United States News
See other United States News Articles
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: 114454
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.
Post Comment Private Reply Ignore Thread
Top • Page Up • Full Thread • Page Down • Bottom/Latest
Begin Trace Mode for Comment # 201.
#1. To: All, sneakypete, hondo68, A K A Stone, BorisY, Captialist Eric, CZ82, Murran, no gnu taxes, nolu chan, e_type_jag, We The People (#0)
SS is a retirement insurance program - it does not function like a "Christmas club" account where after a period of deposits you get your money back when the day comes around. You want a ponzi scheme? Invest in the private sector like Wall Street.
It is a government program and does not function like any commercial insurance program. With the government program, the "insurer" can change the benefits at any time and in any manner of its choosing. You can pay in for 40 years, retire, and the government may increase, decrease, or eliminate the benefits. There would be political consequences, but the government has the power to do it. An insurance company cannot unilaterally absolve itself of responsibility. The only government responsibility is to pay in accordance with the effective law, but they can always change the law. The fund itself basically consists of bookkeeping entries. The money collected has been transferred to the general fund and spent. The government is over $14T in debt. The amount in the fund, including any interest, is a bookkeeping entry. It is payable by the U.S. government. If the government does not have the funds, there are few ways to produce the funds on demand. They can just print money which acts like a tax, decreasing the value of all existing U.S. currency, and the value of all savings. They can collect the amount needed with revenue, but that is just handing the bill to the people to pay them what they are owed (or what is due by law). They could borrow the money, or perhaps sell some national infrastructure. In its current form the system will go bust. Effective reform means changing the eligibility or benefits to reduce the overall payment to beneficiaries, or to increase the revenue stream coming in.
Its like an insurance program. No government program functions exactly like a private sector entity.
It is also exhibits characteristics of a Ponzi scheme where early investors are paid with the money of later investors, and it works as long as the number of investors keeps increasing at the necessary rate. When the increase in new investors slows or stops, the system fails. An insurance company cannot unilaterally void or change its liability. The government program (a "social compact") can be changed at the whim of the government and there is no legal recourse. The private insurer is subject to enforcement by the courts. A government program or social compact is not an enforceable promise. It does not really equate to an enforceable contract in commerce, whether one chooses to compare it to a commercial retirement or insurance plan, or any other enforceable contract. It is a thing unto itself, based on the full faith of the government, and the credit of the government.
But the government can always make modifications to raise revenues. Real Ponzi Schemes always fall apart. There is no reason that Social Security must fail. When the increase in new investors slows or stops, the system fails... It does not really equate to an enforceable contract in commerce, whether one chooses to compare it to a commercial retirement or insurance plan, or any other enforceable contract. When an insurance company fails (revenue slows down too much), the state guarantee corporation must pay out benefits and may not pay out as much as originally insured for. Doesn't this indicate that private insurance does have certain characteristics of a Ponzi Scheme as well.
When a Ponzi-like government program requires more money than the government can raise, the funding will fail. The government cannot raise infinite money just by passing confiscatory laws. When the program payments exceed what those paying in can provide, something has to give. Governments can, and do, fail. Without change, the social security program will fail. The proportion of persons paying to persons receiving benefits is diminishing. At some point it becomes unsustainable. I do not see the relationship between this and a Ponzi scheme. In any case, the State does not pay out the benefits from some existing fund. It sells the remaining pieces and pays pennies on the dollar and passes on the remainder of the expense to other surviving insurance companies. http://www.businessweek.com/magazine/content/08_48/b4110100507198.htm Your Life Insurance Policy May Not Be Protected Some major insurance companies are in trouble. If they fail, policyholders shouldn't count on guarantees By Ben Levisohn [excerpt] When insurers do fail, state regulators sell off what they can and bill the remaining life insurers operating in that state to make policyholders whole. "The funds have been pretty good at providing a basic level of consumer protection," says Peter G. Gallanis, president of the National Organization of Life & Health Insurance Guaranty Assns. But the system runs on the assumption that only small insurers are likely to fail, and then only one at a time.
The point is that insurance companies, like in a Ponzi Scheme,depend on continued investments from investors to pay out current benefits. If the insurance company fails, the controlling guarantee corporation is no longer required to pay out all the benefits.
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.
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.
You can't be serious.
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.
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.
Except that an adjustment in the amount collected was made during the Reagan administration to compensate for the dreaded baby boomer retirement.
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?
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?
