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Title: Rick Perry is Right: Social Security Really is a Ponzi Scheme
Source:
Dissenting Opinions
URL Source: http://jwpegler.blogspot.com/2011/0 ... -is-right-social-security.html
Published: Sep 10, 2011
Author: Eric Blankenburg
Post Date: 2011-09-10 21:05:00 by jwpegler
Keywords: None
Views: 112407
Comments: 228
Rick Perry's comments during this week's GOP debate at the Reagan library has caused quite a stir in the liberal media. During the debate, Governor Perry defended the words in his book, calling Social Security a "Ponzi scheme". After the debate, the "analysis" on MSNBC was truly fun to watch as every commentator sat shelled shocked over the fact that a politician would dare to use these words to describe America's most sacred welfare program. The only person on the panel who had a clue about what might be going on was Ed Schultz who at one point questioned whether or not whether young people would stick with Obama or jump on the Perry bandwagon. Unlike the political and media establishment in this country, young people understand that they are going to get the short end of the Social Security "inter-generational compact". Schultz surprisingly realized that Perry's message might resonant with young people. Let's take a quick look at the Social Security system and see if Perry might be on to something. The people who got into the Social Security system very early got back on average 15 times the amount of money they paid in. They got a great deal and were raving proponents of the system. The people receiving Social Security benefits today are getting back on average 2 1/2 to 3 times what they paid in. They are also generally strong proponents of the system. Today, Social Security is paying out more every year than it takes it. We are borrowing money from the foreigners, like the Chinese and Saudis to pay current benefits. As the huge Baby Boom generation retires, the amount of debt we incur each year will quickly escalate until it blows up in our face and old people without resources really do wind up in the street. So, what happens when my generation starts to retire in 15 to 20 years and what will happen to my kids? We will all be left holding the bag. There is a financial MODEL that describes this. The model is called a Pyramid scheme or Ponzi scheme or a Bernie Madoff scheme. The people who get it in early make out like bandits and the people who get it late get screwed. That is exactly how the Social Security system will play out. The fact is that the Social Security is a pay-as-you-go welfare system that transfers money from young, struggling families to relatively well-to-do retired people. There isn't any "trust fund". The words "trust fund" are used to describe a mountain of debt. A mountain of debt is NOT a trust fund. It's a mountain of debt. Today, the mountain of debt in the Social Security system is so great that it cannot be paid. Peel away the emotion, the Orwellian language about the "trust fund", and the other political rhetoric, and just look at the financial facts. Then this all becomes very clear. Rick Perry is absolutely right and I am actually impressed that a politician would tell the truth about this. It's truly amazing. The big question is what can be done? Long term, people need to be able to save for their own retirements. Social Security needs to be taken back to it's roots as a program that supplements the income of retirees who are truly poor, through no fault of their own. Today, 25% of people over 65 have pension or investment income that places them in the "wealthy" category. They still get Social Security benefits, so long as they don't work for their income. Why should young struggling families hand money over the wealthy retired people? They shouldn't. Means testing Social Security will go a long way to make it solvent for the future. When Social Security was implemented, the retirement age was 65. The average life expectancy was 59 for men and 61 for women. Most people didn't live long enough to get a check. Today, the retirement age is still 65. However, life expectancy is 73 for men and 78 for women. The math just doesn't work. We need to gradually raise the retirement age to keep up with life expectancy. Bravo to Perry for telling it like it is. I certainly agree with Ed Schultz that a lot of young people will find this message appealing. The other group who should find this message appealing are wealthy retirees who are stealing from their children's and grandchildren's future. Will they finally put their selfishness aside and say: "no more"? Probably not, but we'll see.
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#117. To: Godwinson (#111)
I talk as if the sovereign enjoys sovereign immunity and can only be sued with permission. If Congress passes a law, and the President signs it, and it is constitutional (however bad it may be), what do you think you can ask a court to do for you? If Congress passed a law repealing Social Security in its entirety, all benefits null and void, and the President signed it into law, who would you sue, and for what? The people can vote out the politicians and/or amend the Constitution. That takes a while.
:). Dude you're good.
