Part of FDR’s statement upon signing the Social Security Bill:
“We can never insure one hundred percent of the population against one hundred percent of the hazards and vicissitudes of life, but we have tried to frame a law which will give some measure of protection to the average citizen and to his family …”
History will judge the Social Security Bill to be the grandest Ponzi scheme in all of history; unless, the government continues on with the Anthropogenic Global Warming regulations. These may sound like wild ambiguous statements to you the reader; however, you probably aren’t that familiar with the history of Ponzi schemes or understand how they function or the similarity would be painfully obvious. So obvious, that it is conceivable that the SS Bill used the genius of Charles Ponzi as the framework for the Social Security Bill.
The public wasn’t really familiar with the Ponzi scheme until Bernie Madoff pulled his now comedic rise to wealth by peddling his version of the Ponzi scheme to the wealthy. Concentrating on the extremely wealthy, he sold an exclusivity of influence for investors. Making a mockery of “the rich are so smart” parable, he had them clamoring for the opportunity to get close to Bernie and be bilked for millions.
The Ponzi scheme wasn’t invented by Charles Ponzi, but he had the name that was adopted by the public for the designation of an old confidence game called, “Rob Peter to pay Paul“. This fairly simple larceny involves promising huge returns on investments, so that you have a continuous flow of naive and simple minded investors who will believe the lies of the confidence man. The original investors are paid outrageous returns to entice new investors.
There is always a defining characteristic for confidence men, they have pleasing personalities that inspire confidence in the naive and weak minded.
The scam often continues on its own momentum and the lies of the perpetrator, until a point of critical mass is reached or until the carnival barker runs out of rubes to ante up fresh money for the scam. Once there is no longer funds to payout to the older investors the scam falls apart.
The Social Security Administration is approaching the critical mass phase. Adjustments will need to be made or the program will bankrupt itself, I have termed this phase critical mass. There is a major difference in the design of the Rob Peter to pay Paul scams and Social Security: the others are illegal, FDR had the genius to not only make Social Security legal, but he made dues paying membership required by law. Thus he assumed there will never be a tell tale line up of doubting Thomas’s wanting their money back. Another tragic, but humorous trait of the critical mass phase of a classic Ponzi Scheme.
However, there were some unforeseen problems that evolved in FDR’s Ponzi Scheme. People have begun to live longer and a changing demographic is upsetting the worker to retiree ratio. Obviously, FDR wasn’t a mercenary confidence man, but whether Social Security was set up with the Ponzi Scheme as a template or he just used the old Rob Peter To Pay Paul scenario is without doubt, a cold hard fact of American life. It fits the classic description or definition of this particular con game. The only reason it isn’t in the midst of critical mass is that participation is required by law. Once the public stops believing in a con man or a hoax, the jig is up. Requiring participation was a stroke of genius that delays the inevitable end of all Ponzi Schemes, this period known as critical mass or melt down.
Charles Ponzi started his scheme by buying older undervalued postal coupons in European currencies at fixed, outdated rates of exchange and trading them in the Us for dollars, generating a guaranteed profit. He promised investors a 50% return on investment in 45 days. The bank’s return on investments at this time was 5% per annum.
His early investors doubled and tripled their money. Many of his investors declined to redeem the coupons and preferred to let their money ride to get the exponential increases. His company, the Security Exchange Company or the SEC, yes, you read that correctly, received great reviews in the financial editorials of newspapers and new investors stood in line to become part of the scam. At his peak, Ponzi received one million dollars from investors in a three-hour period. In nine months his scam took in $15,000,000 during 1919 and 1920 (approximately $174 million in 2007 dollars). No one realized that there weren’t enough of these foreign exchange coupons to begin to equal the amount of money that was being invested. They were essentially a coupon that people sent to Europe from the US so that their relatives could afford a stamp to mail a return letter with a postage coupon redeemable for a certain amount of postage in a foreign country. Remember, this was the Great Depression.
Ponzi spent five years in federal prison, when his scam collapsed. The State of Massachusetts sentenced Ponzi to an additional nine years, but he left the country and settled in Brazil. He lived the rest of his life in poverty and was buried in a pauper’s grave.
In his last interview he came clean about his scam:
“My business is simple. It was the old game of robbing Peter to pay Paul. You would give me one hundred dollars and I would give you a note to pay you one-hundred-and-fifty dollars in three months. Usually I would redeem my note in 45 days. My notes became more valuable than American money … Then came trouble. The whole thing was broken.” (Zuckoff, Mitchell, Ponzi’s Scheme: The True Story of a Financial Legend, p. 313)
Ponzi didn’t possess the killer instinct of the true confidence man; the goal of the confidence man is to take the money and run; he was trying up until the end to make his scheme into a legitimate business. Whether he was aware that there was not enough postal coupons on the planet to cover his customers’ investments is open to debate, but if he could have become Ponzi International Shipping, he could have avoided prison and retired a wealthy man.
Al Gore, one of the biggest confidence men of the modern age seems to have reached the point of no return, he has lost credibility and his sanctimonious pleas to make money and save the earth are falling on deaf ears more and more.
Obama is possibly the greatest hoax in history. He is the first undocumented president in the history of the country. His “Hope and Change” jingoism, seems to only benefit campaign contributors; but his days as a confidence man are nearly over, the Son of Stimulus will tell the tale of whether the country has lost faith in the Obama Magic. Obama also has numerous incidents of corruption nipping at his anles, Fast and Furious, Gunwalker, Solyndra, Operation Castaway in Tampa, Gangwalker and Lightsquared have compromised his confidence game. But he hasn’t promoted a Ponzi Scheme.
Bernie Madoff’s scheme was another deal entirely. He “Made Off” (the correct pronunciation of his name, BTW) with $50 Billion. It is the largest (money involved) Ponzi scheme in history: investigators found his larceny stretched back the 1970’s. Madoff had a head start with his position as Chairman of NASDAQ, a prominent and influential position on Wall Street. His victims were arguably the most financially savvy and wealthiest in the world; he required a minimum of twenty-million to invest with him. His literature was meant to convey “Confidence” among potential investors.
Ponzi was a Democratic conman in that he reached out to the masses and gave them a chance to accrue wealth. In a manner of speaking Madoff was also a Democratic swindler; although, he serviced the Elites or Limousine Liberals of Wall Street and Palm Beach, he serviced their hunger for wealth and greed. You had to be in the upper echelons of society and wealth to be accepted into Madoff’s select group of suckers.
In an era of faceless organizations owned by other equally faceless organizations, Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner’s name is on the door. Clients know that Bernard Madoff had a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm’s hallmark.
Of course, when the veil was lifted on the nefarious nature of Madoff’s investment scheme, there was pandemonium as the world’s elite tried to recover their investments like starving peasants. No more were they interested in having access to the genius Bernie Madoff; it was time to scratch and claw to the front of the line to get their money; unfortunately, Bernie had squandered the funds by living the profligate lifestyle that had attracted those same affluent investors. The so-called smart rich people were played for fools and morons by Bernie Madoff, the charismatic conman, the guy who didn’t know when to quit.
