Skip to comments.Setting Grandma's Hair on Fire
Posted on 09/13/2011 5:31:40 AM PDT by Kaslin
Social Security is a "Ponzi scheme for these young people," said Gov. Rick Perry in his first debate as a presidential candidate. "The idea ... that the current program is going to be there for them is a lie."
Pressed by the moderator, Perry did not back down. He doubled down, calling Social Security a "monstrous lie to our kids."
Is not such language provocative, Perry was asked. Retort: "Maybe it's time to have some provocative language in this country."
Since Barry Goldwater suggested the program be privatized and LBJ ran an ad of a Social Security card being scissored in half, the issue has been "the third rail of American politics." Touch it -- and it kills you.
Apparently, the Mitt Romney campaign thinks it is still the third rail.
Falling on Perry's perceived fumble, Mitt declared that Social Security "is working for millions of Americans, and I will keep it working for millions of Americans. ... Our nominee must not be someone who is committed to abolishing Social Security but ... to saving Social Security.
Yet Perry never said he was going to abolish Social Security. He said, "We need to be focused on how we are going to change this program."
Karl Rove, however, piled on, as did ex-Romney aide Alex Castellanos:
"Rick Perry may have reassured the base with some very fiery rhetoric, but what he didn't do last night was prove in any way that he could win independents or seniors or soccer moms. And ... he shot an arrow into the heart of seniors. He set grandma's hair on fire."
Yet, on the merits, Perry has more than a small point. For the Social Security program has been relentlessly looted by a Beltway political class that has used it for decades as the piggy bank of last resort.
Social Security was originally designed in the 1930s to be a program where all workers would contribute during their years of employment into a trust fund, from which they would receive a small annual stipend to help with retirement, should they live to 65.
In the 1930s, not everyone lived to 65. Indeed, from 1950 to 1955, life expectancy for the average American male was 66 years.
In 1972, when Richard Nixon proposed a 10-percent increase in Social Security benefits, plus indexation -- automatic annual increases to cover inflation -- the Democratic Congress raised it to 20 percent.
Fearing a congressional override if he vetoed, Nixon signed, then claimed credit for the most generous Social Security benefit increase in history, and went on to win 49 states.
But the 1970s became a decade of soaring inflation, and Social Security payments, now indexed, soared along with it.
By 1982, Social Security was nearly bankrupt. A commission led by Alan Greenspan was appointed to save the system. This was done by raising the Social Security tax rate and tax base, and modestly increasing the age of full retirement. Americans were living longer.
However, something else had been happening to the Social Security trust fund. The hundreds of billions that poured into government coffers in Social Security taxes each year had been borrowed by the U.S. Treasury and used for operating expenses -- fighting wars, funding food stamps, etc.
Thus today the Social Security trust fund consists not of gold, silver or tradable commodities and securities, but of special-issue government bonds, IOUs, a promise by the Federal Government to pay back what it has taken out and spent.
If Ford Motor did what the U.S. Government has done -- borrowed and spent all the cash the company, its employees and workers had contributed to their pension fund, and used it for wages, salaries and expenses, leaving IOUs in the vault -- the executives would go to prison.
What is Social Security today?
Basically, it has become an inter-generational income-transfer program where working people contribute 6.2 percent of all wages, and their employers match it, and the money is then sent to the Treasury, which sends it out in monthly checks to the 50 million on Social Security.
If incoming funds don't match what Social Security recipients are entitled to, the Feds borrow the money from China or somewhere else. If incoming funds exceed what has to go out in Social Security checks, the Feds use the surplus to cover the deficits, and leave an IOU.
And there are other and serious questions raised by the Ponzi scheme controversy. Is grandma's generation, which fought World War II, Korea and the Cold War, more alarmed by Rick Perry's red-meat rhetoric than by President Obama's refusal to address the entitlement crisis threatening the fiscal and financial future of the republic?
Is political correctness more important to Americans than hearing the unvarnished truth about the condition of their country?
If so, the country is in trouble, not just Rick Perry.
Another Texan from another time, "Cactus Jack" Garner, once said, "Sometimes you have to give it to 'em with the bark on."
Personally, I am sick and tired of the verbiage used. I want to know what is their specific plan on Social Security. If they are going to keep it, I want to know how they will pay for it and how benefits will be distributed in precise detail.