They do not depend on an ever-growing base of customers to pay benefits to earlier customers. An insurance company does not go bust due to failure of an impossible rate of increase in customers, but it may go bankrupt.
As one may observe from the information quoted below, Social Security actually gets funded month to month. The Treasury Department estimates what is needed and transfers that amount each month to the Social Security Trust Fund. It is a transfer from the general fund. I captured the stuff from the SSA today. Had the debt ceiling not been raised recently, the general fund would have gone into default. The transfer to the Trust Fund would not have occurred. Social Security would have had no funding with which to issue checks or direct deposits. Social Security Administration, In-Depth Research, Legislative History Social Security Amendments of 1983, H.R. 1900/P.L. 98-21, (Enacted April 20, 1983) At pages 11-12 of the scribd PDF. Normalization of Social Security Tax Income Establishes accounting procedures for crediting the OASDI trust funds and the HI trust fund at the beginning of each month with estimated revenues for the entire month. Treasury will be required to estimate the amount of tax revenue to be collected each month and transfer such sums to the trust funds at the beginning of the month. The trust funds will pay interest, at rates equivalent to those earned on trust fund investments, on amounts so credited to the extent that they are credited prior to Treasury's actual receipt of taxes. Under prior law, Social Security taxes were transferred to the trust funds on an estimated as-received basis throughout the month. The provision is a change primarily in accounting procedures and, under alternative II-B assumptions developed for the 1983 Trustees Report, is unlikely to have a cost effect on the trust funds. Under these assumptions, the amounts transferred under normalization in all likelihood will not be needed to pay benefits and amounts transferred to the trust funds in advance of tax receipts will be invested in Government obligations at the same interest rate that the trust funds must pay Treasury. Therefore, the interest earned on the advances will offset the interest payments to Treasury. The Social Security FAQ presents it with a bit of spin. As stated above, money flowing into the trust funds is invested in U. S. Government securities. Because the government spends this borrowed cash, some people see the trust fund assets as an accumulation of securities that the government will be unable to make good on in the future. Without legislation to restore long-range solvency of the trust funds, redemption of long-term securities prior to maturity would be necessary. Far from being "worthless IOUs," the investments held by the trust funds are backed by the full faith and credit of the U. S. Government. The government has always repaid Social Security, with interest. The special-issue securities are, therefore, just as safe as U.S. Savings Bonds or other financial instruments of the Federal government. Many options are being considered to restore long-range trust fund solvency. These options are being considered now, over 20 years in advance of the year the funds are likely to be exhausted. It is thus likely that legislation will be enacted to restore long-term solvency, making it unlikely that the trust funds' securities will need to be redeemed on a large scale prior to maturity. If the debt ceiling had not been raised recently, the general fund would have defaulted. With Treasury incapable of performing the normal funds transfer, Social Security would have been unable to issue checks. When Social Security ran a surplus, that surplus was used to fund the general government. As it now runs a deficit, new tax revenues must be used to fund the Social Security Trust Fund. The payments from the general fund to cover the Social Security monthly revenue shortfall add to the Federal debt. With the existence of a debt ceiling, a collision with that ceiling renders the Social Security program vulnerable to a default of the general fund.
From the Summary of the 2011 Annual Reports of the Boards of Trustees: At page 1: Social Security expenditures exceeded the program’s non-interest income in 2010 for the first time since 1983. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years. This deficit is expected to shrink to about $20 billion for years 2012-2014 as the economy strengthens. After 2014, cash deficits are expected to grow rapidly as the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers. Through 2022, the annual cash deficits will be made up by redeeming trust fund assets from the General Fund of the Treasury. Because these redemptions will be less than interest earnings, trust fund balances will continue to grow. After 2022, trust fund assets will be redeemed in amounts that exceed interest earnings until trust fund reserves are exhausted in 2036, one year earlier than was projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2085. That had to be written by Rosie Scenario. The economy is not exactly strengthening as we approach 2012. At page 3 Projected long-run program costs for both Medicare and Social Security are not sustainable under currently scheduled financing, and will require legislative corrections if disruptive consequences for beneficiaries and taxpayers are to be avoided. The financial challenges facing Social Security and Medicare should be addressed soon. If action is taken sooner rather than later, more options and more time will be available to phase in changes so that those affected can adequately prepare. Signed:
What ever it takes. The USSA eliminates SS/Medicare and continues the Unfunded Wars we're at 1932/33...with no New Deal and WWIII. Master and Serf.