Madoff offered little more than his word. There have been scams with real value and legitimate businesses with a practical product.
On the other side of the world, Wang Fengyou founded Yilishen Tisnxi an ant farm conglomerate that had farmers maintaining ant farms on a precise feeding regimen so that they could later convert dead ants into an aphrodisiac. A million Chinese developed a passion for farming ants. They saw the financial rewards of a simple enterprise and were happy to be involved in improving life for people with deflated egos.
Poor farmers bought into the scheme for 10,000 yuan (approx. $1,500) and they were given a box of special ants. The insects were fed the a sugar and honey solution twice a day at 9 am and 4 pm and they were to be fed a cake and egg yolk solution every three to five days. They were never to open the box and after 74 days the boxes were picked up. The farmer received 13,500 yuan every 14 months, an excellent return on investment.
The ants were ground to a pulp and sold as an aphrodisiac, did the product work? Yes indeed, it worked like no other traditional medicine in the history of the world! The powdered ants put extra lead into the pencils of tens of millions of Chinese men!
Wang became a very wealthy man, his aphrodisiacs were sold in 80,000 pharmacies across China. He is reported to have had over one million farmers raising his ants. His company had a yearly turn over of 15 Billion yuan or $2 billion US. In October 2007, he reached critical mass and his company missed farmer payouts and collapsed, he was soon arrested.
Although, the ants were traditionally considered to be an aphrodisiac in traditional Chinese Medicine, Weng hedged his bets by including sildenafil
with his crushed ants to give them a little extra boost. Sildenafil is the main active ingredient in Viagra.
In 1935, while the country was under the yoke of poverty and depression, Roosevelt signed into law “Social Insurance” to alleviate the cruelty of abject poverty imposed upon retirees and the unemployed, it was considered a part of the New Deal. The benefits paid to retirees and the unemployed were paid by taxes from the wages of employed workers.
Over the years the rules and regulations have changed, but we still have the basic premise of Charles Ponzi: the new investors (workers) pays in the form of taxes to support the older investors (retirees). This is the first and primary premise of the Rob Peter to Pay Paul confidence game or the Ponzi Scheme.
Between 1937 and 2005, Social Security took in $10.7 trillion in taxes and other revenue: during that same period it paid out more than $8.9 trillion.
Currently Social Security runs a surplus (it invests the money in Treasurys, thus complicating the issue, because the government is essentially giving itself an IOU). It is expected to run a surplus until 2018. The baby boomers will then be retired and drawing benefits; the Social Security program will have theoretically reached critical mass. Unless the system is altered, it will be bankrupt by 2040. Taxed income will need to be increased and the retirement age will need to be increased; these are two of the obvious possible partial adjustments that will need to be made.
Even though FDR mandated participation by law, he hedged his bets by making the retirement age 65 when the average lifespan was 62. He was such a kind hearted man. No one figured the lifespan would be increased to approximately 80 in 75 years. People are sticking around far too long as far as the Rob Peter to Pay Paul confidence scheme is concerned. Now the young people in their thirties are complaining that there won’t be any money left for them when they retire: ha! they just don’t realize there was never any stockpile of money in the lock box, it has been a Ponzi Scheme since day one. They must rely on the younger generations to support them in the greatest Ponzi Scheme of all time. Have faith young people, we older people believed the conmen, why can’t you follow the government in blind obedience like your grandparents and great grandparents? Why should you not have faith in the great Liberal Ponzi Scheme?
Young Americans should remember Ernest Ackerman and Ida May Fuller before they worry themselves into an early grave over the prospect of paying into the Social Security version of a Ponzi Scheme. Like the traditional Ponzi Scheme, the early investors have the best chance to make money. Ernest worked for one day under the Social Security before he retired. His total involuntary contribution was $.05. The government decided to pay him a lump payment of $.17 for his retirement. Ida May Fuller, of Ludlow, Virginia, was the first person to receive monthly retirement checks in 1940 at the age of 65. She paid $24.75 and received $22,888.92 until her death at 100 years of age.
FDR was truly the most Democratic of all the conmen of Ponzi Scheme history, he offered the helping hand of government to the retired workers in a show of humanism; of course, you were supposed to be dead according to the statisticians and odds makers before you could start dipping into the kitty. Now, that was a fantastic idea for a con game; until, the parameters changed and people began to live healthier lifestyles and longer lives.
Social Security started paying benefits in 1940, there was only one beneficiary for 160 workers. In 1950, there were 16.5 workers for every beneficiary. Presently, we have three workers for every beneficiary. In twenty years, we are projected to have only two workers for every beneficiary.
The average retiree receives approximately a third of what the average worker earns. In 1940, the worker paid .02% of his income to support a retiree. In 1950, he was required to pay 2% of his income towards Social Security. Today he must pay 11% to support the system. In twenty years, it will require 17% of a paycheck to keep the system viable. With the increasing costs of Medicare, the costs to the taxpayer will be astronomical.
The Treasury is borrowing money to pay the deficit in Social Security revenue to meet the payouts to seniors and this deficit will only increase as the ratio of workers to retirees continues to invert.
Yes, my friends, Social Security is the greatest Ponzi scheme ever devised, but it is an institutionalized and integral confidence game of Rob Peter to pay Paul, within our society and our economy. It is imperative that we alter the plan by increasing the retirement age and we will surely need to raise the taxes for Social Security; unless, someone can figure out a way to avoid the inevitable. We can’t throw our seniors into the street. It is not who we are and besides they have already paid into our grand Ponzi Scheme for 50 years.
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@Larry, whether it’s public debt or intragovernmental debt, it is still part of the US national debt. All GAS securities are debt that is owed by the federal government, and are included in the nation’s debt figures. The only difference is the counter party principal. Simply because the “bank” is the same entity as the borrowers doesn’t erase the spending and financial obligation. Therefore, you telling anticsrocks he “doesn’t get it” is likely the height of hypocrisy.
Why not read one of those young people who aren’t as enthralled with the “success” of this program as you … he happens to also be a grad with economics degree, and manages technology trading. The Fallacy of Intragovernmental Debt.
Don’t like him? How about Charles Hugh Smith at the Daily Finance? Eventually you might run across somebody, other than yourself, you might trust when they tell you that funds borrowed from SS are, indeed, included in the national debt.
Truly, I’m fatigued pulling archived links to economists for you to actually get it. Make an effort to broaden your horizons.
@MataHarley: Thank you, Mata. As I said I am no economist, but I do know the difference between what you described as accounting gimmicks and actual investments.
As for Larry and his tirade about the Reagan tax cuts, the national debt, the GOP, and the sports blogs he says he posts at: I have a question. Correct me if I am wrong, but doesn’t Larry claim to be a physician? One wonders how he finds the time to actually see patients…
Hi Mata,
You and I have had lots of arguments which can never be adjudicated, because they are based on predictions of the future (e.g. what would be the economic and social effects of ObamaCare) or opinions/philosophy.