You argue people who don't agree with you should die and claim you are pro- life. And you expect me here to argue in good faith with such insanity. Save it for your psychiatrist. He gets paid enough to hear such crap; I don't.
Pro life is a term that has no definition. You say you are pro life but you would let a murderer go free. That is anti life. You say you are pro life but you vote for Obama the man who champions baby murder. Your words are hollow. I never said people who disagree with me should die. That is ridiculous. I said if someone is running around saying abortion abortion. Who is going to pay for the kid. We can't afford it. Abortion is a right. People who say that then at the end of life want government help should be aborted.
This post is conflicted and convoluted. It in no way merits being taken seriously. For example; being against Capital Punishment turns no murderer loose. Which makes this hyperbolic sentence utterly meaningless. As I said, save it for your shrink.
Tell that to Dukakis and Willie Horton.
Illinois: Madison Hobley, Aaron Patterson, Stanley Howard and LeRoy Orange, pardoned in 2003 • Sent to death row on the basis of "confessions" extracted through the use of torture by former Chicago Police Commander Jon Burge and other Area 2 police officers in Chicago. They were pardoned by outgoing Governor George Ryan, who also commuted the remaining 167 death sentences in Illinois to life imprisonment. North Carolina: Jonathon Hoffman, exonerated in 2007 • Convicted and sentenced to death for the 1995 murder of a jewelry store owner. During Hoffman's first trial, the state's key witness, Johnell Porter, made undisclosed deals with the prosecutors for testifying against his cousin. Porter has since recanted his testimony, stating that he lied in order to get back at his cousin for stealing money from him. http://www.amnestyusa.org/our-work/issues/death-penalty/us-death-penalty- facts/death-penalty-and-innocence Our system of justice which is predicated on the notion that one is innocent until proven guilty beyond a resonable doubt is compromised by a cruel and unusual punishment that cannot be reversed should an innocent woman or man be executed and then be revealed to actually have been innocent of the crime they were convicted of. Murderers are always going to get away with their crime now and again unless we had a 'you have to break an egg to make an omlette' apprach that postulates it is preferable to kill some innocents least one guilty person escape justice. I see no rationality to your point.
So Obama should be impeached for practicing cruel and unusual punishment against babies without a court order. Screw that asshole. Now go report me to the Obamunist snitch line. Tell him I said to fuck off.
Roe v. Wade is the law of the land. You can't impeach a POTUS elected in 2008 for a SCOTUS decision made in 1972. You do not make a rational point.
A president is under no obligation to enforce supreme court decisions. President Andrew Jackson famously told the supreme court to stuff it.
And it is a shame Jackson had not been appropiately sanctioned with empeachment for this concern to support this unconstitutional action. The interment of Japanese Americans in the emotional hysteria at the start of WW II was also a retracted error that was quite unconstitutional. All this proves is the system has human failings to it. So?
It's a presidents duty to ignore the human failings of the supreme court and uphold the constitution and rule of law, as they swore in their oath of office. Jackson upheld his oath of office. FDR did not because he was a statist progressive communist, like Lincoln, Woodrow Wilson, Clinton, Bush(x2), and Obama. The whole later bunch went along with SCOTUS rulings that violated the constitution. It's been a very long time since we had a law abiding president.
Jackson ignored his duty to enforce a High Court decision is very clear in our system of government. The U.S. Constitution has three branches of government sharing power to create checks and balances in the system. Jackson did what he did not so much because he was just in ignoring his constitutional duty he swore an oath to preform; he did it because of the greed and racism of those lobbying him to do so. There was not a thing that was law abiding in his action any more then the graft and greed that those agents contracting to provide food and medicine to Native Americans forced onto small reservations were guilty of was right or legal. This application of Apartheid that was an inspiration for concentration camps in South Africa during the Boer War in South Africa or those of Nazi Germany in WW II was very unjust as well and this action of Jackson has put blood on his hands for many decades after his presidency. Manifest Destiny and the Papal Bull called the Doctrine of Discovery that were much the basis of the Trail of Tears was evil and responsible for many deaths and acts of genocide after the Indigenous People of North America were largely rubbed out helped kill many people for generations in other parts of the world. What Jckson did was predicated on greed and hate and helped empower and create much death and suffering in the world. There was nothing good or just about this violation of his oath of office to uphold the U.S. Constitutuion.
I think you lie. Show me in the constitution where it says the Presidents job is to enforce Supreme court decisions. I read that it is his duty to enforce the constitution. You're a very feminine fake poser.