Social Security doesn't depend on ever growing base of customers either. In fact it has had a shrinking base of customer but yet it still has survived. And all that is needed is to tweak revenues and benefit to continue. Its no more like a Ponzi Scheme than an insurance company.
Which Ponzi Scheme has lasted for almost seven decades?
The people will never let that happen unless we actually bankrupted and then they would have no choice. The people will decide in the end what we do with Social Security and Medicare. Congress cannot and will not do it independently.
Yea, because the American court system is a quick system, right?
With the economy still in the dumper -- maybe permanently? -- and full-time jobs becoming as scarce as rain during a drought, huge percentages of Americans have had their (misplaced) faith in the American dream shaken, the upper-middle-class consumerist lifestyle is exposed as a mirage for anybody who plays by the rules. Capitalism and the America that embraced it as a way of life is now and forever more a failure. It does me good to know that the generation that voted in Reagan and his ideology will see their America die from that ideology before their very own eyes and knowing they had a hand in its destruction.
As compared to amending the Constitution?
You can't be serious.
Just what have the people done, or what will they do? Hold their breath unti they turn blue? Congress, with the President, can pass laws against the will of the people. They did not have support for NAFTA. They did not have support for the bailout of Wall Street. They do not need the people's permission to pass a law. They can create something like a joint committee and then just point fingers at each other regarding the result. We reelect them in great numbers. Incumbents have great approval at the ballot box. http://www.thirty-thousand.org/documents/QHA-07.pdf Historical Prevalence of Reelected Representatives in the U. S. House, by Congress and by State. For the above numbers, factor in that not all representatives run for reelection. For example, in the 106th Congress 403 sought reelection and 394 won reelection. In the 107th Congress, 399 sought reelection and 382 won reelection.
Just some tweaking can get SS to survive past our lifetimes and America's population is not shrinking. The only ones trying to end SS are the fucking minority kook party, a party that is composed of people who believe Jesus rode dinosaurs, Obama is a Soviet KGB plant to weaken America and believe little girls should not be immunized from HPV because they think the fear of getting cervical cancer from HPV is the only thing keeping them virginal till they marry.
With the economy still in the dumper -- maybe permanently? -- and full-time jobs becoming as scarce as rain during a drought, huge percentages of Americans have had their (misplaced) faith in the American dream shaken, the upper-middle-class consumerist lifestyle is exposed as a mirage for anybody who plays by the rules. Capitalism and the America that embraced it as a way of life is now and forever more a failure. It does me good to know that the generation that voted in Reagan and his ideology will see their America die from that ideology before their very own eyes and knowing they had a hand in its destruction.
So you want to pay out less? Or raise taxes? Don't you care about the deficit?
I would tax multi-millionaires at 90% like the Republicans did under Ike.
With the economy still in the dumper -- maybe permanently? -- and full-time jobs becoming as scarce as rain during a drought, huge percentages of Americans have had their (misplaced) faith in the American dream shaken, the upper-middle-class consumerist lifestyle is exposed as a mirage for anybody who plays by the rules. Capitalism and the America that embraced it as a way of life is now and forever more a failure. It does me good to know that the generation that voted in Reagan and his ideology will see their America die from that ideology before their very own eyes and knowing they had a hand in its destruction.
Social Security. It's lasted 7 decades because we are FORCED to participate. If government FORCE wasn't behind it, it would have collapsed a long time ago.
The U.S. population is growing. It is not growing fast enough to support the next generation of retirees. That's why my generation will get back LESS from Social Security than we paid in. This is called a Ponzi scheme.
