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.
A professional horseman for over 50 years, Skook continues to work with horses. Skook has finished an historical novel, Fifty Thousand Years, that traces a mitochondrial line of DNA from 50,000 years ago to the present. The story follows a line of courageous women, from the Ice Ages to the present, as they meet the challenges of survival with grit and creativity. These are not women who whimper of being victims, they meet the challenges of survival as women who use their abilities without excuses or remorse, these women are winners, they are our ancestors.
Fifty Thousand Years is available in paperback and e-book, it is getting great reviews. You can purchase a copy here; Visit me on Facebook.
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I think the only part of most definitions of a Ponzi Scheme that differs from Social Security is the color of legality with SS.
Take that away and the definition fits perfectly.
Nan, we agree as usual, but we must contend with Liberal rage at the suggestion of a legalized Ponzi Scheme and we must figure out how to contend with future retirees who have willingly or reluctantly paid into the system, expecting a retirement fund at 65.
Do we tell them it was a con game, better luck next time around or do we trigger runaway inflation so that their payments will be barely enough to buy dog food?
This is going to be a problem that needs to be addressed before we figure out how to find the money for Obama Care.
Certainly, early beneficiaries of the system took out far more than they could conceivably have earned on their contributions by investing them. Don’t forget that the benefits were raised significantly in the early 1970s as well. Generations prior to the boomers paid into the system at low tax rates, and reaped outsized rewards. The boomers were a unique demographic bubble that could be exploited to make this all work.
In the 80s it became clear that this was going to be a serious problem once they started retiring. So, besides paying disproportionately for prior generations’ benefits, their taxes were raised higher still to create surpluses that, in theory, would fund disproportionately higher payouts when their turn came. In other words, they were taxed to pay the retroactive benefits and to fund their own. So in this respect, the system had, as of the Reagan-era changes, begun a transition to a hybrid between an income transfer program and an actual retirement program. Inevitably, this meant that, mathematically, expenditures as a percent of GDP would have to be higher for a few decades starting around 2008. The fact that the surpluses were invested in treasuries isn’t on the whole a terrible thing, especially when you look at the performance of bonds over the last 30 years, and of stocks over the past 10. The unwritten but mathematically certain implication of the Reagan-era deal with boomers was that government spending as a % of GDP would be slightly higher during their golden years, to be funded by a higher tax rate which started immediately (in the 80s).
What to do now is the question. Labeling the system a ponzi scheme is going to lose more votes than it wins. Middle-aged and old workers can’t start over in a new system even if they wanted to – they can’t get all those previous years of working back! It would be best IMO to continue to treat the system as if it were truly a trust fund, and make changes to assure that it’s put on an actuarially sound basis. In other words, to take it off the table as a political discussion item. Because, frankly, there are those who view it as a potential revenue source for all manner of other programs, if it can be put back into surplus again, and this would be a worse outcome than simply “fixing” it and moving on to tackling the real budget-buster, health care spending. As one of many bad ideas that have been batted around, applying the tax to all income without limit would raise effective marginal tax rates on self-employed people to 70% in some states. Such an idea would be sold as needed to “fix” the system, but the true purpose would be to try to raise surpluses well above what was necessary to ensure solvency, naturally to be spent on new priorities. This should be defused as an election issue so that society can focus on bigger problems.
Any number of changes could be made to fix it, given that technically it still has that accumulated surplus to draw upon. My modest proposal:
1. Increase the wage cap by 40%, to $150k, by bumping it 4% a year for 10 years (in addition to any other legislated adjustments). Or pick another number, but the cap needs to be gradually raised to some level where it covers an adequate level of wage income.
2. Raise the “full retirement age” to 69 by, say, 2040, in slow increments, just as was done to my generation back in the 80s. Or pick another age limit or date, but something along these lines is clearly needed.
3. If necessary, tweak the payout formula (down) or the tax rate (up) by tiny amounts.
4. If really necessary, some sort of means-testing of benefits could be considered, although it must be noted that by taxing 85% of benefits above some income threshold, we are already means-testing the benefits on a sliding scale.
Doug, thank you for your thoughtful response. The fact that Social Security fits the definition of a Ponzi Scheme would mean nothing to most Americans without the Madoff confidence game. I am not sure whether it costs Republican or Democrats to expose SS as being similar in structure to a Ponzi Scheme; at best, there could be unintended consequences involved, but there are advantages in the truth.
It is the remedy that is the most important goal on the horizon. I think if Republicans explained the immediate problem and started legislation to actually address the problems, it would be a major advantage in the 2012 election. Presently, they seem to be in a defensive or deflective mode to block ruinous economic policies by Obama. It is time to seize the initiative; especially, now that the Liberals appear yo be stumbling blindly, calling for more of the same and for unreasoned tax increases.
That SS should be addressed before we start trying to fund Obama Care is a given, perhaps funding Obama Care may prove to be impractical after we take care of the immediate business.
Raiding the SS funds to finance other programs should be stopped today. It will take a concerted effort to make the program capable of withstanding the extreme pressures of retiring baby boomers, but continuing to ignore the problem because it isn’t romantic or a headline grabber is guaranteeing a future disaster that isn’t that far down the road.
Raising the retirement age is a double bladed sword. Yes we delay pressures on the retirement fund, but we also deny jobs to younger workers. Not that 65 + year olds will be performing physically demanding jobs, but they do have marketable skills. Many of them may be in demand and vigorous well past 70. Every job they hold down will be keeping a younger person out of the job market.
@Skookum: Add to you reply, so many of the so-called solutions to the Social Security problem ignore the part demographics plays in the problem.
In other words, why on earth would we want to impose a permanent ”solution” on a temporary problem?
As you pointed out in your tags for your initial post, Skookum, “Baby Boomers and Critical Mass.”
Well, baby boomers are not going to be around forever.
Why create a solution that will?
Talk about your unintended consequences.
Great read! And well written Skooum. Yes we need to keep ssn, but as you say it needs to be re-vamped. And i give Perry credit to even call it for what it is. And then here comes the herd after him like white on rice, led by no other than Rommey. And no I don’t like Perry, I am in that 48% of Texans that don’t as opposed to 45 who do.
Thats the problem, that real problems are getting ready to go into critical mass to use your accurate term, only to be avoided by our politicians so as to not lose any votes. SSN can work if our politicians quit using it as a political weapon, and a spare piggy bank to rob as they please and other measures as well.
Hi Doug (#3): Excellent analysis, commentary, and suggestions.
