Social Security is Not a Ponzi Scheme, Mr. Perry

[kaz]

I'm biased towards facts, you're biased towards a political party. Yep, skew is my problem here.

I, like you, was once a stridently ideological libertarian. I am no longer. I don't have a political party. I've supported Republicans and Democrats. I supported Republicans in 2010 and will probably do so in 2012. Pointing out that SS isn't a Ponzi Scheme doesn't make anyone a liberal.

A ponzi scheme is a system where current "investors" get unrealistic returns from funds paid by new investors and not from their actual investment.

An unrealistic return is 40% or 400%, not 4% as being compounded in trusts. Can you give us one example of a Ponzi Scheme promising low single digit returns? One?

A ponzi scheme will collapse when there aren't enough new investors to continue to pay out current investors.

That's true of any non-collateralized debt. If you can't roll your debt, is that a Ponzi Scheme? Of course not. Was Lehman a Ponzi Scheme? Was Bear Stearns? The fact that you can't get new investors to pay off the old does not mean its a Ponzi Scheme.

Social Security is a system where current "investors" get unrealistic returns from funds paid by new investors and not from their actual investment. The social security scheme will collapse when there aren't enough new investors to continue to pay out current investors.

Yep, I'm biased to think those are the same...

A government bond rate is not an unrealistic return assumption.

A Ponzi Scheme has no economic basis under which the promised outsized returns. That is not the case with government debt. The government has the power to tax all economic activity. That's a far cry from the investment methodology given to justify high returns in Ponzi Schemes, which are always "It is very complicated" or "It's a secret." Ponzi Schemes are frauds. The power to tax is not.

SS is underfunded. It is a bad system because it is entirely invested in government liabilities. But most pension funds, public and private, are underfunded. However, nobody sane is going to argue that underfunded pension plans are Ponzi Schemes.

No matter how many times you want to claim government loaning money to itself is an asset and it's not a debt, it don't make it so. Sorry. An you say you're not biased. I like how now not only is government loaning money to itself an asset, but it's "collateralized." That is just too funny...

 

[Toro]

That's true of all government debt. All government debt relies on revenues to fund obligations that have accumulated over time. Taxes are used to pay interest and retire government debt. Taxes are also used to pay off obligations in SS. SS is another form of government debt.

If one argues that SS is a Ponzi Scheme, one also has to argue that all government debt is a Ponzi Scheme. That's nonsensical. That doesn't mean the government will never default but there's a difference between solvency and a Ponzi Scheme.

Technically, I would agree with you.

But I am not sure that a technical definition is the issue here.

What seems to be the common theme is that SS will continue to demand more and more of those who are not collecting from the system to satisfy those who expect to gain from the system. That is about as close as it gets.

What I keep reading is that it is bad practice to push the burden of these obligations onto those who will enter the game later.

It should be noted that SS did pay out money to people who never paid into it. In that sense it did give unrealistic returns....not calling it a Ponzi Scheme....just saying.

Yes, originally it did.

SS is a poor system. It needs to be reformed. If we want to keep it as it is, we either have to start paying more taxes into it or cut benefits. I think we should reform it. People should be given a choice whether they want to run their own investment account. Most people will likely say no, so for those people, SS should be run like a real pension fund, not like it is today. You could lower taxes paid into the system and easily make it fully funded if you did.

 

[kaz]

Social Security is Not a Ponzi Scheme, Mr. Perry

Correct.

UNLESS, of course, ALL T-BILLS are a PONZI scheme.

In which case, Social Security is the least of our problems.

That argument is stupid...even for you...

 

[Bfgrn]

I'm biased towards facts, you're biased towards a political party. Yep, skew is my problem here.

I, like you, was once a stridently ideological libertarian. I am no longer. I don't have a political party. I've supported Republicans and Democrats. I supported Republicans in 2010 and will probably do so in 2012.

It appears you grew up, but had a relapse.

Please explain to me how blood letting cures patients, because that is what Tepublicans have prescribed for our economy. I know that Austrian economics is not based on mathematics, so it can only be based on emotion; punishment.

If all our economic indicators are measured against GDP, the vital signs of our economy, then policies that will shrink GDP can only lead to death, not life.

Mere parsimony is not economy. Expense, and great expense, may be an essential part in true economy.
Edmund Burke

"We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win."
President John F. Kennedy

 

[kaz]

I'm biased towards facts, you're biased towards a political party. Yep, skew is my problem here.

I, like you, was once a stridently ideological libertarian. I am no longer. I don't have a political party. I've supported Republicans and Democrats. I supported Republicans in 2010 and will probably do so in 2012.

It appears you grew up, but had a relapse.