More than slight tweaking is needed. The funding shortfall forecast indicates a significant increase in revenues or decrease in spending, or some combination thereof will be required. Brian Beutler | September 14, 2011, 5:59AM [excerpt] "I think really the fundamental question for you is not how we got here, but where you want the country to go, what role do you and your colleagues want the government to play in the economy and the society?" said Doug Elmendorf, who heads the Congressional Budget Office. He was addressing the six Democrats and six Republicans on the new joint deficit committee, and for three hours he did his best not to get buried under the same avalanche. "[I]f you want a role that has benefit programs for older Americans, like the ones we've had in the past, and that operate for the rest of the government like the ones we've had in the past, then more tax revenue is needed than under current tax rates," Elmendorf said. "On the other hand, if one wants those tax rates, then one has to make very significant changes in spending programs for older Americans" or all the rest of the government's functions.
I think one possible or probable course of action is to eliminate the cost of living increases. Once that is gone, they can inflate the currency. The dollar amount of benefits would remain, but the buying power would be reduced.
Americans are under taxed. How long will we have to deal with the mythology that lower taxes creates prosperity? Are people still arguing this as fact? That would be like arguing the sun revolves around the earth.
With the economy still in the dumper -- maybe permanently? -- and full-time jobs becoming as scarce as rain during a drought, huge percentages of Americans have had their (misplaced) faith in the American dream shaken, the upper-middle-class consumerist lifestyle is exposed as a mirage for anybody who plays by the rules. Capitalism and the America that embraced it as a way of life is now and forever more a failure. It does me good to know that the generation that voted in Reagan and his ideology will see their America die from that ideology before their very own eyes and knowing they had a hand in its destruction.
So this chart shows you from 1960 and beyond This chart shows you the same ratio from 1945 onward. So you can tell that the number of investors to the plan has, for the most part, steadily decreased.
Ping to #138
Which Ponzi scheme has paid out as much in benefits and done as much for the population as Social Security?
The fact that Social Security has always been one of the government's most popular programs for almost 70 years and the fact that most politicians are scared to even mention cutting benefits (the so-called third rail of politics) leads me to believe that politicians will only make changes with the public's permission.
No comment. :o)
Hey, ASSHAT... it's not a decline in the "customer base," that you're showing, it's the number of people that are supporting each CUSTOMER! That is, this graph shows the number of paying in, versus those who are pulling money out.... And NOW.........? Shit, there's aren't enough people left to STEAL from, to keep the Ponzi Scheme alive............ Jeez...... (((((shaking head in utter disgust)))))
To:Skippy, toe-jam, old man Fred Alzheimers Mertz, _jim, loonymom/ming, e-type-jackoff, goober56, Wrek, calcon, dummy DwarF, continental op, Biff, gobsheit and meguro From: Capitalist Eric Message: You're SOCIALIST morons. ESAD. No, your premise is unrelated to your conclusion. The chart shows a declining RATIO of workers to beneficiaries which I have repeatedly said is the case and the problem. The RATIO does not express anything in terms of the quantity of participants, investors, or beneficiaries. To retain the RATIO, the system would have had to sign up 40 new workers for each addition to the rolls of beneficiaries. The number of beneficiaries has risen to 54,032,097. To maintain a 40:1 ratio you would need to find 2,161,283,880 investors to pay in. That is about 7 times the population of the entire United States. The number of people paying in has gone UP. The number of people collecting benefits has gone up at a higher proportional rate. Where there one was over 40 people paying in for each person drawing benefits, it appears there are now between 3 and 4 persons paying in for each person drawing benefits out. The baby boomers are retiring, swelling the number of beneficiaries in numbers the system never could sustain. This is the type of thing that happens in a Ponzi-like system.
Wise choice.
"...all of the equations in neoclassical economics are rubbish. The differential equations describe nothing. Economics is not about mathematics, it is about the human being." Sandeep Jaitly
The number of people paying in has gone UP. The number of people collecting benefits has gone up at a higher proportional rate. In other words, it's a Ponzi scheme. The 2 + billion number is really interesting because we are bumping up against the entire population of the world. At a 40 to 1 ratio, there aren't enough people to keep this pyramid scheme from continuing past the current generation of retirees. Of course, this is what the Social Security Trustees have already concluded.