The social security battle was fought and decided back in the 1930s. Reagan never liked the concept of SS, but he accepted the reality and moved on to do his best to try and make it work. That remains great advice to Republican politicians to this day.
– LW/HB
There is much more to Social Security than a Ponzi scheme.
The goal of FDR was to divide and conquer: to divide us up into little groups, then give each group a reason to vote Democratic–forever. So Social Security was to rope in the senior citizens. FDR roped in the labor unions with Davis-Bacon. And he roped in the South by refusing to integrate. And so on.
And he roped in the farmers with agricultural price supports. It was one grand scheme to keep one party in power forever. I could go on, but I think you get the point.
These Senators and Representatives were not in Washington for just a few years, as a matter of public service. No, they became an entitled class, owed our deference for the rest of their lives (Strom Thurmond, Robert (KKK) Byrd, and so on).
Get the big picture. It was a coalition. And it worked for 70 years!
And now we must pay the price.
Hi Mathman. “Pay the price?” What price? Social Security is not responsible for one dime of our current debt. Social Security is solvent without any changed for another quarter century and it will be solvent forever with some common sense modifications. People live longer today than in the 1930s; so they shouldn’t start drawing SS until they are much older. If they want to retire by 65, they and their families will have to assume more of the burden, but SS will still be around to keep them out of poverty in their true old age. Social Security has been a brilliant success. It did just what it was supposed to do, which was not to keep Democrats in power but to keep the elderly out of poverty.
Social security is also a government investment in entrepreneurism. It allows entrepreneurs to take greater risks and it it allows entrepreneurs to risk more of their capital in their businesses, as opposed to needing it to care for their parents.
– Larry Weisenthal/Huntington Beach, CA
Yes, Nan G, the baby boomers seem to be the future anchor around the neck of the younger taxpayers; however, they were a major source of revenue in the past. A revenue that was a major source contributing to the vitality of the country.
When the last of them cross over, there will be a bonanza in the retirement fund that can be raided with any number of Solyndra Con games and political patronage scams. Happy Times will be here once again! But if we put a stop to the corruption now, maybe the country will be on a sound economic footing.
The system can be “soft-landed” back to a pure pay-go transfer program once the last boomer goes to her reward. That is to say, a low or no “balance” would be left in the fund once the demographic bubble had passed, leaving the system solvent as a generational wealth-transfer program supported by a stable population. Given where we are, I view this as a best-case outcome. The alternatives seem worse; if we let younger workers out of the system, no one’s paying in and the system collapses too early. If we force the young to pay in but tell them they won’t have any benefits, the system can be sun-setted but why the heck would any young person agree to that deal?
The social security administration estimates it would take about 0.6% of GDP to close the shortfall, so this is hardly the most pressing budget problem we have. I say let’s close the gap and move past this issue to more important ones.
Ponzi Scheme? Of Course…. Add to it the perfect environment for FRAUD!
Why does no one, I mean no one, ever address FRAUD??? In ALL these Government Programs….
The Government says: “with so many people receiving SS payments (in some form, and there are millions receiving it) it is extremely hard to detect fraud.”
Fraud is depleting necessary funds to run a lot of [Gov’t] programs…. Funny how the Government knows [who to go after when they need to REIN IN (Collect) TAXES] but it can’t (go after criminals) to REIN in Government FRAUD?????? I thought we had Big Government?
“Moral Turpitude” is not something people adhere to when it come to Government handouts. There is a link at the end of the excerpt below if you would like to get a ‘mind ache’…
_____________________
“T he sheer enormity of the federal entitlement process makes Social Security benefits fraud difficult to detect and manage . In 2003 the Soc i a l
Security Administration (SSA) distributed an estimated $494 billion in total benefits to
recipients in the Old Age , Survivors, and Disability Insurance (OASDI) and Disability Insurance (DI) programs. SOC. SEC. ADMIN., THE FISCAL YE A R 2 0 0 5 BUDGET (Feb. 2004) . Each month , SSA pays benefits to more than fifty- two
million people. I d . Thus, while actual fraud totals are not precisely quantified, even a small pe r c ent age of fraudulent payment s made in any of SSA’s programs can reach staggering totals.’
More at: http://www.famguardian.org/Publications/USAttyBulletins/usab5206.pdf
P.S. Out of the Millions of people who receive SSI there is only a handful of people who actually get caught committing Fraud and then prosecuted… Why is that?
@Doug: How are we supposed to have a “stable population” when we have no control of our borders and the Dems have an endless appetite for handing out benefits to people who never paid into the program in exchange for votes?
Skookum: I’m still LMAO over the Chinese ants in the pants bit!
OH….MY….GOD!!!!
I’ve been around the block a few times.
I’ve worked for 6 First Selectmen (3 for consecutive terms), 2 Congressmen and one Senator.
I’ve seen DEVASTATING Ads like:
“Morning In America”, Willy Horton”, “But WHAT IF THERE IS A BEAR OUT THERE” and the famous “Little Girl Picking Flowers During a Nuke Attack” Ad.
But this one by Perry ranks right up there with all of those.
What makes it “Unique” is that he ran it NOW, while he’s engaged in mortal combat with other republicans for the nomination (Yet the Ad DOES NOT MENTION ANY OF THEM) and goes straight to the throat of Obama.
This Ad is equally devastating, and (FINALLY!) shows who Perry intends to eviscerate (And HOW) should he win the nomination.
Running this Ad now just bleeds CONFIDENCE and I sure do like that.
Enjoy!:
Quick Edit: I got this in an email from The Perry Campaign 4 hours ago. It had 4000 views. I just re-linked it and saw that it has 85,000 Hits. It’s going viral).
AND IT CRASHED FROM ALL THE VOLUME NOW!!!!!
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Tooth, I am glad you enjoyed the humor. With all the scandals about to explode in Washington, the wars, corruption, and lies, people are tense and it is hard for us amateur comedy writers to get a laugh, not to mention the pros that are out of work and elbowing their way into the non-pay gigs. Its’ tough out there in the comedy world and I think it is going to get worse before it improves.
We all need a laugh, at least once a day!
Nostra, I saw the ad. It reminded me of the America we knew decades ago. I liked it.
Of course Obama will have a billion dollar campaign fund and will be allowed to thumb his nose at all the campaign funding laws, like he is skating past one impeachable offense after another.
Of course if he is impeached the crime will need to be so heinous that it will be a foregone conclusion he should quit, because a Progressive Senate wouldn’t impeach him if he gave Air Force One to China, loaded with gold from Fort Knox.