I know that should the SCOTUS overturn Roe v. Wade and a future POTUS then sign an executive order authorizing abortion in spite of it, you would be howling bloody murder that he or she has no right to go against this new hypothetical ruling. Now as for the charge I am feminine, that is an interesting slant of insult. Does this mean you view over half the population of the U.S. as inferior to those of us who are fueled by testaterone instead of estrogen? I am much amused.
If you are female if is good to be feminine. If you are male you come across as some kind of faggot freak.
Gee Dr Ruth, thsnks for sharing your master baiting skills. Most gays are very masculine and unless you know them well on the personal level, you would have no clue to their sexual orientation. ;-D
I wouldn't know. Apparently you know very well. By the way it is preference not orientation. To say it is orientation is an insult to God.
There are no replies to Comment # 201. End Trace Mode for Comment # 201.
Top • Page Up • Full Thread • Page Down • Bottom/LatestPing
#23. To: jwpegler, e_type_jag, hondo68, lucysmom, nolu chan, NewsJunky, eskimo, mcgowanjm (#1)
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.
#34. To: Godwinson (#23)
SS is a retirement insurance program - it does not function like a "Christmas club" account
#81. To: nolu chan (#34)
(Edited)
the "insurer" can change the benefits at any time and in any manner of its choosing
#83. To: NewsJunky (#81)
Its like an insurance program. No government program functions exactly like a private sector entity.
#84. To: nolu chan (#83)
It is also exhibits characteristics of a Ponzi scheme where early investors are paid with the money of later investors, and it works as long as the number of investors keeps increasing at the necessary rate. When the increase in new investors slows or stops, the system fails.
#85. To: NewsJunky (#84)
But the government can always make modifications to raise revenues. Real Ponzi Schemes always fall apart. There is no reason that Social Security must fail.
When an insurance company fails (revenue slows down too much), the state guarantee corporation must pay out benefits and may not pay out as much as originally insured for. Doesn't this indicate that private insurance does have certain characteristics of a Ponzi Scheme as well.
Insurance November 20, 2008, 5:00PM EST
#115. To: nolu chan (#85)
I do not see the relationship between this and a Ponzi scheme.
#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.
#123. To: nolu chan (#119)
(Edited)
They do not depend on an ever-growing base of customers to pay benefits to earlier customers.
#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.
#138. To: nolu chan (#128)
#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.
#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.
#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
#157. To: Ferret Mike (#154)
#159. To: A K A Stone (#157)
(Edited)
#162. To: Ferret Mike (#159)
#167. To: A K A Stone (#162)
"Your words are hollow."
#169. To: Ferret Mike (#167)
For example; being against Capital Punishment turns no murderer loose.
#175. To: A K A Stone (#169)
(Edited)
Examples of wrongful convictions: Arizona: Ray Krone, released in 2002 • Spent 10 years in prison in Arizona, including time on death row, for a murder he did not commit. He was the 100th person to be released from death row since 1973. DNA testing proved his innocence.
#176. To: Ferret Mike (#175)
Our system of justice which is predicated on the notin that one is innocent until proven guilty beyond a resonable doubt compromised by a cruel and unusual punishment that cannot be reversed should an innocent woman or man be executed and then be revealed to actually have been innocent.
#178. To: A K A Stone (#176)
#183. To: Ferret Mike, A K A Stone, *Liberal Rehab Staff* (#178)
Roe v. Wade is the law of the land
President Andrew Jackson, who had the executive responsibility of enforcement of the laws, stated, "John Marshall has made his decision; let him enforce it now if he can."
#184. To: hondo68 (#183)
(Edited)
#188. To: Ferret Mike, A K A Stone (#184)
the system has human failings
#189. To: hondo68 (#188)
(Edited)
#190. To: Ferret Mike (#189)
Jackson ignored his duty to enforce a High Court decision is very clear in our system of government.
#191. To: A K A Stone (#190)
"I think you lie. Show me in the constitution where it says the Presidents job is to enforce Supreme court decisions. I read that it is his duty to enforce the constitution."
#193. To: Ferret Mike (#191)
Now as for the charge I am feminine, that is an interesting slant of insult. Does this mean you view over half the population of the U.S. as inferior to those of us who are fueled by testaterone instead of estrogen?
#199. To: A K A Stone (#193)
#201. To: Ferret Mike (#199)
Most gays are very masculine and unless you know them well on the personal level, you would have no clue to their sexual orientation. ;-D
Replies to Comment # 201.
[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]