" IS SOCIAL SECURITY A PONZI SCHEME ? "

MCNBC Tv | September 8, 2011 | Rick Santelli

[Graewoulf]

At 7:33 AM CDT Rick Santelli asked guest host Thomas L. Friedman, New York Times foreign Affairs Columnist, and author of his new book " That Used to be Us, " the following question: " Is Social Security a Ponzi Scheme ? " Tom replied, " Your question is idiotic ! " Rick then replied: " Your answer is idiotic! "

GAME ON !

[rightwingintelligentsia]

SS is also not an "investment" scheme, because if someone has paid into the system for years, but dies before retirement age (or shortly thereafter) with no eligible heirs (a surviving spouse or minor children), the money is absorbed into the system to pay someone else.

[Jim Noble]

Is Social Security a Ponzi Scheme ?

No, it's a pseudo-Ponzi scheme.

The government does not claim, nor does it promise, that your FICA taxes belong to you. If they did, it would be a Ponzi scheme.

If you want to BELIEVE that your "contributions" belong to you, that's fine with the Feds. But their actual position, both as to law and as to fact, is not difficult to discover.

[Hodar]

A Ponzi Scheme is voluntary. If you are smart or cautious, you can avoid them completely. SS is enforced by the law, thus no amount of caution can allow you to avoid getting scammed.

SS is worse.

Beautifully stated.

[achilles2000]

No, it was clear from the beginning what SS was. Go read the Jacoby piece on SS that has been posted today.

And the demographics were bad in in the 30s when the law was enacted. The Post-War Baby Boom put off the crisis for a while, but in the 30s no one could forsee that temporary reprieve.

[pitviper68]

http://www.cato.org/pubs/policy_report/pr-ja-jp.html

We decided that the minimum contribution should be 10 percent of wages. But workers may contribute up to 20 percent. The money contributed is deducted from the worker’s taxable income. The money is invested by a private institution, and the returns are untaxed. By the time a worker reaches retirement age—65 for men, 60 for women—a sizable sum of capital has accumulated in the account. At retirement the worker transforms that lump sum into an annuity with an insurance company. He can shop among different insurance companies to find the plan that best suits his personal and family situation. (He pays taxes when the money is withdrawn but usually at a lower rate than he would have paid when he was working.)

As I said, a worker can contribute more than 10 percent if he wants a higher pension or if he wants to retire early. Individuals have different preferences: some want to work until they are 85; others want to go fishing at 55, or 50, or 45, if they can. The uniform pay-as-you-go social security system does not recognize differences in individual preferences. In my country, those differences had led to pressure on the congress to legislate different retirement ages for different groups. As a result, we had a discriminatory retirement-age system. Blue-collar workers could retire at 65; white-collar workers could retire more or less at 55; bank employees could retire after 25 years of work; and the most powerful group of all, those who make the laws, the congressmen, were able to retire after 15 years of work.

Under our new system, you don’t have to pressure anyone. If you want to retire at 55, you go to one of the pension-fund companies and sit in front of a user-friendly computer. It asks you at what age you want to retire. You answer 55. The computer then does some calculations and says that you must contribute 12.1 percent of your income to carry out your plan. You then go back to your employer and instruct him to deduct the appropriate amount. Workers thus translate their personal preferences into tailored pension plans. If a worker’s pension savings are not enough at the legal retirement age, the government makes up the difference from general tax revenue.

[kabar]

Myth 4: President Roosevelt promised that the money the participants paid would be put into the independent "Trust Fund," rather than into the General operating fund, and therefore, would only be used to fund the Social Security Retirement program, and no other Government program

The idea here is basically correct. However, this statement is usually joined to a second statement to the effect that this principle was violated by subsequent Administrations. However, there has never been any change in the way the Social Security program is financed or the way that Social Security payroll taxes are used by the federal government.

The Social Security Trust Fund was created in 1939 as part of the Amendments enacted in that year. From its inception, the Trust Fund has always worked the same way. The Social Security Trust Fund has never been "put into the general fund of the government."