Great post Skookum, very informative. You left out the most famous quote by FDR inre Social Security:
His statement portended just what we are seeing today; politicians are loathe to tackle the problem of making it solvent.
Has anyone read the story of how Social Security got through Congress in the first place? North Carolina Congressman Robert Doughton, Chairman of the House Ways and Means Committee, took a bribe in exchange for voting the bill favorably out of his committee. He demanded – and got – the Blue Ridge Parkway rerouted through North Carolina rather than Tennessee. I need to find where Doughton is buried so I can go pee on his grave.
@Nostradamus: And to think that those sound bites used are only the tip of the iceberg of the ones that are out there.
@Toothfairy:
You’ve answered your own question: we can’t have expensive social programs while running an open border with the developing world. Otherwise, we might just as well declare everyone in America (even the poorest) “rich” and bankrupt ourselves trying to achieve income equality with billions of truly and desperately poor people around the world. Or we could decide that bankrupting ourselves is just going to make everyone worse off, and set about helping them to raise their own circumstances. That said, legal immigration is a source of strength for the US, and one reason we can hope to have stable demographics at some point; whereas less open societies such as Japan face demographic declines that will be more difficult to manage.
SS is one of the most heinous examples of unintended consequences ever- if ever there was an apt use of the term “Epic Fail”, it would be SS. Intended to kick in after the person was dead, this legislation was going to provide progressives with a huge pot of money that they could use at their discretion, the people being dead- they wouldn’t object.
But surprise, surprise- the Pharma companies began to make medicines that actually did work, and many of the maladies that would kill us before, now only made us a little ill, if at all sick. We, as a people, began to age more, with the median age going from 64 to70s and 80s routinely. Consequently, the pile of money that the Pols had counted on to fund whatever kept them in power dwindled fast- but by then, everyone was hooked on the myth of SS- that it would always be there, and it would fulfill all the monetary obligations that were rashly promised.
We NEED to have a rational discussion on the future of SS, Medicare, and Medicaid- the big three socialist entitlements we are now saddled with. If we are going to continue, then rational discourse must take place- seriously. Otherwise, lets just dismantle them now- it will save us countless trouble if we wait ’til later.
Skookum,
If you don’t know this wrangler, you should read about her experience with a grizzly bear and an 8-year old boy.
http://www.spokesman.com/stories/2011/sep/18/gutsy-wrangler-huge-horse-save-boy-from-charging/
You douches won’t understand this. No room in your crazy, wierded out brains. But my friend (MY 65 YEAR OLD NEIGHBOR WHOS BEEN MARRIED LONGER THAN I’VE BEEN ALIVE, MATA, YOU CONCEITED LOONY) went to the trouble of explaining it for me, so here it is.
Tell your friend to get a clue. I’ll parse this slowly for you:
Excess SS funds not paid out are run thru the treasury, and end up as part of the general fund for Congress to use as a piggy bank. But since Congress spends more than what’s in any piggy bank, they are borrowing. SS excess funds collected are not “invested” in anything but more Congressional spending. If they are to be returned to the beneficiary, and the next near’s revenue is short, they need to borrow to pay the IOUs in the so called “trust fund”. It has been like this since SSA’s inception. Go read the bill. It’s on the internet, and most middle school students possess the search capabilities to find it.
Obviously your guru friend has never read the bill either, and has no clue where the so called “invested” funds have gone either. If he/she isn’t adept at reading legislative bills, he/she might at least pick up reading some financial rags.
Well ain’t that an interesting parallel. If a worker does not live to retirement age to claim his benefits, they disappear. They cannot be passed on to heirs but in the most rare circumstances. Therefore, if you do not live to retirement age, you have no expectation that your SS payment will be returned to you.
I’ll tell you what, Ms. Hill’o’beans… why don’t you approach your nearest investment counselor. Tell him you want to invest in a fund that will give you a maximum return of 3% over 50 or so years, that you have no access to it until you’re of legal retirement age, and that you don’t want the investment to be passable to any heirs… that the government gets to keep it all if you don’t live.
When he stops laughing at your stupidity, tell me what he says.
Off your meds, Ms. Hill’o’beans? Do you see any particular comment I’ve made on this thread? Or are you and your socialist hubby so threatened by me that you stalk me on every thread? LOL
Hi Mata. Another late night. Without commenting on the merits of your analysis, allow me to offer my opinion that about the only way Obama may survive the election is if whoever is his opponent starts talking like you regarding social security. The battle was fought in the 1930s. You are picking through the desiccated bones of a hundred million people who were spared an old age of abject poverty because of Roosevelt’s vision.
It’s a program which hasn’t contributed a dime to the national debt and which can be fixed with the same sorts of common sense actuarial adjustments that life insurance companies have been making for a hundred years.
– Larry Weisenthal/Huntington Beach CA
Lawdy, Larry… from the SSA.gov site itself:
When the time comes to pay the piper, and the “trust fund” is empty, T-notes need to be redeemed and Congress must pay for that non-social security spending they did. They’re pulling all this spare cash out their azz?
If you don’t get it, maybe Allan Sloan at CNN Money can make it more simplified from his 2010 article… the first year since Carter years that the Treasury had to borrow money to redeem some of the trust funds treasury securities. So much for your “hasn’t contributed a dime to the national debt” claim.
Again… where do you think that borrowed money lands? Hint… part of the national debt. Ugly part is most of it’s looming debt is rather invisible since the boomer generation hasn’t hit as hard with the payouts yet. SS is not in as immediate trouble as Medicare. But since there is less revenue coming in to pay for a larger group of beneficiaries, it only goes downhill from here.
And you want to thrust this system onto your grandchildren? The nation needs to carefully ween itself off this entitlement program… just like Medicare.
BTW, Larry, the SSA was imposed upon an unwilling electorate in the 30’s. It was not a popular bill. The devotion to it today for seniors and approaching seniors is we’re not willing to be raped for the cash quietly. However I would be more than willing to be paid back, in full, for all my FICA taxes and sign a waiver for both entitlement programs, using the cash to invest myself instead. Like that will happen…. no cash in the trust fund. Just IOUs that require more borrowing to redeem.
The only “battle” that was fought in the 30s was whether it was Constitutional. That was a slick little staged number with Roosevelt attempting to pack the court via the Judiciary Reorganization Bill of 1937. In that one move, tho ultimately failed, he still got to appoint six Supremes, plus 44 judges to the lower fed courts. Why? They were busy striking down key pieces in “his vision”. Even with him stacking the deck by sheer longevity in office, he barely carried a majority vote in Steward Machine.