In the present case, however, there is an existing mathematical answer and you are wrong when you assert that social security has added to the national debt. My statement was 100% correct. Social security has not added one dime to the national debt.
The problem, as explained, is that the US government spent more money then it took in. This was caused by overspending and it was also caused by tax cuts which were not balanced by spending cuts. The most rapid expansions of debt occurred during times when there were massive tax cuts in the face of massive spending increases — the Reagan military build up and the Iraq/Afghanistan wars and Medicare Part D being three such examples.
It is a fact that, during all these periods of time, the government, therefore, had to borrow money to make up the shortfall. The way that the US borrows money is to issue treasury bills. Two sources of borrowed money were (1) private pension funds and (2) social security tax surpluses. Both private pension funds and the social security trust fund were issued interest bearing T bills. The exact same T bills, with the exact same interest rates.
You can no more accuse social security loans to the government of adding to national debt than you can accuse private pension fund loans to the government of adding to the national debt. The only thing which creates debt for the government from loans is the interest due on those loans. But the interest on debt to social security is no more or nor less onerous/illusory than interest on debt to private pension plans. You can no more blame national debt on social security than you can blame national debt on private pension funds. The private pension funds didn’t create the debt; they only lent the money. Social security didn’t create the debt; it only lent the money.
It is no more mathematically (or intellectually) honest to blame national debt on social security than it is to blame national debt on private pension funds. The Social Security Trust Fund was created through regressive taxation which disproportionately hit poor and middle income Americans. The US government has the same economic and moral obligation to repay those loans as it has to repay the loans of the pension funds.
I would respectfully suggest that the most appropriate way to repay those funds is by increasing the taxation of the wealthy Americans who’s generous tax cuts of the past 30 years were financed, to a substantial degree, through the cash loans from the social security administration, which, along with loans from private pension funds and other sources, provided the financing for these tax cuts.
P.S. I did read your Charles Hughes Smith link. He’s simply regurgitating the George W Bush outrageous statement that “there’s no pile of money” somewhere to pay for the Social Security T Bills. Both Charles Hughes Smith and George W Bush consider the Social Security-held T Bills to be worthless paper. But they are exactly the same paper as that held by private pension funds, hedge fund investors, wealthy private individuals, and the Peoples Republic of China. Either T Bills are backed by the full faith and credit of the US government or they are not. It isn’t the fault of Social Security that the government overspent and undertaxed.
I’ll repeat again that, at the time of the Reagan tax cuts, there was a simultaneous large increase in the regressive social security tax. When people pointed this out, the government asserted that social security surpluses would be invested in T bills to finance the long term solvency of social security. Those social security surpluses helped to finance military build up, tax cuts, wars, and other government spending. Now, when the time comes for social security to redeem those T bills, Hughes and Bush say that they are only worthless paper.
Tell that to the pension funds. Tell that to the hedge funds. Tell that to the private investors. Tell that to the People’s Republic of China.
– Larry Weisenthal/Huntington Beach, CA
@openid.aol.com/runnswim: Larry, to date the Iraq/Afghanistan wars have cost about $1.5 trillion over nearly the last decade. If you took away ALL that spending, you would only erase the deficit for ONE year under Obama.
I really think it is time to leave the libtard talking points that the Iraq/Afghan wars are causing our debt problems.
Hi Antics. The deficit under Obama is owing primarily to the financial meltdown, with a crash in revenues. You can’t attribute this deficit to new Obama spending programs. Obama didn’t initiate the Wall Street bail out. He didn’t initiate the auto rescues. The $700 billion “stimulus” consisted, in substantial measure, of GOP-supported tax cuts and also in unemployment benefit extensions which received bipartisan support, as late as the winter of 2010. At the time Obama proposed the $700 billion stimulus (mixture of spending increases and tax cuts), the GOP proposed a more “modest” $500 billion stimulus, consisting mostly of tax cuts. So the extra debt directly attributable to Obama is $200 billion or so, and not $1.5 trillion per year.
P.S. The Asian Wars are the gifts that keep on giving, financially speaking, in terms of long term disability, medical care, and death payouts, and other long term obligations. Their ultimate cost will be trillions more than your quoted figure.
– Larry Weisenthal/Huntington Beach CA
Larry, we all know, resorting to hyperbole is a method I employ to muddy up the water and fire up the natives:
We and the government, including our inarticulate extemporaneous speaking president, from whom I paraphrased the above quote, realize the boomers are likely to live well past their scheduled departure date, due to their healthier lifestyles, at least the ones not embroiled in drugs or certain male homosexual proclivities. This will serve to further complicate the issue if an extra decade or more is added onto the collective lifespan, not to mention the health care costs. (Later article)
I based my anecdotal evidence on talking to my 30 year old children and their friends, who are split as to which side of the political fence they walk on, assuming we designate Canadian Conservatives as being on the right. Many of them read the article above and thanked me for explaining the mystery. They weren’t frightened that the program may have been based on the criminal activity of one man that was a main source of conversation in the early thirties. No, it all made since to them. Most of them are well read and economically upwardly mobile young people. They are concerned with the burden, the generation of their father will place on society. (Canada is a mirrored image of the US but with a more sound pecuniary footing. They offer many of the same programs with distinctly Canadian names and feel as if they are maintaining a Canadian identity.)
They have been worried in the recent past about the possibility of supporting this gargantuan demographic and the system being exhausted by the time they approach an ever increasing and perhaps mythical retirement age. I am not sure where they have received their input, but it was not from me or FA.
They serve as a small representative sample of their generation; a sample that is more literate than most, but the point is that they are nervous about the system in the US and Canada, but they were reassured once they gained insight into how the system actually works.
Has the government intentionally perpetrated a false impression over the decades and allowed the public to assume their money was secure in a lockbox, rather than leveling with them? Yes, to keep the public in more or less voluntary compliance, the public has been deceived by using the rationale that it was for the public’s interest.
When the government deceives the public, in much the same manner our administration is currently stonewalling on several different fronts, the public loses confidence; once you reach that point of mistrust, it is too late to reassure the public with the truth.
Woof… downright dizzy from the spin machine, Larry. Your inaccurate portrayal as a defense for an incorrect statement about SS not added to the US debt… which the Treasury, the SSA and everyone who knows the workings of government contests… comes down to this..
“hey… we (being SS) took in enough money, maybe even more money. so it ain’t us adding to the debt!”
sigh. I think that works well with a few 5th graders.
Larry, the creation of the SSA of 1935 was a tax that was falsely advertised as a contractual guarantee to a pension right if you lived to a certain age. The big lie was there were no contractual rights built in, and in fact the bill’s language stated that Congress could not only alter, amend or repeal it at will, but mandated that any excess was to be made available for non pension spending. It was not to be held separately and away from Congressional access and devoted to any such pension. It was always meant to be a clever revenue stream.
The SSA created, simultaneously, a tax revenue stream (the taxes) and a debt/liability (the payout of benefits, as long as Congress agreed to do so). In a perfect world, this yin yang was supposed to be revenue neutral, or a revenue surplus. Or at least it is presented that way, and apparently there are more than a few that buy into this notion.