Please explain to me how blood letting cures patients, because that is what Tepublicans have prescribed for our economy. I know that Austrian economics is not based on mathematics, so it can only be based on emotion; punishment.

If all our economic indicators are measured against GDP, the vital signs of our economy, then policies that will shrink GDP can only lead to death, not life.

Mere parsimony is not economy. Expense, and great expense, may be an essential part in true economy.
Edmund Burke

"We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win."
President John F. Kennedy

I liked how he claimed to have been a "libertarian" when there is absolutely no libertarian principle in anything I've ever read from him.

 

[Toro]

Social Security is Not a Ponzi Scheme, Mr. Perry

Correct.

UNLESS, of course, ALL T-BILLS are a PONZI scheme.

In which case, Social Security is the least of our problems.

That argument is stupid...even for you...

No he's right.

All government debt is "Ponzi Scheme" according to you extremists. All government debt requires taxpayers to pay it off. It's all taxpayers paying others.

 

[Toro]

I, like you, was once a stridently ideological libertarian. I am no longer. I don't have a political party. I've supported Republicans and Democrats. I supported Republicans in 2010 and will probably do so in 2012.

It appears you grew up, but had a relapse.

Please explain to me how blood letting cures patients, because that is what Tepublicans have prescribed for our economy. I know that Austrian economics is not based on mathematics, so it can only be based on emotion; punishment.

If all our economic indicators are measured against GDP, the vital signs of our economy, then policies that will shrink GDP can only lead to death, not life.

Mere parsimony is not economy. Expense, and great expense, may be an essential part in true economy.
Edmund Burke

"We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win."
President John F. Kennedy

I liked how he claimed to have been a "libertarian" when there is absolutely no libertarian principle in anything I've ever read from him.

That's because I'm always arguing nonsensical dumbass arguments from the right, like "SS is a Ponzi Scheme."

 

[Full-Auto]

It appears you grew up, but had a relapse.

Please explain to me how blood letting cures patients, because that is what Tepublicans have prescribed for our economy. I know that Austrian economics is not based on mathematics, so it can only be based on emotion; punishment.

If all our economic indicators are measured against GDP, the vital signs of our economy, then policies that will shrink GDP can only lead to death, not life.

Mere parsimony is not economy. Expense, and great expense, may be an essential part in true economy.
Edmund Burke

"We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win."
President John F. Kennedy

I liked how he claimed to have been a "libertarian" when there is absolutely no libertarian principle in anything I've ever read from him.

That's because I'm always arguing nonsensical dumbass arguments from the right, like "SS is a Ponzi Scheme."

The similarities are uncanny.

I guess you need a new script..................................................


Chris Matthews on Social Security: Yep, It

 

[kaz]

Correct.

UNLESS, of course, ALL T-BILLS are a PONZI scheme.

In which case, Social Security is the least of our problems.

That argument is stupid...even for you...

No he's right.

All government debt is "Ponzi Scheme" according to you extremists. All government debt requires taxpayers to pay it off. It's all taxpayers paying others.

You say he's right and you also say government loaning money to itself is an asset.

That you claim to not be a liberal Democrat is funny, but that you claim to have been an ideological libertarian and went to an unaffiliated socialist is even more ridiculous. As critical minds grow they start to realize government is not an effective solution to more and more of our problems and in fact the "solutions" actually make things worse then they were. Nobody who knows government is stupid and screws up everything one day wakes up and discovers it actually is the solution to all our problems as you claim to have done.

 

[flacaltenn]

SS is underfunded. It is a bad system because it is entirely invested in government liabilities. But most pension funds, public and private, are underfunded. However, nobody sane is going to argue that underfunded pension plans are Ponzi Schemes.

You have started to state what Social Security is.

I don't call it a Ponzi Scheme for several reasons.

However, it is a system that depends on current revenues to fund obligations that accumulated over decades.

I am not sure if is underfunded or overpromised.

To be accurate, it has paid EVERY obligation it needed to for the past 30 yrs. The problem is -- the govt decided to OVERCHARGE current generations in that time period to the tune of almost $3Trill by making FICA taxes too high. This resulted in a "slush fund" for EVERY Congress over 30 years to STEAL those funds and spend them on anything they wished.

Thus the Trust Fund. Trust funds shouldn't exist for "pay as you go" programs, but because Congress decided they could STEAL that EXCESS FICA from SS -- they created the fiction of a "trust fund" that pays interest for the theft. (in reality, the same taxpayers who had their FICA stolen get to pay "the interest" plus the costs of financing new debt when it is required to cover shortfalls.)

It is ANYTHING but ISOLATED as you're friends suggest (you wrote in a previous post).. It is smack-dab in the fast lane of politics and your friends don't have an equity position in this program. It is subject to the will of nation's most despised clown college..