Roosevelt was a despicable and corrupt POTUS, who took great advantage of tough times, IMHO.
@MataHarley: Well said.
@openid.aol.com/runnswim: You said:
Ignoring the fact that the first part of your above comment is wrong, I have to ask; if it hasn’t contributed to the national debt, then why would it need to be “fixed”?
Just a data point here. My late mother paid a grand total of $1,250 in FICA taxes over her entire working life. When she was eligible in 1983, she started receiving $224 per month in SS benefits plus “free” Medicare benefits. She lived another twenty years, at which time she was receiving roughly $1,000 per month in SS benefits. So she got her “investment” back in the first six months and for the other 19.5 years was receiving benefits paid by people working at the time.
Oh, hey, look at this. In going through her records I found a little slip of paper entitled “SOCIAL SECURITY IS FINANCIALLY SOUND”. Dorcas P. Hardy, the Commissioner of Social Security at the time, offers:
Anyone want to post the actual 2010 numbers?
Hi Y’all,
As I said, Barack’s only hope is for the GOP candidates to go talking like y’all. They do that, and Barack will win in a cakewalk.
Which brings up one other interesting point. Someone said that SS was unpopular at the time it was proposed and that Roosevelt corruptly pushed it through the system. And yet, in terms of enduring popularity, it’s undoubtedly the most successful piece of legislation ever signed into law. At the time it was passed, 70% of elderly Americans were living in poverty. Generations have had dignified and comfortable old age years since its inception.
I see an obvious parallel with ObamaCare, by the way. Legislation unpopular at the time of passage, yet embraced down the road by a grateful nation. The most popular Canadian Prime Minister in history is Lester Pearson, considered the father of their health care system.
In terms of its solvency, social security hasn’t contributed one dime to the national debt. At the same time that Reagan’s massive tax cuts were passed (disproportionately benefiting the rich), there was a steep rise in social security taxes, disproportionately affecting the middle class and poor. Social security contributed two trillion dollars toward plugging the revenue hole engendered by the Reagan and Bush tax cuts (also disproportionately benefiting the rich).
The deal made with America’s poor and middle class, though, was this. Any excess social security taxes collected would be invested in interest-bearing T Bills in the dedicated social security trust fund. George W Bush famously said, in effect, that there is no “pile of money” in the “trust fund” somewhere. It’s, in effect, as y’all say, “only worthless pieces of paper.”
No, it’s not. Worthless pieces of paper. It’s the same T Bills as those T Bills representing money loaned to the US treasury by private pension funds and wealthy individual private investors. EXACT SAME THING. Why don’t you go telling all those rich Americans and ordinary Americans with employee pensions that their T Bills are just “worthless pieces of paper?”
Easy fix to social security is just raising retirement age. Maybe remove cap on yearly payments (where someone making a million dollars a year pays the same tax as someone making $106,800.
I’ve got a great idea. Why doesn’t Mata use her remarkable logic and formidable writing skills to convince the GOP presidential field to make opposition to the “corrupt” and “insolvent” social security system the centerpiece of all of their campaigns! At least convince them that Mitt Romney is a Marxist for supporting social security. I’d really like to see all those GOP attack ads, condemning Romney for supporting a Marxist program like social security.
Anyone remember this photo?
– Larry Weisenthal/Huntington Beach CA
Larry, I don’t know if you are old enough to have met any of the early SS recipients or their sons and daughters.
But I have.
Can you imagine the joy of not paying anything in and getting a check for the rest of your life?
What about the freedom of not having to take care of widowed mom because a SS check will do some of that for you?
SS destroyed this country’s extended family unit.
How is that a good thing?
Today do young adult even consider how they will take mom or dad in?
No!
Off to the convalescent home with them!
Time was a young couple bought a big enough home so a parent could move in.
Not anymore.
But now that SS does not bring in enough to take care of all the baby boomers who will?
Their own children have been like children well beyond their teens.
And their grandchildren are even worse.
Anyway, demographically, the baby boomers are a temporary problem that is being used for making PERMANENT changes to SS.
That is incredibly dumb,
Actually, Nan G… it’s happening more and more. I see primary care and hardship homes all the time. But I might also add it’s grandparents getting a bigger home to allow grandkids to move in as well. Frankly, the boomers are the spoiled ones, and oddly enough a lot of their kids (and grandkids) have a better head on their shoulders.
@John Cooper, here’s the summary of the annual reports for both SS and Medicare. You’ll find the 2010 figures as you scroll down, as well as the projected chart of these entitlements’ cost as a % of GDP into the future. SS/DI will be hitting 6% of the GDP around 2025. What makes it more scary is what rosy GDP growth projections are they using? Reality may be it’s entirely worse. And, of course, the trustee summary also points out that whatever the problems for SS, they pale compared to the more immediate Medicare costs.
If you want something more specific, JC, here’s the 2010 financial statement from SSA.
Back in ’83, when your Mom started collecting, there was just over 35 million collecting benefits… this includes standard retirees, those on disability, and the few that qualify for survivorship benefits. Today it’s getting close to double that number.
INRE SS adding to national debt – pay attention, Larry…. extremely frustrating to have to keep pounding this into your head that it’s debt – Stever Vernon at CBS’s MoneyWatch wrote about this back in February. And this comes from someone who’s not averse to the scheme in theory, but complains about the execution and misrepresentations given on it’s solvency and future.
It’s quite the scam the Roosevelt Congress concocted… since the payouts in the early years were small, take the excess cash and turn it into spendable funds for other purposes. As long as the ponzi scheme had enough of those not on the system paying in to support those on the system, collecting, there were excess funds for Congress to use.
But that money, once turned into treasury securities, instantly became debt. That debt becomes compounded when, to redeem the securities for payout, more has to be borrowed to pay for both it… and the interest… back. It was a looming black cloud that most didn’t recognize because usually, there was enough fresh revenue to pay off for the smaller populous on the system. No one ever thought about the repercussions of paying back all the trillions borrowed from the funds over the decades because it hadn’t come up – save in the 70s, and again now. Rather like not worrying about all the charges on your credit card – until reality hits when the bill comes in the mail.
I repeat… this is a system you want to wish upon your children and grandchildren? Obviously some basic economics need to be replacing “tolerance” curriculum in our public schools. Who on earth wants to admit to being this dumb in the use of money? It’s such a bad financial deal that the only way anyone would want to participate is by force of law.