Didn't see your response before I said about the same thing. This shows the Ponzi-like nature of the scheme. The number of beneficiaries swells at a rate that is impossible for the population to keep up with, resulting in an ever diminishing RATIO of donors to beneficiaries. As the ratio diminishes, the burden on each donor rises until the donors no longer meet the needs of the beneficiaries. Social Security Beneficiary Statistics
That is true up until 1975; since then the ratio has been pretty darn stable, ranging between 3.2 and 3.4. In 2009 the ratio dropped to 3, and was 2.9 in 2010. www.ssa.gov/history/ratios.html Because workers generally spend more years (about 50) working than they do in retirement (15-20), the ratio should remain relatively stable as long as the economy creates jobs and population isn't declining.
"...all of the equations in neoclassical economics are rubbish. The differential equations describe nothing. Economics is not about mathematics, it is about the human being." Sandeep Jaitly
Except that an adjustment in the amount collected was made during the Reagan administration to compensate for the dreaded baby boomer retirement.
"...all of the equations in neoclassical economics are rubbish. The differential equations describe nothing. Economics is not about mathematics, it is about the human being." Sandeep Jaitly
It is actually 1.75 people per social security recipient. You can't rightfully say people who work for the government who "pay" social security taxes adds anything to the system since their paychecks and "taxes" they pay is actually tax money itself. Some group did a study on this and they came up with 1.75.
Baby boomers who have publicly stated their support for abortion shouldn't get any Social Security. They should be sent to Jack Kevorkian. That would go a long way towards solving the problem and it would be just.
Jack's dead. You don't get out much, do you?
I know they should be with him. lol
You only wish death on others because you are so pro-life, yes?
That does not include the overhead for administration. At a ratio of 3:1, each worker needs to pay almost $400 per month. When it shrinks to 2:1, that would rise to nearly $600 per month. As the ratio shrinks, the burden on each worker rises at a much more rapid rate. From 3:1 to 2:1 causes a 50% increase. The ratio will continue to shrink unless the worker base increases at an impossible rate.
Everything collected has been spent, plus over 14T more. The SSA is running monthly deficits. The deficits must be paid with tax dollars from the general fund, adding to the national deficit and debt. There's a problem.
People who argue that a child is a burden and you should be able to murder er abort it. They should reap what they have sown. If they become a burden they shoudn't get any help and they should be left to themselves. Is that unjust?
Comments (158 - 228) not displayed.
Top • Page Up • Full Thread • Page Down • Bottom/LatestYou talk as if the govt is not of the people, by the people, for the people and a third party.
#118. To: nolu chan (#109)
You only document that they CANNOT LAWFULLY do as you claim. The contract can be enforced.
#119. To: NewsJunky (#115)
The point is that insurance companies, like in a Ponzi Scheme,depend on continued investments from investors to pay out current benefits.
#120. To: jwpegler (#112)
Exactly right. The "assets" in the "trust fund" are in fact government debt. There is $2.6 trillion dollars worth of debt in the Social Security "trust fund".
MECHANISMS TO ASSURE CONTINUED BENEFIT PAYMENTS-- "FAILSAFE"
Why do some people describe the "special issue" securities held by the trust funds as worthless IOUs? What is SSA's reaction to this criticism?
#121. To: jwpegler (#112)
(Edited)
This must be an old article, because the Social Security system fell into deficit this year. The deficits will increase dramatically as the baby boomers continue to retire.
Social Security
Conclusion
Timothy F. Geithner, Secretary of the Treasury and Manageing Trustee
Hilda L. Solis, Secretary of Labor and Trustee
Kathleen Sebelius, Secretary of Health and Human Services and Trustee
Michael J. Astrue, Commissioner of Social Security, and Trustee
Charles P. Blahous III, Trustee
Robert D. Reischauer, Trustee
#122. To: nolu chan (#100)
(Edited)
#123. To: nolu chan (#119)
(Edited)
They do not depend on an ever-growing base of customers to pay benefits to earlier customers.
#124. To: jwpegler (#116)
Only Ponzi schemes like Social Security promise that. They can't deliver, so the people who get it late get screwed
#125. To: nolu chan (#117)
If Congress passed a law repealing Social Security in its entirety, all benefits null and void,
#126. To: nolu chan (#117)
The people can vote out the politicians and/or amend the Constitution. That takes a while.
#127. To: Godwinson (#126)
the American court system is a quick system, right?