Most likely this myth comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the "unified budget." This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are "on-budget." This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken "off-budget." This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are "on-budget" or "off-budget" is primarily a question of accounting practices--it has no affect on the actual operations of the Trust Fund itself.

[urbanpovertylawcenter]

you can avoid SS either by not working or working for the federal government which for the most part is the same thing as far as I can see.

[who knows what evil?]

Thanks!

[Chancelot]

That is why they wanted control of Health care. Now they can offer the Old people an easy way out (Death Panel)and the S.S. problem is solved.

[cc2k]

Grunthor wrote:

Look up the definition of “Ponzi Scheme” and tell me how it is NOT one.

That's it.

Of course, if the question is ever turned around, or if a candidate ever reads the dictionary definition of Ponzi scheme in a debate, it's game over.

Which is why candidates can speak no longer than one minute in public debate (on the major networks or news networks) and candidates aren't allowed to bring any reference materials/props to the debate (like a dictionary).

The truth can not be spoken or demonstrated in public. The Party Propaganda Ministry will not allow that. Only emotionally charged (though true) phrases and angry emotions can be shown to the great unwashed.

[WestwardHo]

SS is also not an “investment” scheme

SS is like pouring water INTO a leaking boat.

[Fee]

Remember people sued Carter when he raised the retirement age in the 1970’s. Plaintiff argued that the gov had a contract with the people. Another myth. SCOTUS ruled SS is a legislated entitlement and Congress is granted wide latitude to change it. In other words, Congress can spend all of SS money on a one month sex orgy on the Wash DC mall and the only thing the American people can do is vote the bastards out of office. That is why SS is the worst “contract” to accept. Atleast a 401k is your money and the provider has contractual obligations to the original terms of the agreement and one can sue them if they violate the contractual terms. SS does not have this feature.

[evad]

It became a full blown PONZI scheme when congress decided to include all of the taxes collected as part of the "general fund".

Until then, one could argue it was just a Baby PONZI

[WOBBLY BOB]

Add in SSI /disability, IE: “crazy checks” and you have the
boondoggle factor making Sosh Security exponentially stupid.

[evad]

"It is not a Ponzi scheme in the same way that the AFL-CIO is not an organized crime syndicate. "

Ahh...the ole "walk like a duck, quack like a duck" scenario

[InterceptPoint]

I’d like to hear more about the Chilean retirement system that Cain mentioned last night...

This will get your started:

Chile's Social Security Lesson

[Dubya-M-DeesWent2SyriaStupid!]

SS is a ponzi scheme.As far as Bernake is concerned the entire Obama admin is defined in the word

trea·son    [tree-zuhn] noun 1. the offense of acting to overthrow one's government or to harm or kill its sovereign. 2. a violation of allegiance to one's sovereign or to one's state. 3. the betrayal of a trust or confidence; breach of faith; treachery.

[cc2k]

evad wrote:

It became a full blown PONZI scheme when congress decided to include all of the taxes collected as part of the "general fund".

Until then, one could argue it was just a Baby PONZI

Actually, it has always been a Ponzi Scheme. Current beneficiaries have always been paid from the principle invested by new members.

When they started spending the money through the "general fund," it became a very poorly managed Ponzi Scheme, operated for the benefit of the welfare state and not for the benefit of the "early investors."

[Sgt_Schultze]

Correct. The left’s love affair with abortion has robbed the “trust fund” of the “investments” of some 30 million American employees. The scampering about by the permanent political class for a path to citizenship for illegal is all about an infusion of new employees to stave off the inevitable collapse of social security. For the democrats, extra voters is a bonus.

[WOBBLY BOB]

A 401k is yours (until the feds decide it isn’t.)

Still a better option than Sosh Security.

Any “contract” you can’t opt out of is not a contract, it’s a forced obligation. Kinda like Obammycare. If it’s so great, why do so many people get waivers from it?