Ponzi schemes, or intergenerational money redistribution, are always profitable in the beginning.
The ugly reality is that taxpayers end up paying twice for social security. Once when the original revenue is collected from employers/employees/self-employed. And a second time when the excess that was loaned out for Congressional non pension spending has to be repaid because the annual revenues were insufficient to pay out the benefits – as it has at least three times in our past. This repayment is borrowed from elsewhere since Congressional pockets are empty.
In the interim, the interest on what was borrowed is added to the debt because intragovernmental loans between federal agencies is a debt that has to be paid…. and therefore considered debt.
But what you insist upon doing is trying to separate out the SS revenue as sacrosanct and uninvolved in the results. Needless to say, your logic doesn’t even hold water with the Treasury and SSAs own explanations of how these funds are used, and how it’s accounting and loan interest does, without question, add to the debt.
The federal budget in 2011 has 21% of spending devoted to “pensions”… and it’s called “pensions” on the fed pie chart, not “insurance”… and 23% to health/Medicare/Medicaid. Using your selective logic, any pieces of those pie that remain within a neutral deficient are “solvent” and not adding to the debt, and the other pieces aren’t. Ergo, were we 24% over budget, everything other than defense is not adding to the debt. Just don’t work that way.
Needless to say, were the SSA just a past dream of FDRs, and not reality, that is not only 21% of spending the US would not have on budget, but would also have reined in the frivolous spending by Congress who had their fingers in the cookie jar yearly. So as far as I’m concerned, it’s very presence has been fuel to the spending fire and runaway debt. Without it’s convenient piggy bank, our national debt would be considerably lower because the convenience of cheap loans to itself would not have been available from that large source.
Even worse, SS has created a dangerous mentality for all… as you yourself admit with taking chances… by counting on a government pension after a certain age. This has trained generations to be less concerned with securing their own futures. Why should anyone worry? The government will be their nanny, taking care of them after a certain age. It was this “entitlement” mentality – and the reason the enacted law was peddled to the country as an “entitlement” – that FDR counted on so that future Congresses would not repeal his revenue stream by using sheer populous revolt.
I do agree that the government as a moral obligation to repay what they absconded for non pension spending use. But I will be also just as quick to point out that they deliberately built in the government’s power to totally do away with it as well. There is no contractual right to that tax money’s return in the original legislation, nor any ensuing amendments. The only thing that keeps them from doing so is exactly what FDR planned… that an “entitlement”, “you owe me” mentality in the citizenry would tear an elected official apart for attempting to do so.
As far as the claims that it’s “working”, even were the excess funds never allowed to Congress for non pensions spending, it is still in the red in the coming years. Why? Because eventually all ponzi schemes collapse when they hit that moment where intergenerational payment plans no longer function. Congress has, of course, the ability to slowly renege on all promises because it was never a contractual right. And that is what they will do because they sure aren’t going to give up their piggy bank.
Hence the reason it needs to be carefully weened from the system. The young live in a different age, and they do not need to look to the government as their inefficient stock broker to secure their future. Education in the public schools needs to include economics, investment planning. Far more valuable than this tolerance nonsense and sex education peddled these days.
I have no idea why you are harping and mischaracterizing this business about “worthless T-notes”. No one is calling them worthless, except you. Altho it’s hard to imagine the treasury yields could get much lower. This is some sort of a straw man tangent used merely to detract and distract from the original debate and criticism that there is no revenue in the “trust fund” – merely IOUs from intragovernment lending that will cost the taxpayers a second round of the same amount, plus interest.
Considering that cashing those chits in to pay back the fund entails considerable borrowing power for the nation, plus interest, it’s a fallacy to consider the SSTF solvent in any form. It’s the same entity.. the federal government… as the borrower and the lender. You may owe yourself a trillion dollars with your right hand, but your left hand is borrowing from a 3rd party to pay yourself back because the left hand is deep in debt. You cannot separate the two, but conveniently on paper for accounting mumbo jumbo.
INRE your Obama defense… Obama did not initiate the Wall Street bailout, but he continues to use and misuse the funds to this day. Secondly, he most certainly DID initiate the auto bailout. He used TARP funds (illegally) to purchase two automotive companies and turn bankrupcty law upside down. This was done in March 2009.
As far as softening the blow for Obama’s culpability based on the GOP proposed stimulus, and the Obama/Pelosi/Reid proposed stimulus, that’s a real stretch as well. First of all, I was opposed to all stimulus funds as constructed by the terrible trio. The tax cuts were all in the wrong places, bolstering up failing state payrolls was a waste of time, extending unemployment was a deterrent, bailing out the Dept of Ed and the EPA was vain stroking, the industries chosen to create jobs were deplorable, and virtually nothing was “shovel ready”.
So it beats the tar out of me how you can compare a GOP “stimulus”, without seeing where the money was to go in that legislation, as an apples to apples with Obama/Pelosi/Reid POS welfare bill that did nothing. You simply want to play the numbers game. But not all spending is created equal. Perhaps if every bit of that was genuinely *needed* infrastructure, and not funneled to ridiculous programs to keep bubbles inflated, there might have been a more lasting effect.
Considering not only the amount, but the choices of how and where to spend that stimulus money, the onus for the debt, and the repercussions of it’s failure, lie squarely on the shoulders of Obama and his majority Dem Congress. No passes, save in your own partisan viewpoint.
@MataHarley, #53:
I’m not clear what you’re referring to. What was alluded to in #44 is the fact that Social Security retirement was originally an all-or-nothing proposition. FICA payments were premiums that insured against an age-related loss of work ability. If you were still working, you weren’t eligible. Social Security’s statutory retirement age was the earliest point at which eligibility could exist if a loss of work capacity occurred. Since benefits were significantly less than wages, most people who remained able to work continued to do so.
Spin the FDR administration’s motives however darkly you wish; the foregoing is pretty much how things actually worked for most American workers, and they’ve been a hell of a lot better off in the final years of their lives for it. If the program is scrapped, the majority of Americans will suffer greatly as a result.
@openid.aol.com/runnswim: You are right Larry, the $1.5 yearly deficits under Obama just aren’t his fault. Its the Japanese tsunami and earthquake, the Arab spring, the D.C. quake, Bush, Reagan, and hey, don’t stop there, should we maybe go all the way back to Fillmore?
Sheesh, you live with your head in the sand all you want, buddy.
I used to have a modicum of respect for you, but you continue to ignore facts when presented to you by myself, Mata and others and instead, insist on spewing your liberal talking points.
You are sad.
Hi Mata. I don’t know how many words you wrote in # 63 but none of it in any way negates my utterly irrefutable points.
Since the inception of social security, all of the excess funds from any given year were supposed to be invested in US treasuries. This is no different from any other source of money to finance government debt. But let’s simply focus on private pension funds. Whenever the government needed more money (which was almost every year), the government took loans from where ever it could find it. They took loans from private pension funds and they took loans from social security. Both of these loans are real money. Neither of these loans were responsible for any of the debt. What was responsible for the debt was (1) too much spending and (2) too little taxes, given the level of spending. So the government needed to borrow money to finance the shortfall. And they took loans from both social security and from private pension funds. And both got the exact same US treasury bonds in return.
