Social Security is Not a Ponzi Scheme, Mr. Perry

[Toddsterpatriot]

IF SSI's accounts are worthless, so too are all FEDERAL GOVERMENT issed debt instruments.

Now, the question really is Which debts will be paid and which will not?

Will The USA pay its own people that it owes money to, or will it decide to ONLY pay everybody else it owes money to?

Seems to me that the American people ought to be first in line to get paid.



No guarantee that the masters will decide that, of course.

They do seem to hate the american people, after all, so these complaints about SSI do have some merit.

Now, the question really is Which debts will be paid and which will not?

You have no legal right to your Social Security benefits.
Congress could vote tomorrow to reduce or eliminate your benefits completely.

True, and they could take away most of your income in taxes, shutdown Medicare, reduce the military to a token force, and do all kinds of crazy stuff.

The US would default on it's debts only if Congress refused to raise the debt limit or people lose faith in the government's ability to make good on it's financial obligations. If that ever happened, the market prices of treasury bonds would fall like a rock. Strange at it make seem, Special Interest Treasuries could still be redeem at par, the price paid for them. It would take an act of Congress to allow the government to default on Special Interest Treasuries. This makes them just a bit safer than normal treasury bonds.

If the government defaulted on normal Treasuries, our credit rating would tank.

If they "defaulted" on Social Security, our credit rating would improve.

 

[Toro]

If the government defaulted on normal Treasuries, our credit rating would tank.

If they "defaulted" on Social Security, our credit rating would improve.

That's true. That's because it would strengthen the holders of Treasury bonds.

In a bankruptcy re-organization of a corporation, it is common for the price of senior bonds to rally when the deal is finalized since it increases certainty of recovery.

 

[Flopper]

Now, the question really is Which debts will be paid and which will not?

You have no legal right to your Social Security benefits.
Congress could vote tomorrow to reduce or eliminate your benefits completely.

True, and they could take away most of your income in taxes, shutdown Medicare, reduce the military to a token force, and do all kinds of crazy stuff.

The US would default on it's debts only if Congress refused to raise the debt limit or people lose faith in the government's ability to make good on it's financial obligations. If that ever happened, the market prices of treasury bonds would fall like a rock. Strange at it make seem, Special Interest Treasuries could still be redeem at par, the price paid for them. It would take an act of Congress to allow the government to default on Special Interest Treasuries. This makes them just a bit safer than normal treasury bonds.

If the government defaulted on normal Treasuries, our credit rating would tank.

If they "defaulted" on Social Security, our credit rating would improve.

I rather doubt that. A government defaulting on it's financial obligation isn't likely to impress bond rating companies.

 

[Toddsterpatriot]

True, and they could take away most of your income in taxes, shutdown Medicare, reduce the military to a token force, and do all kinds of crazy stuff.

The US would default on it's debts only if Congress refused to raise the debt limit or people lose faith in the government's ability to make good on it's financial obligations. If that ever happened, the market prices of treasury bonds would fall like a rock. Strange at it make seem, Special Interest Treasuries could still be redeem at par, the price paid for them. It would take an act of Congress to allow the government to default on Special Interest Treasuries. This makes them just a bit safer than normal treasury bonds.

If the government defaulted on normal Treasuries, our credit rating would tank.

If they "defaulted" on Social Security, our credit rating would improve.

I rather doubt that. A government defaulting on it's financial obligation isn't likely to impress bond rating companies.

A government that stops over promising will improve it's rating.

If Greece did so, they might be able to keep using the Euro.

 

[flacaltenn]

In case you think I'm opposed to Soc Sec, I'm not.. I adamantly defend the ORIGINAL intent of it. Not the proposed chopblock fixes that are coming.. In fact I see it as contract that should be upheld. But to punctuate my use of the terms "theft" and "fraud" -- these are quotes that all you "deniers" should ponder..

From the 2009 SS Trustees Report...

http://www.socialsecurity.gov/history/pdf/tr09summary.pdf

Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.

This is EXACTLY what the "right-wingers" and myself have asserted in this thread. Straight from the geeks at the actuarial heart of SSA... We're not lying.. We've waded thru the prospectuses and actuarial reports because we're competent enough to READ THEM CAREFULLY BEFORE YOU INVEST.. Just like they tell you on TV.

How about getting the bad news from a Congressional Rep..

Social Security - Congressman Lynn A. Westmoreland

The Social Security Trust Fund is legally allowed to only
purchase special treasury bonds as assets, since they are not
tradable on the open market and can be redeemed at any time. When
there is a surplus in the Fund, these special T-bonds are
purchased from the Treasury and that money is then used to pay
down the national debt. If revenues do not exceed costs of the
Fund however, the Social Security Fund is essentially only left
with IOUs from the Treasury. Right now it is estimated that the
Treasury will need $4 trillion to repay the Social Security Funds
between the years 2017 and 2041. After 2041 however we will only
be able to pay a percentage of promised benefits.