Any one can identify the problem. And using colorful language to identify the problem is not a solution. I want to see a real plan.
Its a “Ponzi scheme” at this point because too much is being paid out for a variety of reasons from liberal definitions of “disability” to longer lifespans.
Governor Palin says that entitlements need to be addressed in a “humane way” to tackle the debt problem.
Perry would help himself immensely if he would explain in greater detail HOW he plans to reform the system. If he can do so in a coherent way, this issue won't be the political death knell for him that even many on the right seem to be craving.
Use as few words as possible:
Old bastards, no worries.
Something along those lines.
Well, what was originally Federal Old-Age (Retirement), Survivors, and Disability Insurance was a pension safety net for seniors retiring. Now it’s this....
Federal Old-Age (Retirement), Survivors, and Disability Insurance
Temporary Assistance for Needy Families (Aid to Dependent Families)
Health Insurance for Aged and Disabled (Medicare)
Grants to States for Medical Assistance Programs (Medicaid)
State Children’s Health Insurance Program (SCHIP)
Supplemental Security Income (SSI)
Patient Protection and Affordable Care Act
Not to mention the whole thing is almost dead ‘er ‘n a doornail due to robbery and abuse by the very government that was tasked with the TRUST ACCOUNT. The operative word being ‘trust.’ Too late, we’re finding that you can’t ‘trust’ these people with a damned dime of our money.
The only one after Perry on SS was Romney. All the others accepted his clarification and pretty much agreed.
I have no problem with Perry on this issue.
Its some of those other things.
Good for Perry it’s about time a politician spoke frankly and honestly without regard for their election prospects. He isn’t telling anything new, everyone who’s planning on retiring in 20 years knows damn well SS cannot be counted on. I think in the end it will serve him well and leave egg on his competitor’s faces.
Assets grew from about $47 billion at the end of December 1986 to about $2.6 trillion by the end of December 2010. The assets of the Trust are invested in US Bonds , backed by the full faith and credit of the federal government by law. The SS Trust fund is the largest holder of US debt. Social Security will not be bankrupt unless the US defaults on that debt.
The Social Security trust fund holds $2.7 trillion dollars of government bonds. Is the USA going to default on those bonds? Incidentally, at present China owns only $1.2 trillion.
More than half of Americans, 56 percent, would be less likely to vote for a presidential candidate who favored phasing out Social Security so that workers could invest their payroll taxes in the stock market, according to a nationwide poll in June by The Wall Street Journal and NBC News. That included 64 percent of Democrats and 57 percent of independents, whose swing votes decide elections, and even a 45 percent plurality of Republicans. Only one-third of Republicans said they would be more likely to vote for someone who espoused ending Social Security.
Some people think SS is broke because its funds are held in Treasury bonds. In other words, the surplus of what workers have paid in is all lent to the government. Who knew? While banks sold bad mortgages and brokers sold bad stocks, US workers were investing their pensions in this patriotic way all along. They were nobly, or naively, willing to believe that the Treasury will pay them back. Will it? I suppose it must, or else the full faith and credit of the US will be worthless and the country will go bankrupt.
Read the trustee report.
Social Security can function at current levels and future projections for at least 25 years before benefits would have to be reduced. Even beyond that point it is funded out to 85 years with just a 23% drop in benefits.
It seems we have a little time to fine tune SS.
So what crisis are we even talking about?
If push comes to shove, yes. If there's no money, there's no money. And the more obligations we carry, the more interest we pay, and the more taxing and spending we do, the more comes due every month, and the more likely a default becomes.
The money used to bail out the banksters would have backstopped SS for 500 years. Tell the retiree that banks are too big to fail but SS is not? Good luck with that. As far as ripping off the investor(retiree)why aren’t any politicos speaking of defaulting on the debt that China owes us? After all, they are invested in the same government bonds.
If Obamacare continues, life expectancy will drop sharply into the upper 50’s.
Yes, and that should be made into a bumper sticker sized statement and repeated at every opportunity. BHO's SS reform: ration away the excess users.
Or better: Save SS! Kill everyone over 65.
I agree with you, but that option isn't on the table. I'm talking about what's possible or likely from here on.
Tell the retiree that banks are too big to fail but SS is not? Good luck with that.
Again, I'm just saying it could happen. The (unconstitutional, stupid, possibly criminal) bank money is over the dam.