Now, let’s simply focus on the period from 1981 onward. The principles are the same, only, in response to the irresponsible tax cuts (disproportionately benefiting the rich), the government at the same time raised social security taxes, which are regressive taxes, disproportionately hitting the poor and middle class. When many people noted this fact, it was emphasized by government officials and politicians that all the excess social security collections are being invested in T bills, which would be used to ensure the solvency of social security for decades into the future. So the government cut taxes (especially for the rich) at the same time that it initiated a massive weapons build up . The predictable result was soaring deficits. The government financed these deficits through the sale of T bills and the T bills purchased by social security (REAL MONEY) were the same T bills as those purchased by pension funds.
Now, when it’s time to redeem those T Bills conservatives are saying that the social security administration T bills are basically phony, illusory, and worthless, while the private pension fund T bills and hedge fund T bills and Chinese T bills are sacrosanct. The private pension fund loans were “good” loans, which did not add to the debt, while the social security loans were “bad” loans, which did add to the debt.
I know that you will never admit that you are just playing semantic games, while I am telling it exactly like it is, backed up by real math, but I’m sure that at least one objective person who reads this will understand my point, and that’s all I require.
With regard to Obama and the deficit: the only part of the deficit which can be blamed on Obama is the increased “stimulus” beyond that proposed by the GOP (which did propose a $500B stimulus as an alternative to Obama’s). Obama isn’t responsible for the recession. He isn’t responsible for TARP. With respect to the auto bailouts, this was the child of Dick Cheney, who told George Bush that he’d go down in history as Herbert Hoover if he allowed the US auto industry to fail. Contrary to your after the fact rationalization (offered on previous threads), this bailout wasn’t intended to allow for “an orderly bankruptcy,” but was intended to save the US auto industry. Of course Obama added more money to the bail out. Bush only added what was needed to kick the can down the road. Obama put in what was needed to finish the jab, and I’m confident that history will judge the entire Cheney-Bush-Obama rescue of the auto industry favorably.
As an aside (to Antics), I don’t know why you are raising the Arab spring, tsunami, etc. I never offered any of that as an “excuse.” Of course your position is that the economy would have recovered to a greater extent had the GOP been running the show. That’s an easy claim to make, as you don’t have to back it up. Just like Mata’s claim that the actual GOP “stimulus” (had it been adopted) wouldn’t have been the same $500B “stimulus” which was being offered as an alternative. Both of you can speculate all you want, but neither of one can back it up, because it’s all conjecture.
I’m off to go see “Moneyball.” Combines two of my avocations: economics and baseball.
– Larry Weisenthal/Huntiongton Beach
Well I see you have yourself convinced, Larry. Of course, the only feasible way for you to be correct is to dissect the entire SS program into revenue collections only, and totally ignore the regulatory mandated management of the funds. Sorry… no can do. It’s an all or nothing package. This of course makes it you, not me, who is paying the semantic games. Look in the mirror next time your hurl those words.
Now maybe you’ll be able to convince the SSA, the Treasury, scads of economists into your web of spin – including lib/prog darling, Krugman, who called SS a ponzi scheme in 1996 as well… but I highly doubt it. Apparently more know about how the SS world operates than you do.
Perhaps Greg will note that at least Krugman isn’t as gullible as others as to call it “insurance”, but refers to it as a retirement (or pension) plan.
Accusations with no links to those specific evil conservatives calling T bills “phoney, illusional and worthless”? Funny, the only person I hear saying that is you.
Me? I’m bored… therefore outta here. Debating with you is like debating with a 20 second tape loop.
@Greg:
As I said, Greg… do yourself a favor and do some reading… specifically the legislative history and court challenges to SSA, the use of anything related to “insurance” being unconstitutional (which is why the fed budget calls it “pension” and not “insurance” to this day). Here’s the link again. John Attarian’s “The Roots of the Social Security Myth” back in 2001, from the Ludwig Von Mises Institute.
There is no “spin” to the facts of history. You will learn how, to this day, you are still suckered into the “social insurance” myth for social acceptability (and populous devotion to perpetuate the scheme), and why FDR had to resort to thuggery and bully tactics to control the courts. After which he set to marketing the enacted bill to a wary public by promising them there was a contractual right.. when there is none… to their collected taxes.
There ya go, like Larry, purporting you have seer abilities and can envision parallel universes. Considering the amount of cash that Congress has borrowed from the trust fund over the decades, plus the interest being paid on it, saying anyone… seniors or not.. are “better off” is a fool’s dream.
@openid.aol.com/runnswim: Who are you trying to convince? Yourself?
You make claims about what I say and think, but you haven’t a clue as to what I believe.
Like I said, I have lost any respect that I had for you, Larry. Just keep regurgitating the Dems talking points.
Hi Mata (#67). You are changing the target with your “ponzi scheme” stuff. That has absolutely nothing at all to do with whether or not social security has contributed to the debt. As I said, you are changing the subject. What we are talking about is the total amount of money paid into social security versus the total amount taken out. If more money was taken out than put in, then it did, indeed contribute to the national debt. But if more money was put in than was taken out, then it did not.
In point of fact, the answer is that much more money was put in than was taken out. More than a trillion more. Close to two trillion more. And the rest is precisely as I have described it. Exactly. You haven’t directly challenged anything I’ve stated. All you’ve tried to do is to explain it using a different set of language, and all your explanations disregard the fact that social security was set up to take each year’s surplus and lend that surplus to the government, in return for T bills.
This policy was specifically reaffirmed during the first Reagan term, when many critics objected to raising the regressive social security tax (at a time when social security was still running a yearly surplus, even without the SS tax hike). This was at a time when there were massive tax cuts favoring the rich. The rich got to pay a lot less. The poor had to pay more. The only justification for raising the regressive SS tax at that time was to build up the SS trust fund. So at the same time that the rich got massive tax cuts, average people were hit with tax hikes — solely to build up the SS trust fund. The SS trust fund consisted of the same T bills that private pension funds got. And this SS excess helped to fund the tax cuts for the rich. Those are the unvarnished facts. You can’t challenge those facts and you haven’t challenged those fact.
You still haven’t explained the difference between the SS T bills and the private pension fund T bills — because there isn’t any difference. You repudiate the bargain made with average Americans — that their excess SS taxes are going into an interest bearing trust fund.
I might not ever win a debate with you here on F/A, with all of your fans as the judges. But I’d love to have this debate with you on national TV, with an audience consisting of voters. You argument is intellectually bankrupt, and that’s why no GOP candidate for President will EVER try to make that argument. They’ll be chewed up and spit out.