Which brings up the point -- HOW SHOULD the "trust fund" been set up to TRUELY invest all that surplus that was stolen?

Well it's kinda like the fairy tale that Flopper tells actually.. The Congressman says the TF can ONLY purchase these fake "Special Issue" IOUs. I don't know if that's true. But if they had INVESTED each years surplus by buying T-Bills on the Open Market and putting THEM in the trust fund --- here's the diff..

1) REAL MONEY would have gone to private investors on the open market in exchange for already issued debt instruments that were FULLY NEGOTIABLE, FULLY TRADEABLE, and FULLY MARKETABLE.

2) Because these debt instruments came off the OPEN MARKET, it only transferred the title of ownership to the SSTF, but it would serve to sap the OPEN MARKET of supply therefore generating increased demand for government debt products. (not sapping demand as one poster opin'd)

3) It would have deprived Congress of the money to spend and waste at their will. No more hiding debt and declaring the "budget balanced" like Clinton and Gingrich have done for a decade.

4) Those INVESTMENTS now having IMMEDIATE market worth and earning ACTUAL interest could be sold at will back onto the Open Market. Generating the REAL cash that our USMB leftists believe is occuring now -- but is not..

5) REALLY backed by the 'full faith and credit' because NOW all SS enrollees have a TRUE equal standing with Japan and China on their INVESTMENT..

None of that happened. Should've happened. They want to PRETEND it happened but it didn't. And I hope you deniers -- get ALL the subtle differences straight in your heads..

 

[Quantum Windbag]

I did differentiate between the cash flow of a pension fund and SS.

No you did not. If you did, you should be able to inject the differences into this schematic.

Government bond fund cash flow
Tax money ---> Buys bonds ---> Your account is credited ---> Government spends all your tax money ---> Government taxes others ---> Government redeems your bonds from the taxes of others and gives you back your money plus interest

SS cash flow
Tax money ---> Your account is credited ---> Government spends all your tax money ---> Government taxes others ---> Government gives you back your money plus interest from the taxes of others
​

This is the money trail. Change it based on how SS and a government bond fund is different.

Moving the goal posts?

I thought cash flow was both into and out of a fund, not just in. No wonder I can't get through to you, you do not use generally accepted accounting standards, you use government accounting.

Let's try this again, we are talking about pension funds that invest in government bond funds, not government bond funds.

Pension fund cash flow:

Client >> money into fund >> bonds >> time passes >> bonds mature >> client gets paid from his investment and the mature bonds
​

Social Security:

Taxpayer >> money goes to retirees >> since current payouts exceed income no money goes to bonds >> time passes >> no bonds to mature >> taxpayer gets paid from new taxpayers
​

Tell me again how that is no way, shape, or form, a Ponzi game, and how it will continue to work as long as the demographics continue to endlessly grow.

 

[saveliberty]

You forgot the part where they decide to cut the payroll taxes, so less money flows in.

 

[kaz]

Try to keep up. Government collects payroll taxes, government spends the money, government keeps tabs of how much money it spent by issuing t-bills to itself, government considers the t-bills it issued to itself to be an "asset." Or as toro calls it, a "collateralized" loan.

I don't call it a collateralized loan. It's a non-collateralized loan. What is US Treasury debt collateralized against? The Lincoln Memorial? FFS, I thought you worked on Wall Street. Try to keep up.

Do you see the difference between these scenarios?

You lend Tim $20,000. He agrees to pay it off with interest. You list Tim's debt to you as an asset.

Tim has a $20,000 liability. You have a $20,000 asset.

You spend $20,000, you write an IOU to yourself and agree to pay yourself back with interest, you list the debt as an asset.

The latter is the "social security trust fund."

Wrong. Fail.

The government has a $20,000 liability.
You have a $20,000 asset.

It works like this, Mr. Big Shot Wall Street / Consultant

1. You give your money to the SS trusts. Your balance sheet looks like this
Dr. $20,000 in SS

2. The SS trust has created a liability because it has taken your money. It then lends that money to the Treasury. The SS trust's balance sheet looks like this
Cr. $20,000 to you.
Dr. $20,000 to the US Treasury
Net balance $0.

3. The Treasury spends the money. The US Treasury has a balance sheet that looks like this
Cr. $20,000 to the SS trusts.

The US government has taken your money and spent it. It now owes you $20,000 through the SS trusts. The assets and liabilities in the trusts, and thus the liabilities of the US Treasury, will rise and fall based on contributions and redemptions, which is a function of the level of economic growth.

The "Treasury" and "Social Security" are both the "Federal Government."

You spend $20,000, you write an IOU to yourself and agree to pay yourself back with interest, you list the debt as an asset.