Which brings me to Larry’s observation above.
Larry, leaving your unneeded (and likely sarcastic) personal remarks aside, I’d say that most of the nation has proven, via sundry elections since Nov 2010, that we’re quite tired of having lies and sweet nothings whispered in our ears. I don’t want a leader who sugar coats our financial problems. I’m not interested in popular and being wined/dined on mistruths, clever off budget accounting, bait and switch spending and promises it will all be okay if we just move the goalposts a bit further down the field. This Scarlett O’Hara “after all, tomorrow is another day” mentality just doesn’t cut the mustard anymore.
I’m interested in fiscal restraint and correcting a path to financial bankruptcy long term. And frankly, I look around at the mood of the nation, who’s no longer kept in the dark and fed BS with our access to the Internet, and I see I’m not alone.
I, personally, don’t think of this in political terms, but you obviously do. You also present your disagreement with minced political nuance when you suggest that weening the younger generation off of social security, and medicare…. an expectation they only read about and are not slaves to early in their lives… is some equivalent of pushing granny off the cliff and forcing the elderly to eat dog food.
There hasn’t been any proposal that have affected current beneficiaries, or those near to collecting beneficiaries. That has not stopped people who share your political viewpoint on this issue from portraying them as such in outright lies for political gain. The word “politics” should never be used without the token adjective, “dirty”, preceding it.
I suggest you are inflicting your own attitudes towards both SS and Medicare on to the young, convincing yourself they are just as starry eyed about it as you are. The young may prefer to be more in control of their own earnings and investments, rather than handing it over to Congress to use as a bottomless pit piggy bank. Especially when they know the price they will be paying in interest and debt for such a small rate of return.. .and that’s IF they live.
You continually just say make the age limit higher. What you are actually saying, in quite a cold hearted way, is that the goal posts should be moved so that more have an opportunity to die before collecting. Or that the “golden years” (what a joke that is…) need to be shortened simply because Congress has mismanaged money so badly, promises can’t be kept. How wonderful that would be, yes? It was, of course, designed that way originally… to be just out of reach of the average life expectancy. A debt and promise that the government hoped they never had to pay back.
There’s a major flaw in your suggestion. With unemployment high, slated to remain high, housing remaining in the tank for quite some time, the economy is not friendly to ripping out the rug beneath the feet of those approaching SS. There’s quite a gap between 62 and the suggested age you mentioned (70, I believe) for older Americans to fare… possibly being unemployed, yet too “young” with your age change to collect benefits.
And many like you consider my attitude of weening/reform of these entitlements cold blooded? I suggest your kick-the-can fix of moving the goal posts is far more cruel than allowing the young to engage in a new form of future retirement security, with control over their own funds.
So INRE the election… I’ve got no dog in this race. Not much thrilled with anything I see. But I do know one thing… few in either party have the political guts to tell the truth, and fix the problems. The majority of elected officials.. .thinking like you about winning and power.. will only suggest a band-aid to protect their proverbial political butts. And frankly, it’s just more sweet whispering of lies in the ears… same ol, same ol.
@Jasmine: Alrighty then AJ, you’re gone. One warning was all you get. You’re posting from the same computer, same IP….neighbors DO NOT have the same IP.
Man, some people are just dumb.
A Ponzi scheme, by definition, is a fraudulent investment scheme.
Social Security isn’t an investment scheme. It’s a social insurance program.
The concept is sound. Social Security has worked well for 75 years. If properly managed and intelligently adjusted, it can continue to work indefinitely.
Hi Mata, Just so you know, I swear that I wasn’t intending to be at all sarcastic. Your logic and writing skills are quite formidable. I was simply making the point that the one thing which would be guaranteed to lose every Presidential election as far as the eye could see would be for Republicans to start trashing Social Security using the language that you’ve used in this particular thread. You don’t like it, for reasons you’ve clearly explained. But it remains the Third Rail, as even Rick Perry now realizes.
Hi Nan, You want to blame the crumbling of the fabric of the American family on Social Security (if I understand you correctly; I may not). You say that children used to take care of their elders; now they don’t. And you blame that on Social Security.
Lots of people don’t have children. The average size of the family unit has diminished markedly. Lots of people work hard all their lives, but are never able to save for retirement. Lots of people save for retirement, only to have a disaster happen. Like they lose their job at age 55 and have to survive on their savings while looking for work and then end up with a part time or minimum wage job. Or the stock market crashes, at the same time that bond yields go down near zero. Poof, no money on which to live.
This is the classic Right versus Left argument. There’s no way to bridge the gap. The far Right thinks that the individual should be responsible for everything and the government should not bail him/her out if things go badly. The far Left thinks that the government should take care of everything, and bail out everyone, no matter how irresponsible they have been. Most people are somewhere in between.
Some people here have expressed the view that many social security recipients make out like bandits. They pay in very little and get supported for a long time. This sort of reminds me of the parable of the vineyard (Matthew 20:1-16 or thereabouts), where some workers toil all day and the others jump in at the last minute, but all get paid the same thing. The workers toiling all day are resentful; they’d have been happy, if only they didn’t know that the other guys got the same thing for less work.
I’ve commented before how quick people are to resent it when poor people game the system, but giving rich people a total pass. A guy who cheats on his income tax takes money away from all of us no less than the guy who cheats on welfare. Let’s someday compare money lost to the treasury though income tax cheating compared to that lost to near-do-wells collecting undeserved government benefits. Poor and middle class people didn’t cause the financial meltdown — that would be rich people.
My personal opinion is that Social Security, in addition to all the good things that it has done for the elderly, has also been a terrific jobs investment for America. It has allowed entrepreneurs (such as me) the opportunity to take risks that would otherwise have been more difficult or impossible. When I started my business, 19 years ago (at age 45), I cashed in all my government retirement money (I’d been a VA employee), IRAs, kids’ college funds, took out 2nd mortgages, and got a large business bank loan as a third mortgage on my house and investment rental property. I knew that, worst case scenario, I could somehow scratch out a retirement from Social Security, if I crashed and burned. Likewise, I could take all the money and put it into growing the business, because Social Security helped my aging parents to live decently in retirement.
Getting back to the decline of the social fabric of America — if you want to blame Hollywood for a lot of this, I’m with you. But Social Security is just a scapegoat in this, in my opinion.
– Larry Weisenthal/Huntington Beach CA
Then I thank you for the genuine compliment.