With respect to the “Ponzi scheme” stuff, you guys are playing a gotcha game with Krugman which distorts what he said and meant. He didn’t say “Ponzi scheme.” He said “Ponzi game.” There’s a huge difference. “Game” in Krugman’s economics refers to a mathematical “game,” from game theory, of the type based on “the greater fool.” Here is an example from economics which doesn’t have anything to do with social security:
http://www.businessinsider.com/john-hussman-the-current-market-is-a-ponzi-game-2010-10
As Krugman explained on his blog, when conservatives started to play the “gotcha” tactic with him, he was simply using that term to describe that social security wasn’t sustainable without a change in mathematical parameters, i.e. to sorts of “simple actuarial adjustments” which are now required. The fact that a system designed in 1937 didn’t anticipate that people would live longer and families would get smaller doesn’t mean that the concept was wrong or that the program has been a failure. Quite the contrary, as I’ve pointed out. The elderly used to have more than double the poverty rate as the general population. Now it’s lower than the general population. The percentage of seniors below the poverty line is right around 10%, which is a tremendous achievement. Seniors are much better off today than they were back in the good old days, when they had to rely on savings and family to take care of them.
By adjusting the parameters (retirement age; contribution limits; means testing payouts, etc.) the system will be solvent in perpetuity. Sure, it may require periodic adjustments at different periods of time, owing to unforeseeable demographic and economic conditions, but it’s been a wildly successful and wildly popular program which hasn’t added one dime to the national debt.
Woe be unto the hapless GOP Presidential candidate who tries to argue otherwise.
– Larry Weisenthal/Huntington Beach, CA
Larry, Krugman’s quote likening SS to ponzi was in 1996… well ahead of today’s bruhaha about Perry’s comments. Inconvenient to your defense.
You are simply wrong, no matter how hard to try and spin it… and spin it you did by your own admission that you were speaking only of “What we are talking about is the total amount of money paid into social security versus the total amount taken out.”.
No, Larry. That is not what we are talking about. You made the blanket claim that SS does not add to the national debt. You cannot pick and choose one part of the SS program (the tax revenue) and ignore the other mandated parts of the program (the management of the funds which does add to the national debt, as even the Treasury and SSA site state unequivocally) just because it’s convenient to your erroneous defense. As I said, look in the mirror when you hurl the semantic charge.
It’s all one baby… you can’t have one wthout the other. Yet this is exactly what you are trying to do.
@Greg: SS is a Ponzi Scheme- you nailed the definition right there, since the SS was SUPPOSED TO GIVE US ALL 1-2% in interest, but even that was not enough, with all the pols looting the program for their own self- interests. The forced taxation of this scheme just makes it an INVOLUNTARY Ponzi Scheme, nothing more.
However much republicans enjoy disparaging the Social Security retirement insurance system, I have yet to hear any of them put forward a single credible scheme for phasing the current program out that wouldn’t either abandon a transitional generation of retirees, or rapidly make federal deficits so much worse that the increased debt would destroy the value of the dollar.
Defining the problem is simple: If you shift a significant portion of younger workers’ current FICA contributions into some other retirement scheme–private investments accounts, or whatever–where do you get the money to pay current Social Security retirees without placing an enormous new demand on general revenue? If you do that, you’re looking at either general revenue tax increases or much higher deficits. You can choose one or the other, but there’s no escaping both.
Unless they’ve got an arithmetically credible answer to that dilemma, the entire republican discussion is b.s.
Hi Mata (#73). Of course I knew that Krugman’s comments were from 1996. They had nothing to do with the current controversy or discussion. I stand by what I wrote. He never called social security a “ponzi scheme;” he was using an economic/mathematical term (“game”). One of my daughters was an economics major at Yale and one of her required econo-math courses was Game Theory. In this case, a Ponzi game is the “greater fool” game. I provided an explanatory link. He was simply making the point that changing demographics (longer life expectancy, smaller number of children being born) had turned the projected self-sustaining progam into a Ponzi game (not a “Ponzi sheme”) and that the mathematical parameters (retirement age, tax cap, eligibility for full, partial, or no benefits) would have to be adjusted. He never said nor implied that Social Security was a dead end “scheme,” which is the way that gleeful conservatives are portraying their “gotcha” moment. Krugman’s position was that social security’s parameters would need to be adjusted, not that the program was unsustainable. He explained all of this on his blog.
With respect to the following statement:
Wrong again! You should know that the entire administrative overhead of social security is 0.9% per year of funds managed. I stand by my statement that social security has contributed nearly $2 trillion more to the national treasury than it has taken out of the national treasury. Absent social security, the national debt would have been considerably higher and not lower. Social security has not added one dime to the national debt. Quite the contrary.
It’s a great program which has not only supported retirees but which has also paid for a lot of tax cuts for the rich. And it’s extremely popular with the citizens of this country. It’s kept scores of millions of old people out of poverty. And it’s sustainable in perpetuity with simple, common sense adjustments, from time to time.
And the claim that it’s added to our debt burden is completely false.
– Larry Weisenthal/Huntington Beach CA
http://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p27.html
Hi Mata, Well, two comments in a row went off to the ether (spam or whereever). I’ve just now spent 20 minutes doing two separate replies to your #73, and I’ve lost both. Can you look in your spam folder?
Thanks. – LW
Nothing in the spam filter, Larry. But turn your attentions elsewhere that are far more important. You do attempt to cure cancer for a living, and frankly I’m done with this. When you play your semantics games to interpret the mandated management of the funds, and then consider that as only department administrative management overhead, and not the funneling of the funds into spending and interest, my disgust with your selective word parsing simply worsens.
You can’t dissect the program. It brings in revenue, it launders that revenue thru the treasury, hands it over to Congress to spend, which accumulates interest for spending and adding to the debt. Worse yet, the taxpayer pays twice when they have to cash in the t-notes. That’s the program as written, as regulated, as administered and as operated. The whole enchilada.
…. and for the record:
You haven’t provided links to anyone who calls T-notes “phoney” or “worthless”. That’s your language alone. It’s not relevant since you are manufacturing criticism that does not exist. The criticism is, and has always been, that the trust fund is filled with IOUs which is further debt that taxpayers end up shouldering.
For your future comments, I’ll just hit replay on the tape loop with your comments above, and get the same ol.
@openid.aol.com/runnswim:
I fished you out of the filter. Not sure why you ended up there.
If you want to keep both that’s fine. If you want one gone, just let us know.
Thanks, Aye. Just keep the first one (the longer one). – Larry
Aye dug ’em out already. They are above. – LW/HB
Larry, I spent eleven years on the racetracks and was exposed to several confidence games: yes, they are called games by the guys who make a living in the underworld.
The racetracks (horse racing) isn’t necessarily involved in the underworld, but the gangster types are there and you learn quickly not to trust these people and their “games.”
It is the civilized and honest among us who consider them schemes; rightfully so, but in reality they are games and the confidence man plays the rube. That is the truth, my friend. LOL
Hi Skook: Different fields of endeavor have different types of “games.” The word game, however, in math and economics, has a very specialized meaning. It doesn’t mean “confidence game” and it certainly doesn’t mean “scheme.”
Did you ever see the movie “A Beautiful Mind?” I think, starring Russell Crowe? It’s about a mathematician who got the Nobel Prize in economics for his work in Game Theory.