#128. To: NewsJunky (#123)
Social Security doesn't depend on ever growing base of customers either. In fact it has had a shrinking base of customer but yet it still has survived.
#129. To: NewsJunky (#125)
The people will never let that happen unless we actually bankrupted and then they would have no choice. The people will decide in the end what we do with Social Security and Medicare. Congress cannot and will not do it independently.
#130. To: nolu chan, NewsJunky (#128)
Social Security doesn't depend on ever growing base of customers either. In fact it has had a shrinking base of customer but yet it still has survived.
#131. To: Godwinson (#130)
Just some tweaking can get SS to survive past our lifetimes
#132. To: A K A Stone, NewsJunky (#131)
So you want to pay out less? Or raise taxes? Don't you care about the deficit?
#133. To: NewsJunky (#124)
Which Ponzi Scheme has lasted for almost seven decades?
Oh, God, can you ever imagine what would happen to the country if Lyndon Johnson were president? -- Jackie Kennedy
#134. To: NewsJunky (#123)
(Edited)
In fact it has had a shrinking base of customer
Oh, God, can you ever imagine what would happen to the country if Lyndon Johnson were president? -- Jackie Kennedy
#135. To: Godwinson (#130)
Just some tweaking can get SS to survive past our lifetimes and America's population is not shrinking.
Super Committee Riven By Major Divide Over Basic Facts
Talking Points Memo
#136. To: jwpegler (#134)
my generation will get back LESS from Social Security than we paid in.
#137. To: nolu chan (#135)
More than slight tweaking is needed. The funding shortfall forecast indicates a significant increase in revenues
#138. To: nolu chan (#128)
#139. To: jwpegler (#134)
#140. To: jwpegler (#133)
#141. To: nolu chan (#129)
#142. To: lucysmom (#95)
Who can you trust? Banks? What about the stock market? Real estate? Perhaps gold buried in the backyard?
#143. To: NewsJunky, jwpegler, nolu chan (#138)
#144. To: NewsJunky, jwpegler (#138)
This chart shows you the same ratio from 1945 onward. So you can tell that the number of investors to the plan has, for the most part, steadily decreased.
#145. To: We The People (#142)
No comment. :o)
#146. To: nolu chan (#144)
(Edited)
To maintain a 40:1 ratio you would need to find 2,161,283,880 investors to pay in. That is about 7 times the population of the entire United States.
Oh, God, can you ever imagine what would happen to the country if Lyndon Johnson were president? -- Jackie Kennedy
#147. To: Capitalist Eric, NewsJunky, jwpegler (#143)
And NOW.........? Shit, there's aren't enough people left to STEAL from, to keep the Ponzi Scheme alive............
#148. To: nolu chan, NewsJunky, jwpegler (#144)
(Edited)
This chart shows you the same ratio from 1945 onward. So you can tell that the number of investors to the plan has, for the most part, steadily decreased.
#149. To: nolu chan (#144)
The baby boomers are retiring, swelling the number of beneficiaries in numbers the system never could sustain. This is the type of thing that happens in a Ponzi-like system.
#150. To: lucysmom (#148)
That is true up until 1975; since then the ratio has been pretty darn stable, ranging between 3.2 and 3.4. In 2009 the ratio dropped to 3, and was 2.9 in 2010.
#151. To: lucysmom (#149)
Except that an adjustment in the amount collected was made during the Reagan administration to compensate for the dreaded baby boomer retirement.
#152. To: A K A Stone (#151)
#153. To: Ferret Mike (#152)
#154. To: A K A Stone (#153)
"I know they should be with him." lol
#155. To: lucysmom (#148)
That is true up until 1975; since then the ratio has been pretty darn stable, ranging between 3.2 and 3.4. In 2009 the ratio dropped to 3, and was 2.9 in 2010.
The average monthly Social Security benefit for a retired worker was about $1,177 at the beginning of 2011. This amount changes monthly based upon the total amount of all benefits paid and the total number of people receiving benefits.
#156. To: lucysmom (#149)
Except that an adjustment in the amount collected was made during the Reagan administration to compensate for the dreaded baby boomer retirement.
#157. To: Ferret Mike (#154)
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