Now, if you’ll be so kind as to point out where my heinous “language” is that I “trashed” social security, I shall be beholding. Feel free to parse my comments #26, 27, 29, 30, 36, and 37 for quotes.
What I did was describe exactly how this system is funded, how it adds to our debt, and how it is unsustainable. If more people knew this, they would not be seeing it as the cash cow you seem to believe it is for retirees.
In fact, I genuinely have a problem with some fantasy argument that had the elderly not had SS all this time, they would be in poverty. I see it to be the opposite, since I deal with seniors very often, and I find them to have been far more frugal and careful with their investments. Now the spoiled baby boomers? That’s another story. But then, that may be because they look at the SSA as a cash cow for their golden… er aluminum age. Just as you did saying you took risks. In your case, you tried to build something. But had you failed, you tucked away nothing. Others? They don’t try to build anything because they believe that’s their senior paychecks. It creates a false sense of security, and is a dangerous fiscal failure on all levels.
One more thing, you have no idea how I laughed at this statement of yours…
Larry, it was the Dust Bowl era… you’ve got to be kidding me if you think that poverty was confined to, or singled out, the elderly, fer heavens sakes. Unemployment rates for the 30s follows.
1930 8.7%
1931 15.9%
1932 23.6%
1933 24.9%
1934 21.7%
1935 20.1%
1936 16.9%
1937 14.3%
1938 19.0%
1939 17.2%
If that was an attempt at an emotional argument, as if SS was to protect impoverished seniors, it was truly foolhardy on your part. The passage of the SSA did not lift those 70% of elderly out of poverty.
Social Security was passed in 1935. The first payouts were in 1937.
1937 – 53,236 beneficiaries – $1,278,000 TTL pd: Avg of $24 per person/$2 per month
1938 – 213,670 beneficiaries – $10,478,000 TTL pd: Avg of $49 per person/$4 per month
1939 – 174,839 beneficiaries – $13,896,000 TTL pd: Avg of $79 per person/6.58 per month
Now, before you tell me that $2 goes a longer way in 1937, I used the BLS inflation calculator to translate those numbers for those figuring out if they could live on that today, in 2011. The equivalent of the above figures per month in buying power is:
1937: $31.46
1938: $64.27
1939: $107.24
Good luck trying to stretch $31 to $107 monthly in 2011… To bring that money into perspective with living expenses of the era, The People History site has averages of housing, new homes, etc from 1935.
$2, $4, or $6 dollars a month in 1935 sure doesn’t go very far when your average house rent was $22 per month. Needless to say, it’s highly unlikely the seniors were lifted out of poverty by the SSA… of which none of them had a paid a dime into. There’s that pyramid/ponzi scheme structure again…. benefits to current users paid by those who won’t collect (if lucky) until later.
That was an era where families did tend to stay together. We’re not talking about today’s boomers, who farm them out to nursing homes and assisted care facilities.
You’ve said this before, Greg. It is no more true now than when you previously said it. Just because you want to call a piece of glass a cultured pearl doesn’t make it so.
An insurance plan is to protect you or family against a loss…. whether it be damage to a home or car, health or life insurance – payable to the health providers, mortgagor, you or your family/heirs on your death, illness, damage in the event of that loss. Being the daughter of an insurance agent, formerly licensed as one myself, and having a brother who’s advanced to the risk management positions, I’ll tell you I generally describe insurance as the latest/greatest mob “protection racket”. Generally these are measures that kick in only when such a catastrophic event happens. In the meantime, you pay, pay and pay more. If you want to go wide on the gridiron, you may consider retirement a “loss of income”.. but that’s a wild stretch. Retirement is not an unexpected accident or event.
An investment plan is something you pay into with the expectation of a return while you are still alive. The same with a pension.. which is an arrangement to provide people with an income when they are no longer earning a regular income from employment. This is why SS more closely resembles a pension plan than “insurance”.
There is no doubt that the mandated FICA taxes translate to the average American as an expectation of a SS check after retirement. The attempt to call it anything other than it is, is just an attempt to disguise reality from the gullible.
Now that we’ve differentiated insurance… related to protection from unexpected loss… from investments/pensions, let’s have a second look at the definition of a “ponzi scheme” via Investopedia.
When the shoe fits…..
Hi Mata, You said:
Social security has not added one dime to the debt and, even unchanged, it won’t add one time for another two decades, at least. It’s easily sustainable, with some common sense modifications, and it will be sustained, because it’s been a huge success and that success has made it hugely popular.
“Moving the goalposts” isn’t cruel. It just means that people need to plan for supporting themselves between age 62 and 70. They can still retire at 62, only they’ll need to have a plan in place to navigate the 8 years in between. There’s been a dramatic increase in life expectancy since the late 1930s. Raising the retirement age simply recognizes this fact. I’m certain that, were the retirement age raised (in effect creating something akin to the Medicare Part D “donut hole”), there would be plans and programs popping up to help individuals cope with this.
It would be interesting to see whether raising the retirement age would substantially shift public opinion in the direction of favoring social security privatization. I’ve also never read a privatization plan which ensures that all eligible over 70 Americans would have the true security that they have enjoyed for many decades under social security.
Social security has kept nearly 90% of the nation’s elderly above the poverty line. This is a magnificent achievement, by any standard. http://www.nber.org/aginghealth/summer04/w10466.html
Getting back to social security not adding a dime to the national debt, you and Stever Vernon are playing semantic games, which obfuscates the truth. The unvarnished truth is that the government has typically run a deficit for many decades. During this time, it borrowed money from private pensions, from wealthy private individuals, and from the social security trust fund. No one is talking about how the T Bills from the private pensions and wealthy private individuals are phony assets. No one is delegitimizing the interest accrued and owing to the T bills held by private pension funds and private individuals. But social security opponents claim that the “trust fund” is phony and the concept that the T bill interest earned by the trust fund has added to the debt in some way different than the way that all the other parties who lent money to the government has added to the debt isn’t legitimate.
The facts are that the social security trust fund was an important source of funding to finance the Reagan and Bush tax cuts. Blame the tax cuts (and spending) for the debt. Don’t blame social security, which hasn’t added one dime to the debt.
– Larry Weisenthal/Huntington Beach CA
Larry, we have arrived at the end of the discussion here. I have provided ample links that prove your repeated statement about not adding “one dime to the debt” as patently false. My substantiated facts are only met with parroted, emotional and unsubstantiated phrasing from you.