It’s all math, but examples of game theory can be made intuitive through real world scenarios, e.g. here are some examples of different types of economic “games” (you see, a Ponzi “game” is far from being the only type of economic “game.” As I noted earlier, another mathematical name for the Ponzi game is the “greater fool” game).
– Larry Weisenthal/Huntington Beach CA
@Skookum, Larry is again parsing words while missing Krugman’s point. “Game” – in a variety of logic based sciences, as well as some psychological sciences as well – is a general term of analysis/investigation. i.e. analyzing various outcomes using a mixed theory of application. You’d probably be most familiar with it when used as the zero-sum game when many speak of economics even here.
It becomes parsing and nuanced differences because Krugman fully admitted that SS was set up using a ponzi structure that affected the intergenerational payout.
Krugman’s flash from the past analysis has been interpreted the same way as we do… that he undeniably labeled it a ponzi scheme… by economists more illustrious than Larry’s kids, such as Robert Murphy at Mises and ZeroHedge’s Tyler Durden. Apparently just the partisan devotees can manage to convince themselves that Krugman’s words did not mean exactly what they did.
And I guess Larry, who thought I was “changing the subject” forgot that this entire discussion started out with a post all about it being a ponzi scheme, or game if you prefer, and that I was accused of “trashing” social security by describing exactly how it operates.. en toto.
A funny link, thanks Larry.
Actually, I made it through advanced physics for majors and considered physics as a major, back when we used slide rules and pencils. That’s the fun part of the internet, you never really know the experiences and backgrounds of the people you communicate with.
I play the math games with used German luxury cars, it is a diversion and it saves a tremendous amount of money and I enjoy it as a hobby. I keep most of the costs and facts of different models in my organic carbon computer that’s mounted on my shoulders. The idea is to compute relative advantages and reliability of different models versus mileage and the various costs of different components. It’s a silly game, but I don’t have car payments or high insurance costs and I drive well engineered cars. I don’t recommend the hobby, unless you know the different models and components.
I fell asleep during the movie. I need beautiful mountain photography or sailing boats on the high seas to stay awake during a movie, even a movie about a mathematician. I’d be a terrible film critic. LOL
Why don’t we let Krugman himself explain:
With regard to “changing the subject,” what you and I were arguing about is whether or not Social Security has contributed to the national debt (it clearly has NOT; quite the opposite, in fact). In the middle of all of that, you bring up the Ponzi thing, which you and I were not talking about previously (see #28,29,36, and following). I wasn’t debating with anyone about the so-called “ponzi” aspect of it. I simply made the innocuous (and true) statement that Social Security hasn’t contributed one dime to the national debt. After going to great lengths in an unsuccessful attempt to prove me wrong (I wasn’t wrong; you were), you, out of the blue, start talking about the Ponzi scheme thing. That’s when I made my comment about you “changing the subject.” The whole “ponzi” thing we argued about in the past, on another thread.
There’s a big difference between “Ponzi Scheme” and “Ponzi Game.” Social security did not start out as a Ponzi game. It became a Ponzi game because no one anticipated the Baby Boom and then no one anticipated that the fertility rate would head South, immediately following the Baby Boom. So something which was designed as a simple pay as you go, in equilibrium, turned into a Ponzi game, down the road. But that Ponzi game has contributed $2 trillion towards financing tax cuts and weapons systems and wars, among other things. And it’s been paid disproportionately by middle and low income people. It can be restored from Ponzi to pay as you go with some simple, common sense adjustments. And the program itself has been a huge and enduringly popular success.
– Larry Weisenthal/Huntington Beach CA
Krugman’s walkback on this is pretty thin… Then again, most Krugman does is really thin.
Notice how he, also, likes to parse things and play word games when found to be caught in a web of spin.
Then Krugman likes to use the same weak argument between ponzi and pay as you go as the SSA does when trying to disassociate itself.
Considering that SSA was paying out by 1937 to beneficiaries, who had not paid it, it was… from the beginning and remains today… intergenerational redistribution. That’s a kindly word for ponzi scheme and ponzi game. But apparently, according to Larry, they were too dumb to predict the baby boomers, followed by generations of reduced birthrates.
Never really mattered… because what it really was intended for is a piggy bank for the feds, starved for revenue.
And Larry… as far as the debate tact, you may want to go back and read from my first comment here. First you accused me of “trashing” social security – (and BTW, never responded to my request of comment quotes that should be considered “trashing”) – then moved on to your selective view of not adding to the debt by ignoring the way the SSA is operated within the agencies. After sundry proof that it does, you then decided to narrow your argument to just tax revenue taken in, to benefits paid out. This, of course, is only a small aspect of how the entire program functions in our federal government.
As Nan G likes to say, move the goalposts… much? You might want to take a gander at the name of this post… “Is Social Security a Ponzi Scheme? Hell yes it is”
Now go back and find a cure for cancer. This is a waste of both of our times. We can exchange a ga’zillion more “you’re wrongs!” and na-naa-nanaaa-naaaaaas at each other, and nothing will change. Put your nose where it is most effective in life… over a microscope.
Mata, Murphy is a crack-up. He uses the dry humor that I admire. I needed a good laugh, thanks for the Link. I wish I would have found it while writing the article. Too much fun in that post, Oh my! I hope there was supposed to be humor involved. I must be careful with my sense of humor. Oh well, he can make a mockery of many a brilliant pundit.
I think I may have one in the spam snare. I don’t care to take a chance of messing with this classic discourse, it is history now! LOL
Figured you’d like that, Skookum. Haven’t gotten around to getting and reading his book, “The Politically Incorrect Guide to Capitalism”. Suspect it’s got that uniquely enjoyable way of pointing out the obvious to the oblivious. It’s also one of the reasons I enjoy Mark Steyn, Jonah Goldberg and (soon to be lost) Christopher Hitchens. They also have that tongue-in-cheek delivery.
That’s the unique part of the SSA’s Ponzi Game or Scheme, if you are required to keep paying the ante by law, it will never go bust or so they thought. LOL
Unintended
Unintended Consequences Can Bite You In The Arse [Reader Post]
/” rel=”nofollow ugc”>consequences
can and will bite you in the arse. Reality is a cold mistress, but who would have predicted a Socialist would be elected during a recession. A Socialist too dense to realize his policies have failed and too well programmed in ideological dogma to try different policies at a period in time, when the largest demographic is preparing for retirement and the economy is on life support.All great tragedies of the stage are dark comedies and this is one of the funniest in all of history. Yet we find the time to debate whether a government program that is tailored to one of the most famous Ponzi Schemes in history is indeed a Ponzi Scheme or game, just because it was written after the trial for Mr Ponzi, when the details were a great topic of conversation, but rest assured, the men who actually wrote the bill ignored Mr Ponzi’s Scheme and wrote one exactly like it for the SSA. They were purists at heart and reached deep inside for original ideas. It isn’t their fault that Ponzi stole their ideas before they were codified or written and made a fortune. It was Ponzi who was a criminal. The SSA is a legal scheme, according to the law; therefore, it can’t be considered an illegal enterprise. It is written into law. Ponzi didn’t go to the trouble to have his scheme written into law and that is the defining difference.