The latter is the "social security trust fund."

Wrong. Fail.

OK, fair enough, I'll fix it.

Your name is Joe. You spend $20,000, you write an IOU to yourself, but you call yourself "Steve" when you do it and agree to pay yourself I mean Joe back with interest, you list the debt as an asset.because "Steve" owes you, Joe, the money. You don't owe it to yourself because Toro thinks that would be fraud. But if you call yourself "Steve" then Toro's good with it so you go ahead.

Happy now?

You want numbers?

If government collected $100 in tax revenue (other then social security) and $40 in "surplus" social security payments and spent $200, then they would:

Say they had a deficit of $60 (200-100-40).

However, they would issue $100 in treasuries.

If the program is not a fraud, how does the government have $100 in debt when they claimed we had a deficit of $60?

No to mention that as I've pointed out, Mr. libertarian, that you:

- Give your children your social security bills

- You give them a "trust" fund to defray the cost, but you give them the bills to fund the trust fund. There is you and your children. Countries are people, individuals. Government, corporations, charities, unions, etc. are not living beings, they are structures created by man. And you are giving your kids the bills for social security and the bills to fund what you lie to them about when you said you funded it.

 

[flacaltenn]

I did differentiate between the cash flow of a pension fund and SS.

No you did not. If you did, you should be able to inject the differences into this schematic.

Government bond fund cash flow
Tax money ---> Buys bonds ---> Your account is credited ---> Government spends all your tax money ---> Government taxes others ---> Government redeems your bonds from the taxes of others and gives you back your money plus interest

SS cash flow
Tax money ---> Your account is credited ---> Government spends all your tax money ---> Government taxes others ---> Government gives you back your money plus interest from the taxes of others
​

This is the money trail. Change it based on how SS and a government bond fund is different.

Moving the goal posts?

I thought cash flow was both into and out of a fund, not just in. No wonder I can't get through to you, you do not use generally accepted accounting standards, you use government accounting.

Let's try this again, we are talking about pension funds that invest in government bond funds, not government bond funds.

Pension fund cash flow:

Client >> money into fund >> bonds >> time passes >> bonds mature >> client gets paid from his investment and the mature bonds
​

Social Security:

Taxpayer >> money goes to retirees >> since current payouts exceed income no money goes to bonds >> time passes >> no bonds to mature >> taxpayer gets paid from new taxpayers
​

Tell me again how that is no way, shape, or form, a Ponzi game, and how it will continue to work as long as the demographics continue to endlessly grow.

Uhhhh. I thought the whole idea of a pension fund for say govt employees, was that the GOVT was buying the assets FOR the benefit of the employees. (or at least heavily subsidizing or matching). The collective of employees get GIFTED valued assets -- as opposed for paying for them themselves.

Yeah yeah the gift is paid for by the "other" taxpayers. But that is the nature of the beast.

If you bias the analogy by having the EMPLOYEE buy the assets, it's not really a pension fund is it? Only if your employer is a real lowlife.. ""Here's your pension fund, now start buying stuff to put in it..""

 

[kaz]

Uhhhh. I thought the whole idea of a pension fund for say govt employees, was that the GOVT was buying the assets FOR the benefit of the employees. (or at least heavily subsidizing or matching). The collective of employees get GIFTED valued assets -- as opposed for paying for them themselves.

Yeah yeah the gift is paid for by the "other" taxpayers. But that is the nature of the beast.

If you bias the analogy by having the EMPLOYEE buy the assets, it's not really a pension fund is it? Only if your employer is a real lowlife.. ""Here's your pension fund, now start buying stuff to put in it..""

The difference is that when corporations promise employees pensions, they create pension funds and fill them with assets. When government promises employees pensions, they save nothing. So it's not just "other" taxpayers who pay it, it's future taxpayers. The politicians continue to punish the current taxpayers with taxes they spend, then they promise current employees future taxpayers will pay for their pension. If a private CEO did that, you could visit him between 2 and 4 on Thursdays...

 

[Quantum Windbag]

No you did not. If you did, you should be able to inject the differences into this schematic.

Government bond fund cash flow
Tax money ---> Buys bonds ---> Your account is credited ---> Government spends all your tax money ---> Government taxes others ---> Government redeems your bonds from the taxes of others and gives you back your money plus interest

SS cash flow
Tax money ---> Your account is credited ---> Government spends all your tax money ---> Government taxes others ---> Government gives you back your money plus interest from the taxes of others
​

This is the money trail. Change it based on how SS and a government bond fund is different.

Moving the goal posts?

I thought cash flow was both into and out of a fund, not just in. No wonder I can't get through to you, you do not use generally accepted accounting standards, you use government accounting.

Let's try this again, we are talking about pension funds that invest in government bond funds, not government bond funds.