The answer to your question is -- it is UNDERFUNDED. If you start slashing benefits and raising caps and taxing the richer for it -- you will dismantle the original intent. It is underfunded because of demographic shifts, the economy, and the Prez now stealing the Premiums for his "stimulus".

That SS FICA surplus SHOULD HAVE been put into vault at the FED or converted to gold at Fort Knox. OR it should have been used to EXCUSE some volunteers who wished to opt out.
But this is the management you get when you are drafted into UNIVERSAL anything...

 

[Contumacious]

To be accurate, it has paid EVERY obligation it needed to for the past 30 yrs. .

To be accurate, Bernie" Madoff would not be in jail right now if he was a federal bureaucrat with ability to print money.

.

 

[flacaltenn]

Social Security is Not a Ponzi Scheme, Mr. Perry

Correct.

UNLESS, of course, ALL T-BILLS are a PONZI scheme.

In which case, Social Security is the least of our problems.

Govt bonds can be intelligiently -- or they can be used destructively. The way that they apply to the SS problem is the best example of DESTRUCTIVE use.

The money that was stolen from excess FICA (ostensibly to cover KNOWN future demographic shifts of the SS program) was covered by a promise to issue future debt.

So the money was largely stolen from the working poor with NO debt issued (and arguably a few wars and lots of bombs to show for it) and a fictional interest structure was set up which will be paid by INCOME TAXPAYERS (some of whom are the same victims of the theft). Not only will the taxpayers bear the indignity of the theft and the burden of the fictionous interest payments -- they NOW have to bear the burden of the PRINCIPLE AND INTEREST of the NEW debt being issued.

Like I said the most destructive use of Govt bonds that anyone can imagine.

The result is that for 30 yrs of overcharging, the Progressive nature of the tax scale was hobbled (because excess FICA came from the working poor). And now the Middle Class and Rich (thru income tax) get to pay TWICE WITH INTEREST AND FINANCING for the SAME contribution they made over the past 30 years.. Unless of course FICA get raised again.

It's SIMILIAR to a Ponzi scheme (because of the historical trend of demographics) , but it reveals much much more devious and serious malfeasance on the govt management of this program..

 

[Quantum Windbag]

I'm biased towards facts, you're biased towards a political party. Yep, skew is my problem here.

I, like you, was once a stridently ideological libertarian. I am no longer. I don't have a political party. I've supported Republicans and Democrats. I supported Republicans in 2010 and will probably do so in 2012. Pointing out that SS isn't a Ponzi Scheme doesn't make anyone a liberal.

A ponzi scheme is a system where current "investors" get unrealistic returns from funds paid by new investors and not from their actual investment.

An unrealistic return is 40% or 400%, not 4% as being compounded in trusts. Can you give us one example of a Ponzi Scheme promising low single digit returns? One?

A ponzi scheme will collapse when there aren't enough new investors to continue to pay out current investors.

That's true of any non-collateralized debt. If you can't roll your debt, is that a Ponzi Scheme? Of course not. Was Lehman a Ponzi Scheme? Was Bear Stearns? The fact that you can't get new investors to pay off the old does not mean its a Ponzi Scheme.

Social Security is a system where current "investors" get unrealistic returns from funds paid by new investors and not from their actual investment. The social security scheme will collapse when there aren't enough new investors to continue to pay out current investors.

Yep, I'm biased to think those are the same...

A government bond rate is not an unrealistic return assumption.

A Ponzi Scheme has no economic basis under which the promised outsized returns. That is not the case with government debt. The government has the power to tax all economic activity. That's a far cry from the investment methodology given to justify high returns in Ponzi Schemes, which are always "It is very complicated" or "It's a secret." Ponzi Schemes are frauds. The power to tax is not.

SS is underfunded. It is a bad system because it is entirely invested in government liabilities. But most pension funds, public and private, are underfunded. However, nobody sane is going to argue that underfunded pension plans are Ponzi Schemes.

I guess the problem here comes down to how we define unrealistic.

Since SS is not actually an investment, expecting anything out of it at all is unrealistic, in my opinion. You keep talking like the money in the SS fund is invested in something, which even you have admitted is not true. What people are currently paying into the system is being used to pay current retirees, who are living longer every year. Couple that with the fact that the pool of retirees is expected to grow faster than the pool of workers over the next two decades, and you end up with even more burdens on current workers.

I guess that makes you wrong about in your whole defense of SS not being a Ponzi scheme. That is a shame, I was hoping to be right in my in my OP, but no one has actually mounted a cogent defense of SS based on reality.

 

[Quantum Windbag]

Social Security is Not a Ponzi Scheme, Mr. Perry

Correct.

UNLESS, of course, ALL T-BILLS are a PONZI scheme.