You said it once, you are in error. You said it twice, and I figured you are in denial. On the third time, you are willing spreading misinformation… or lies, if you prefer… strictly for a political agenda. I know you hate the word lie, but you bring it upon yourself. I always know that debate is limited with you because you are cogent for only so long, then you just relapse into tried and untrue talking points, despite evidence to the contrary.
You and Greg need to educate yourselves to what really isn’t “insurance”. For if it were “insurance”, the Supremes would strike it down as they did with the Railroad Retirement Act of 1934. That was the reason they spent a good deal of time stripping out the insurance language from the bill before passage. However when it came to selling it to a gullible and downtrodden public, “social insurance”… a pure progressive mantra from Russian Jew, Isaac Rubinow… became the talking points, and based on lies about what was in the bill.
And when you think you’ve absorbed that, then tackle the fiscal truths of how SS funds are handled.
Bar none, the best historic overview of the passage, backroom dancing and legal challenges of the SSA of 1935 come from John Attarian’s essay, “The Roots of the Social Security Myth”, back in 2001. When historic events are parsed in retrospect, the corruption and thuggery of FDR, and his use of threats from the bully pulpit and Congress to railroad the SCOTUS, reveal that any similar bully attempts by Obama pales in comparison to what FDR begat in this country in 1935. Yes, there are similarities in the assault on the US citizen that Obama, along with Pelosi and Reid, did with O’healthcare. And that includes it’s detriment to the nation’s fiscal health. It is not a good thing.
Frankly, I believe that were we to be able to fast forward a century in time and look back at the history of America, FDR is the architect for it’s demise, and Obama becomes the contractor who brought the wrecking ball to finish it off. And all has been accomplished under the noses of scared Congressional members, too concerned with their own hides to protect what they were sworn to protect.
I genuinely hope you’ll set aside all your emotions – which I recognize as genuinely humanitarian in intent, if not execution – and start educating yourself about the reality of SS, and it’s prime focus to raise revenue in a dried up tax market. Even FDR’s own Robert Jackson testified in court and before Congress reveals FDRs desperation for cash.
If you read Attarian’s essay, you’ll understand why the admin and Congress rammed this thru, then tried to sell it to the unwilling public as “insurance” with contractual rights to create an entitlement (which do not exist in the legislation at all)… only to blatantly reverse that argument before the courts because, as insurance, it would have been unconstitutional. All for what really comes down to revenue for spending… all of which (ahem) adds to the debt.
As far as you sticking to your extremely heartless cure of shafting the 60-70 year olds… whom you suggest may may have to navigate eight years in order to salvage a POS plan for the young… all I can say is I don’t want to hear any accusations against me about my belief that the young should be weened off FDR’s in perpetuity progressive dreams as something evil. That you would even think, in this economy, those between 62 and 70 can make instantaneous plans to perpetuate this ponzi scheme, is a real “pushing granny over the cliff”. After FDR’s original intent to instill the “entitlement” mentality via non existent contractual rights to SS in order to perpetuate his progressive plan, you have got to be one heartless SOB to suggest ripping it away in this economy…. where there is no opportunity or time to make alternative plans.
So to use your own line, I’m done and you can have the last words. This is simply a waste of my time. There are a plethora of links to reading material in my comments for anyone reading to form opinions. Yours? I guess they’ll have to depend upon nanny feel good BS about how it doesn’t affect the national debt, and your asserted alternative universe statements about how grateful a nation is for a piss poor pension plan.
@MataHarley, #42:
When you retain means testing, the Social Security retirement program is insurance. Covered workers are being insured against the income loss that more often than not sets in at some point with advancing age.
One of the factors that has led to the current problem is that people want to think of Social Security retirement insurance as an investment program. They want guaranteed returns on their premiums (FICA taxes) even when they don’t experience a degree of income loss in old age sufficient to reduce them to the state of poverty that the program was originally intended to insure against. This is analogous to expecting a payback on auto insurance, home insurance, or health insurance when the loss you’ve protected yourself from never materializes.
@openid.aol.com/runnswim: You said:
Proof please.
You keep saying that SS doesn’t add one dime to the national debt.
Did you not even read Mata’s reply to that??
BTW, show proof of how Reagan and Bush’s tax cuts primarily helped the rich.
I await your reply.
Anticsrocks, the original SSA of 1935 was written specifically to mandate that any funds not paid out in benefits was invested in securities backed by the US guarantees.. i.e. treasury securities. This is correct. It is the “laundering” of the cash and movement over to the general funds for the Congress to spend on what they want… and they do. Since they spent it, we’re paying interest on that spending/debt. Additionally, Congress is paying interest on borrowing those treasuries. So of course it all lands in the national debt figures. Even the most brain dead economists know this. I guess those curing cancer haven’t figured it out yet, and don’t bother to read links.
You might want to think of it like this. I have one account where I keep my mortgage funds, and a second where all my other expenses are paid out. My mortgage is $1000 monthly, but I put $1500 in there. By regulation, I am require to “invest” that, so I issue myself a credit card, guaranteed and backed by myself. So I put that $500 extra funds on my credit card, which is constantly overdrawn on the limits, and pay more bills outside my mortgage. Am I incurring debt, and paying interest on money I just borrowed from myself?
But wait… as happened twice in the 1970s, and again last year, I don’t have enough in the original mortgage account to cover my payment. So now I have to go back to my self issued credit card – which is maxed out – and ask for a reimbursement plus interest in order to pay my mortgage. But I can’t pay it out of that account because it’s maxed out, so I have to use yet a another credit card just to pay back that $500 plus the interest that I spent elsewhere. Simple analogy, actually. My mortgage account manager thinks I’m making money because I charge interest to loan to myself, but I have to borrow from a 3rd party just to pay myself back.
I’ve tried linking financial columns from liberal rags like CNN and CBS, since I thought they’d be better received. I’ve even quoted the SSA’s own site that also notes that money goes into the general funds for spending, incurring interest and debt… all for naught. When you get someone with their head up their talking points derriere, there’s little you can do.
Hi Mata (late night again). Please explain to me why social security has contributed to the national debt and why treasury notes held by private pension funds and wealthy private individuals have not added to the national debt. They are the same treasury bills, same interest rates, money borrowed by the government for the same purpose (to finance debt having nothing at all to do with social security).
When you’ve explained to me how social security loans to the federal government are in any way different from private pension fund loans to the federal government, we can then proceed from there.