Pension fund cash flow:

Client >> money into fund >> bonds >> time passes >> bonds mature >> client gets paid from his investment and the mature bonds
​

Social Security:

Taxpayer >> money goes to retirees >> since current payouts exceed income no money goes to bonds >> time passes >> no bonds to mature >> taxpayer gets paid from new taxpayers
​

Tell me again how that is no way, shape, or form, a Ponzi game, and how it will continue to work as long as the demographics continue to endlessly grow.

Uhhhh. I thought the whole idea of a pension fund for say govt employees, was that the GOVT was buying the assets FOR the benefit of the employees. (or at least heavily subsidizing or matching). The collective of employees get GIFTED valued assets -- as opposed for paying for them themselves.

Yeah yeah the gift is paid for by the "other" taxpayers. But that is the nature of the beast.

If you bias the analogy by having the EMPLOYEE buy the assets, it's not really a pension fund is it? Only if your employer is a real lowlife.. ""Here's your pension fund, now start buying stuff to put in it..""

I think that depends on the pension fund.
.
I look at it this way, if that money was not going into the pension fund it would be going into the employees pocket. To be fair, SS kinda works the same way, the taxpayer never sees the money.

 

[Liability]

For the record, I like Quantum W.

But his OP is wrong.

SS is absolutely a Ponzi scheme (or at least akin to one).

That is all.

 

[Quantum Windbag]

For the record, I like Quantum W.

But his OP is wrong.

SS is absolutely a Ponzi scheme (or at least akin to one).

That is all.

For the record, all the people trying to convince me that I am right are convincing me I am wrong.

 

[NYcarbineer]

For the record, I like Quantum W.

But his OP is wrong.

SS is absolutely a Ponzi scheme (or at least akin to one).

That is all.

Your brain is a fucking Ponzi scheme that ran out of new investors years ago.

 

[bripat9643]

In case you think I'm opposed to Soc Sec, I'm not.. I adamantly defend the ORIGINAL intent of it. Not the proposed chopblock fixes that are coming.. In fact I see it as contract that should be upheld.

When did I agree to this so-called "contract?"

 

[NYcarbineer]

Get this straight. THERE IS NO MONEY. SS is IOU's. Period.
You people can spin shuck and dive until Aunt Bessie calls the cows in for milking.
One thing your pontificating about trust funds, bonds, interest etc. cannot get past is Obama's statement that he was unsure SS Checks could be sent out for August payment.
If there's all this coin hanging around, why did Obama threaten SS recipients with non-payment?

Anyone holding a US treasury or any other bond from anywhere else holds an IOU. Why don't you people get that?

Apples to oranges.
People BUY US Bonds with their money. When the bond matures, they get back their original investment WITH interest. When the government taxes us and calls it Social Security, what actually happens is the money is put into the general fund and used for other purposes. The so-called bonds ARE the IOU's. They are worthless unless the flow of dollars from current workers buys the IOU's. The government can move money from one place to another in a mad scramble to pay off the current recipients.

.

That is so wrong in so many ways I hardly know where to start.

You do realize the general fund collects taxes other than the payroll tax, right? Can we at least get you that far along?

 

[NYcarbineer]

In case you think I'm opposed to Soc Sec, I'm not.. I adamantly defend the ORIGINAL intent of it. Not the proposed chopblock fixes that are coming.. In fact I see it as contract that should be upheld.

When did I agree to this so-called "contract?"

When SS became law. That's how it works in America. We make laws, you obey them.

If you want to live in a country where you either don't have laws, or don't have to obey the laws you do have,

I would encourage you to move.

 

[Charles_Main]

Funny thing, You can find literally dozens of Quotes online from Liberals, and Democrats, Dating back decades, saying the same thing Perry said. Calling it a ponzi or Pyramid Scheme. Why the Focus on Perry?

 

[NYcarbineer]

What the Ponzer Right is really all about here is that they are trying to avoid facing a very grim reality and that is that Republican tax cutting, borrowing, and spending policies over the past 30 years are really the only thing that has jeopardized social security in any way.

The Republicans didn't cut Social Security taxes, your Messiah did.

And I called him an asshole at the time for doing so.

Feel better?

 

[Charles_Main]

What the Ponzer Right is really all about here is that they are trying to avoid facing a very grim reality and that is that Republican tax cutting, borrowing, and spending policies over the past 30 years are really the only thing that has jeopardized social security in any way.

The Republicans didn't cut Social Security taxes, your Messiah did.

And I called him an asshole at the time for doing so.

Feel better?

Now he wants to extend those cuts, and also give them to the Employers as well, and pay for it all by Raising Taxes on people making over 200k. So he can do more Short Term Stimulus that will only buy a short term Blip in GDP, so he can try and ride the "recovery" to another term.

What is he now?