Is Social Security a Ponzi Scheme? (a no brainer )

Mises Institute ^ | September 19, 2011 | Robert P. Murphy

[sickoflibs]

RE :”SS is not a scheme, scam, fraud, or socialism. It is an American institution that works, and has never failed to meet payoll, and is as strong as anything. .......The author, sadly, does not understand how SS works. It would even work if there were only 2 workers to every retiree (which is the case if we had no population growth and we had 2 years working to 1 year retirement, like age 25 - 65 working, and 65 to 85 retired). Do the math. 2 workers give up 6.2% and their employers match; the retiree gets 24.8% of a full time salary. That’s it. No collapse, no ponzi scheme, no socialism.”

I think you might be the one that has been in the cave not him. Right now SS is a welfare scheme, the current benefits are being paid by the treasury bills directly adding US debt to this nation. It has never missed a payment ? (Except when it steals the money in income taxes.) That is because seniors are able to terrify those elected into borrowing the money on the unborn’s credit card and giving it to them.

It is welfare plain and simple, those with political muscle demanding the government STEAL it from the the weaker politically. That doesn't mean it will last.

[TruConservative]

A ponzi scheme is a guy (like Ponzi himself) who decides he will defraud suckers by making a up an investment that never really exists. The first few investors get paid high returns, so they’ll tell their friends, and reinvest themselves. Once a large amount of investment is collected, the schemer runs away a rich man, and the investors get nothing.

So why’s this different than SS?

1. There is no schemer; there’s no one getting rich by deception; there’s no one to run away with the money.
2. There is no investment, real or fake. A lot of people think SS has something to do with investment - it does not. It is a unique thing, unrelated to the stock market or bonds or gold or any other type of investment.
3. There is no fraud. Everything is open and above board. We know where every penny goes
4. It cannot collapse and go to zero. It has a constant inflow of cash which grows with inflation and is safer than any other inflow of cash, because it is a fixed percentage of all American wages. SS will be the last thing in the country to lose income, after every other thing has fallen to zero.

It is true that projections are for SS to hand out less than it takes in. Big deal. The income is at least 75% of desired pay outs for the rest of the century. That means (a) SS checks are reduced in size, or (b) worker withholdings are increased, or (c) the withholding cut off is raised, or (d) a combination of these three things.

I think it is simply “popular” to complain about SS. I don’t think those who complain about it seriously consider the facts, like it’s only 6.2% of your paycheck (and the return to you post retirement is somewhere around 24% of your paycheck, so it’s not even a bad deal). You still have 93.8% to have as many private, non-government savings investments as you want. And it performs a function you probably don’t understand - it allows cheap labor (like $8/hour Denny workers). Without SS, those Denny workers would be condemning themselves to old age poverty, or you’d have to spend more at Dennys to cover their retirement needs. SS actually lowers the price of things for you.

I hate this pile-on on SS, and I hate the mischaracterizations of it. We are supposed to think for ourselves! Anyone who honestly believes SS is a ponzi scheme or “stealing” is not thinking for themself.

[sickoflibs]

RE "It is true that projections are for SS to hand out less than it takes in. Big deal. The income is at least 75% of desired pay outs for the rest of the century. That means (a) SS checks are reduced in size, or (b) worker withholdings are increased, or (c) the withholding cut off is raised, or (d) a combination of these three things."

You completely missed my point and are apparently not aware of the current situation. Forget projections, SS FICA taxes afunding a fraction of SS benefits right now, the rest is coming from new treasury bills and national debt. It is degraded into welfare now, which means it cant last in its present form.

[TruConservative]

“it can’t last in its present form.”

I acknowledge that the income will fall to as low as 75% of the outflow, but no lower for the rest of the century (that’s out to the year 2100! You expect to be around past that?). And as I say, that requires that (a) checks get smaller, or (b) withholdings go up, or (c) cutoff is raised, or (d) a combination of these three. But if you make that adjustment, it can last forever. And I give the numbers above - it can last forever with just two workers to every retiree.

It’s no “get-rich” scheme, but it shouldn’t be a get-rich scheme. It’s a “keep-poor-earners-and-poor-savers-from-starving” and a “give-a-little-spending-cash-to-the-rest-of-us” scheme, that can last for the life of the country, no problem. It’s a smart program, has been for 75 years, is right now for my dad, is probably right now for a bunch of your relatives, and will be tomorrow for us.

[Gilbo_3]

SS is not a scheme, scam, fraud, or socialism.

jeez, its the epitome of socialism...ya know, from each according to his means to those according to their needs...

sure, the fact that generational, governmental robbery has occured which made victims outta old folks, but passing the gubmint owned MP5 to them to rob the future citizenry doesnt make em whole...

its like forcing you, by gobmint arms, to reimburse me, for the robbery of my home...its immoral at the very least, but realistically criminal in its application...