social Security financially viable for the long run. People are living longer than in the 1930s and there are fewer workers for each retiree.

Even so, Perry’s remarks are “inherently misleading,” Diamond said. The economist favors a mix of benefit cuts and revenue increases to shore up the current system.

Ponzi schemes pay investors with money from subsequent participants. Once new people stop handing over their money, such schemes collapse. To critics of Social Security, such as Perry, the program’s use of payroll tax revenue from today’s workers to pay benefits for those who preceded them in the workforce smacks of such an arrangement.

“He’s basically correct on the structure of it,” said Michael Tanner, an analyst at the Washington, D.C.-based Cato Institute. “The government can just make people pay more taxes. But the basic idea of transferring money from one generation of individuals to the next is the same.”
Millions Benefit

Zuckoff says there’s a big difference between tricking innocents into making doomed investments and a social insurance program that has benefitted millions of Americans. In December 2010, 54 million Americans received either retirement or disability payments under the Social Security program.

Poverty among elderly Americans was endemic before the program was created in 1935. The first benefit checks weren’t issued until 1940, and as late as 1959 more than 35 percent of the elderly were living below the poverty line, according to the Social Security Administration. In 2009, the most recent Census Bureau data available shows, the figure was 8.9 percent.

In 1983, Congress enacted the recommendations of a bipartisan commission aimed at solidifying the program’s finances. Earnings of high-income Social Security recipients were taxed and the age at which full benefits were received was slowly increased to 67 for those born after 1959.

Those fixes sufficed until now. Last year, for the first time since 1983, Social Security spent more than it collected in revenues. A $49 billion deficit was covered with withdrawals from the program’s so-called “trust fund,” an accounting mechanism that tracks revenues from a dedicated payroll tax.
Deficits Projected

The Social Security and Medicare Trustees project a deficit this year of $46 billion and continuing annual shortfalls until the $2.5 trillion fund is exhausted in 2036. Beyond that point, the program is expected to have sufficient funds from continuing infusions of payroll taxes to pay about 75 percent of promised benefits.

Perry’s aversion to the program is nothing new. In his 2010 book “Fed Up,” he lambastes Social Security as a “crumbling monument to the failure of the New Deal” and likens it to “a bad disease.”

The Texas governor’s remarks tap a deep vein of conservative antipathy to Social Security that dates to the program’s founding. In April, Representative Jeb Hensarling of Texas, a member of the House Republican leadership, said Social Security -- along with Medicare and Medicaid -- were “morphing into cruel Ponzi schemes.”
’Pay-As-You-Go’

Those running the program are accustomed to beating back accusations of shady behavior. The Social Security Administration’s historian produced a research note in 2009 distinguishing between the program and various financial scams.

“Social Security is and always has been either a ‘pay-as- you-go’ system or one that was partially advance-funded,” concluded Larry DeWitt, a program historian. “Its structure, logic and mode of operation have nothing in common with Ponzi schemes or chain letters or pyramid schemes.”

Yesterday, House Majority Leader Eric Cantor defended Perry’s language. “The point the governor was trying to make is the math doesn’t lie and the numbers don’t add up,” Cantor said at a Christian Science Monitor lunch. “We need to face the fact that people are expecting government to live up to its promises.”

Other Republicans said the Texas governor’s take-no- prisoners language risked spooking voters. Calling Social Security a Ponzi scheme was “dumb,” said Governor Gary Herbert of Utah.

Democrats crowed over a statement they regarded as political gold. “Ponzi Perry just lost the general election,” former Michigan Governor Jennifer Granholm tweeted during the debate.

As for Charles Ponzi, after bouncing between prison and fresh scams in Florida and his native Italy, he died in 1949 in the charity ward of a Rio de Janeiro hospital. He was 66. Says biographer Zuckoff: “He could have used Social Security.”

Perry

The more we're talking about SS being a Ponzi Scheme, the more the Republicans are losing.

 

[clevergirl]

If Perry uses this langauge in the Florida debate, the polling will knock him on his ass, and it will be the last time he uses it.

Why? It's not a ponzi scheme, and the elderly in America know that very well.

No, the elderly in America are trapped by its pittance. SS is like a drug of the elderly and government plays the dealer. By the time you are dependent on the pittance it is too late to not need it- you're hooked.

I do agree that he needs to be less bombastic and more conciliatory.

 

[saveliberty]

I disagree that a talk about the condition of Social Security is a deal breaker. A system that is modified and restores American's trust in the program will be very beneficial.

 

[The T]

What other Ponzi scheme has made payments as they come due for 75 years?

SS is no more a ponzi scheme than you know what you are talking about. Your nattering comments about whatever are sooooooooo boooooooorrrrrrrrrriiiiiiiiiiiiing. Learn, please.

Current "retirees" are paid purely from funds from new investors and new investors can only be paid as money is confiscated from future workers. The rest of the incoming money is simply spent by government. And with increasing "benefits" and fewer workers per "retiree" it is unsustainable. You can't find a more pure example of a ponzi scheme.

The current Social Security system works like this: when you work, you pay taxes into Social Security. The tax money is used to pay benefits to:

• People who already have retired;
• People who are disabled;
• Survivors of workers who have died; and
• Dependents of beneficiaries.

The money you pay in taxes is not held in a personal account for you to use when you get benefits. Your taxes are being used right now to pay people who now are getting benefits. Any unused money goes to the Social Security trust funds, not a personal account with your name on it.

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