In which case, Social Security is the least of our problems.

T-bills are debt obligations. SS is a transfer from current workers to current retirees. Equating them is equivalent to saying that a horse is the same as a car because they both move.

 

[Quantum Windbag]

That's true of all government debt. All government debt relies on revenues to fund obligations that have accumulated over time. Taxes are used to pay interest and retire government debt. Taxes are also used to pay off obligations in SS. SS is another form of government debt.

If one argues that SS is a Ponzi Scheme, one also has to argue that all government debt is a Ponzi Scheme. That's nonsensical. That doesn't mean the government will never default but there's a difference between solvency and a Ponzi Scheme.

Technically, I would agree with you.

But I am not sure that a technical definition is the issue here.

What seems to be the common theme is that SS will continue to demand more and more of those who are not collecting from the system to satisfy those who expect to gain from the system. That is about as close as it gets.

What I keep reading is that it is bad practice to push the burden of these obligations onto those who will enter the game later.

It should be noted that SS did pay out money to people who never paid into it. In that sense it did give unrealistic returns....not calling it a Ponzi Scheme....just saying.

Yes, originally it did.

SS is a poor system. It needs to be reformed. If we want to keep it as it is, we either have to start paying more taxes into it or cut benefits. I think we should reform it. People should be given a choice whether they want to run their own investment account. Most people will likely say no, so for those people, SS should be run like a real pension fund, not like it is today. You could lower taxes paid into the system and easily make it fully funded if you did.

The problem is that I do not want to keep it as it is, I want to turn it into what it is supposed to be, a hedge against destitution for retired Americans. The money an individual pays in should belong to the individual, not the government. If the individual dies it should become part of his estate. I would even willing to let the government keep any gains the fund sees, and even a management fee, as long as the principle paid in becomes the property of the individual.

What we currently have is a transfer from current to previous workers, and that is unsustainable. To argue that we should keep what we have means you do not understand the problem.

 

[JakeStarkey]

To be accurate, it has paid EVERY obligation it needed to for the past 30 yrs. .

To be accurate, Bernie" Madoff would not be in jail right now if he was a federal bureaucrat with ability to print money. .

Conty, those of us here who have seen you about your master's business consider you anything but reliable and honest. We know why you want a society freed from government and societal control. The others here will catch on as well.

 

[JakeStarkey]

No one from the pretend-GOP Hard Right libertrians have offered anything of worth so far.

 

[Quantum Windbag]

No one from the pretend-GOP Hard Right libertrians have offered anything of worth so far.

Like I said, I am still waiting for an actual defense of SS that works. One person managed not to dissolve into calling people names, but he did end up proving himself wrong. Why doesn't the Board's Only Republican Expert step up and take a swing?

 

[NYcarbineer]

I am still waiting for you to prove that SS is not a ponzi scheme.

That no one can prove it is is all the proof of a negative one needs.

It's been proven over and over to a critical mind. Social security is just a clear Ponzi scheme. The problem is you're waiting for someone to prove it without violating liberal rule #1, liberalism is inherently true. Some people agree with that rule, liberals, and blindly accept social security is not a Ponzi scheme. For anyone else it just so obviously is, we don't care to prove it without violating the inherent truth of your liberal religion. That's why you're not getting anywhere.

A Ponzi scheme is fraud. There is no fraud in Social Security. Social Security operates openly and in full compliance with the law.

In a Ponzi scheme, someone is stealing money for their own personal use. No one is stealing money from Social Security. All the money is accounted for.

A Ponzi scheme eventually falls apart because money was stolen and the new money runs out. Social Security can only 'fall apart' if either the US treasury defaults on its obligations or if the Congress and the president fail to make the easily made adjustments to income and outgo that are needed to rationalize SS's future finances.


But, hey, 'Ponzi scheme', like 'death panels', is the kind of 2 word simplistic talking point that the Right loves,

mostly because it doesn't put a lot of pressure on their brains to actually function.

 

[flacaltenn]

NYCarbineer:

A Ponzi scheme is fraud. There is no fraud in Social Security. Social Security operates openly and in full compliance with the law.

In a Ponzi scheme, someone is stealing money for their own personal use. No one is stealing money from Social Security. All the money is accounted for.

Forget the Ponzi scheme thing.. There is NO THEFT or FRAUD IN SOC SEC? Then how come you skipped every one of my recent posts outlining all the ways BOTH theft and fraud are part of the program?

Of course diverting Payroll tax "premiums" into any dam thing Congress pleases isn't theft. Especially when some of the same people who paid those premiums the 1st time are now obligated to REPAY those premiums WITH INTEREST and FINANCING charges..

It's indefensible by any means. But go ahead and try...