Hey Mata. You now have the last word. I enjoyed “Moneyball” so much that I was inspired to go to the Angels-Rangers game tonight. More of a Tiger fan, but, if the Angels can handle the Rangers, the Tigers will get home field advantage in the Division Series. – Larry
@MataHarley: The concluding paragraph over at Robert Murphy at Mises:
OW!
Good catch, Mata H.
@Skookum:
I am reminded of Ayn Rand’s famous line from Atlas Shrugged:
Hey JC! We were having a grand old time with good belly laughs and you jump in the wading pool with muddy boots and suddenly we are faced with reality. Jeeze Louise!
Skookum, Mata and antics: You all have the patience of Job and the tenacity of a bulldog. I can only take so much of that libtard crap. They seem to think they win the argument as long as they keep chattering when they really have nothing to say. After a while I just tune them out.
Antics, like you, I wondered how an oncologist had so much time on his hands. Then we learn that Larry has a daughter who “studied economics.” Mystery solved. She’s probably writing most of the rants under daddy’s name.
@Greg: #72- the “cure” for the SS problem was going to be Obamacare, with its rationing, and progressive “Life Curve”, that is supposed to show how productive you might be to the state- in short, whether you are worth keeping alive.
That is what the Death Panels are for- to grade your worth like a side of beef- if you come up short in the “worth to the state”, i.e. having enough taxable income to keep the Gubbmint coffers flowing, then you probably won’t get that “cutting edge” cancer treatment you were saving for.
That’s the socialist cure for the problem of Social Security.
@Nan G: Nan, the teachers in Galveston, Texas opted out of SS, and created their own fund, which pays them handsomely, as they can get dividends from their investment. Hace you even heard of dividends from SS? I haven’t.
Hi Tooth:
I’ll briefly review the 5 points I made on this thread:
1. Claiming that Social Security is a “Ponzi Scheme” is a losing issue for Republicans. Rick Perry agrees with me. Notice how quickly he backed off, when Romney challenged him. So I was not incorrect in stating what I did.
2. Social security has not added one dime to the national debt but, instead, has helped to subsidize not only “wasteful” government spending, but also tax cuts for the wealthy, arms build ups, and wars.
3. Social security was not designed to be a “Ponzi Scheme,” but was, instead, designed to be a pay as you go program. However, 3 unforeseen factors did, indeed, turn it into a “Ponzi Game” (distinct from a “Ponzi Scheme,” as referenced in point #5, below). Firstly, people started to live longer – – much longer. Secondly, there was a birth explosion following WWII (which had not even commenced at the time of SS inception). Thirdly, people stopped making babies at the same rate as previously. All of these skewed the mathematical parameters of the social security actuarial calculations and did, indeed, turn it into a “Ponzi Game,” meaning that a mid-course correction is required. Some of these were made in the early 1980s. More are required now. But these adjustments are just simply common-sense things, which will change Social Security from Ponzi back to pay as you go.
4. Before Social Security, the ratio of old people below the poverty line to young people below the poverty line was greater than 2:1. Today, the poverty level among old people is around 10%, which is less than that for young people. Social security has been a huge success, not only in virtually eliminating poverty among the elderly but also in fostering entrepreneurism, though allowing entrepreneurs greater freedom to take risks and to have greater capital for use in starting and growing their businesses (capital that would otherwise have been required to care for their aging parents). How many great, successful business might never have gotten off the ground, had entrepreneurs not been willing to put all their assets into their new venture, because of uncertainties regarding their own futures and the current requirements of their parents?
5. Lastly, the deal about the “gotcha” game with Krugmann.
On issue #2, which consumed by far the greatest amount of my “ink,” I am 100% right and Mata was 100% wrong. But yet you commend her “patience of Job” for going to great lengths in sticking to her indefensible position, long beyond the point when she should have abandoned, it, which she could have even done with a pithy line, saying something like, “well, like a broken clock, you are correct 1% of the time,” or whatever.
For those of you concerned with how I spend my time, please be aware that I always work 6 days a week and ofen 7 and often on holidays. I don’t spend my days seeing patients in person. I spend my days doing a lot of mind numbing microscopy work (literally counting living and dead tumor cells on hundreds of slides from cancer biopsies and cultures). I’m 64 years old and I intend to keep working until I’m 80, if my health holds and if people still value what I do enough to pay me for doing it. Life is a marathon and a happy life is fostered by balance. I’d have been burnt out a decade ago, without my avocations of working out, sports, and politics, blended in with my work and my family life. It all works for me, and I don’t see any reason to change what I’m doing.
With regard to my reference to one of my daughters, I tend to write in a chatty, personal style. I like to tell people where I’m coming from, so to speak. In this case, I’m certainly no economist, but I developed a real interest in economics, when one of my daughters made that her college major, just as I developed a real interest in rowing, when the same daughter took up crew as a competitive sport. I was just writing along, and I just blurted out what I blurted out, about her. Wasn’t for any specific reason. Just came out. I’m puzzled that you guys think it’s such a big deal.
I do have a question, however. What I get out of doing this is a periodic break from my work, intellectual challenge, and motivation to research things relating to the great issues of our day. What I hope I bring to the table is challenging your assumptions and stimulating you to do some extra research, as well, which doesn’t necessarily change your mind, but which does leave you with more knowledge and therefore better able to make and defend your points.
On the other hand, I do recognize that I’m a guest here. If I ever wear out my welcome, just tell me that I’m more of a distraction than I’m worth, and I’ll go somewhere else. I’ve previously had a good “home” on other conservative blog sites, i.e. alt.politics.usa.republican on Google Groups and the Orange County Register discussion board. I make occasional comments on the Wall Street Journal’s sites, but that doesn’t lend itself to extended back and forth discussions like this.
Thanks for listening, to anyone who made it to this far.
– Larry Weisenthal/Huntington Beach CA
Look in the mirror when you utter those words, pardner…
Hi Mata, Let’s just say that neither of us likes to “lose.” (that’s why it can be such a stimulating challenge, however frequently exasperating).
Larry.. LOL
Allow me to translate this post –
“I was right, you were wrong!!! You don’t know anything, so submit to my obviously superior intellect!! There is not a subject posted here that I don’t know more about than all of you!”
And btw, I got 100!!!!!!!!!!!!!!!!!!!!!!!
Post-script:
Last evening (Wednesday, Sept 28, 2011) on the PBS Newshour, they had two economists discussing social security. One was from the (conservative) Heritage Foundation and the other from the Brookings Institution. They even addressed the issue of whether or not is was a “Ponzi Scheme.”
The Heritage guy misspoke at one point, using “deficits” when he obviously meant to say “surpluses,” but, all in all, I think that it was a helpful back and forth discussion.
http://www.pbs.org/newshour/bb/government_programs/july-dec11/socialsecurity_09-28.html
– Larry Weisenthal/Huntington Beach CA