P.S. I didn’t address your remarks about cost of living in the Great Depression, because I still can’t find the links I want and I’m now going to bed. What I remember is this: at the time of the inception of social security, the poverty rate among the elderly was about 70%, which was more than double the poverty rate of the non-elderly. Today, the poverty rate of the elderly is less than the poverty rate of the non-elderly, which means that the government does a much better job of taking care of senior citizens (on average) than families formerly did.
You and Nan have an idealized concept of the way things used to be, before the era of the cold heartless Baby Boomers. Did you see that poverty graph from 1960 to 2000, which I linked in my previous post? That reduction in elderly poverty from 35% to near 10% happened on the watch of the Baby Boomers.
– Larry Weisenthal/Huntington Beach CA
The public exists under a misconception concerning Social Security and most of you realize the ruse that is perpetrated against the public, if you weren’t among the lost and bewildered before reading the article.
How many of you have heard someone say, “There won’t be any money left, by the time I retire.”
Politicians understand that allowing the public to realize that Social Security is set up like a classic Ponzi Scheme would cause a taxpayer revolt. The public is deluded on purpose for their own “good” in true Socialist form. The truth is readily available, but we all know that a huge portion of people are completely unaware of the true nature of their Social Security “Investments” for retirement. No one is going to tell them that the only thing that keeps the plan afloat is that it is the law that you must participate. The truth is, you must lie by omission to guarantee compliance; otherwise, many people would rather pay into their own retirement plans and take their chances and having the option to will the fund to their heirs. Yes, it is kept under wraps, while we let people assume the government is watching over their money for their retirement, if only it were true.
People in their twenties and thirties are aghast at the thought of paying into the system to support the boomers and their capacity to live too damn long.
Have you talked to them? Have you talked to those who understand the similarities. I talk to them all the time. They are completely underwhelmed at the idea of paying more and more taxes to support the largest crop of seniors since the inception of the plan; then having zero to show for their efforts as their retirement draws near and the age requirement is being raised again and again to allow the system the opportunity to recover in the face of an even worse scenario: the possibility of the boomers living even longer than projected.
Ponzi Schemes are always cruel to the late joiners and it looks like the thirty year olds are going to suffer through the greatest cruelty of all, but as long as we don’t tell them, they won’t know they are being played for saps. In the mean time, you boomers should listen to Obama and think about taking a pill and kicking the bucket earlier. Help out the legal Ponzi Scheme, die before your time.
@MataHarley: Thanks Mata. I just get tired of Larry spouting crap that he refuses to back up with proof.
@openid.aol.com/runnswim: You said:
Well Larry, I’m no economist, but aren’t those held by private individuals actually purchased with real money? I mean if you know how to get T Bills without paying for them, let us all in on your secret.
Hi Skook, As I said, social security can be fixed with some simple actuarial adjustments. 30 year olds are being needlessly frightened by economic urban legends promoted by social security opponents.
It’s not a serious statement. And the reference to the Sarah Palin death panels is inflammatory hate mongering. How am I supposed to debate stuff like that?
– Larry Weisenthal/Huntington Beach CA
Hi Antics:
As you said, you are no economist. Those social security trust fund T Bills were purchased by real money. The surplus tax money paid in, over the years, through the REGRESSIVE payroll and self employment taxes. As I’ve pointed out, at the same time as the Reagan tax cuts, disproportionately favoring the rich, were phased in, so were the social security tax hikes, disproportionately hurting the middle class and poor. That’s the REAL money which purchased those T Bills for the social security trust fund. That money is no different whatsoever from the real money from private pension funds and from wealthy private individuals which were lent to the government in return for interest bearing T bills.
As I charged before, Mata and her CNN pundits are playing semantic games. The truth is very simple. It is precisely as I have explained it in the above paragraph. If you disagree, kindly tell me how I have explained it incorrectly. Tell me what is incorrectly stated in the above paragraph and in my previous comments.
Again, social security has not added one dime to the national debt and there is no reason that it ever has to add one dime, as it is solvent for at least the next 20 years and there are simple, common sense actuarial adjustments which will keep it solvent in perpetuity.
– Larry Weisenthal/Huntington Beach CA
@Greg, your knowledge of history is deplorable. Do yourself a favor and start reading some links. Done with you.
@openid.aol.com/runnswim: You said:
Yes, it was real money, but it was money they had already collected. When a private citizen purchases a T Bill it is money that ADDS to the federal coffers.
Um, where?
.
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anticsrocks, I’m still laughing at the “real money” purchasing the GAS…. like you can get ’em with counterfeit money? LOL
Technically, it’s not “purchased” at all. It’s all just accounting movement in between agencies. But I understand what you are trying to say is that a private investor – foreign state or individuals – purchasing Treasury securities (altho these are non marketable) is bringing in fresh cash revenue, and not recycling taxpayer revenue.
All in all, it doesn’t really matter. Debt is debt whether owed to a 3rd party, or from the feds to the feds. Bottom line, it’s the taxpayer lending itself taxpayer money with interest, all via bookkeeping, as a way of laundering the excess (when we have it… not so last year or in the 70s) so that Congress can spend it elsewhere.
Brilliant scam being run past the big government supporter types. Evidently, they are brainwashed enough to think it doesn’t count in the debt either. Don’t know how such a big number of “intragovernmental debt” can be ignored as non existent…. Takes real tunnel vision to do that.
Hi Antics, you still don’t get it.
Those social security trust fund T Bills were purchased by real money. The surplus tax money paid in through the payroll and self employment taxes.
When a poor or middle class person made a payroll tax contribution to social security, part of it went to pay for benefits of current retirees, and the surplus amount was ADDED to the federal coffers. That money is just as real as the private pension money. The T bills issued in return for this loan the to federal coffers are the exact same T bills as were issued in exchange for the private pension money added to the federal coffers.
In previous posts, on other threads. The Reagan tax cuts were phased in at the same time as the social security tax hikes. As I’ll explain tomorrow, in response to your earlier claims about the salubrious effects of Reagan tax policies on treasury receipts. a big reason why the Reagan deficits weren’t even worse than they were was because of the greatly increased contributions of the social security trust fund toward meeting the shortfall.
Hi Mata, with regard to Greg’s comments in #44, history aside, I think that it makes a lot of sense to look at his explanation as a very useful model for social security going forward. The program has worked extremely well, up to the present and even into the near term future (the next two decades). But it does need to be re-tooled, to carry it forward into the long term future. Greg’s model of social security as insurance, as opposed to an investment, is a useful basis on which to structure the necessary adjustments.
– Larry Weisenthal/Huntington Beach, CA