Posted on 09/11/2011 11:32:47 AM PDT by smoothsailing
September 10, 2011
When Texas Governor Rick Perry in the Republican debate at the President Reagan Library described Social Security as a “Ponzi Scheme”; Perry hoped the media would hyper-ventilate and scream that his political career was over. Back in 1982, Democratic Speaker of the House Tip O’Neill legendarily damaged the President’s and the Republican’s popularity by spinning that Reagan’s efforts to return Social Security to solvency was an effort to destroy the program. Perry understands that Social Security still remains popular; but he intends to use as a wedge issue against Democrats the fact that few Americans are willing to pay more taxes make the program solvent and that younger voters believe they will never receive the benefits they are paying for.
The Merriam-Webster Dictionary describes a Ponzi scheme as “an investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks.” Social Security began collecting taxes in 1937 and began in 1940 to pay their first benefit recipient, Ida May Fuller. Ms. Fuller worked for three years under the Social Security program before she retired. The Social Security taxes on her salary were $24.75; her initial monthly check was $22.54; and she lived to collect $22,888.92. Essentially, Ms. Fuller earned a spectacular 925% return on her investment.
President Franklin Delano Roosevelt was quoted by his Labor Secretary Francis Perkins as trying to make sure Social Security would not be a swindle to future generations:
“Ah, but this is the same old dole by another name. It is almost dishonest to build up an accumulated deficit for the Congress of the United States to meet in 1980. We can’t see the United States short in 1980 any more than in 1935.”
Prior to the 1970s, the Social Security program was fairly well funded; because it took a highly visible Act of Congress to change the payments. But in 1972 Republican President Richard Nixon increased benefits by 20% and created a formula to automatically adjust Social Security payments by a cost-of-living-adjustment (COLA) tied to the Consumer Price Index for Urban Wage Earners and Clerical Workers. President Jimmy Carter in 1977 more than tripled the Social Security tax on wages; but price inflation continued to drive COLA payments up faster than the taxes on wages.
When President Reagan tried to reinstate the original COLA calculation in 1982 he was pummeled by Democratic Speaker of the House, Tip O’Neill, who famously told the press that trying to change Social Security was the political equivalent of asking for the instant death of touching the “third rail” of an electric train. Republicans lost 26 Congressional seats in the following midterm elections, as the Democrats made preservation of Social Security the centerpiece of their campaign slogan: “It’s not fair … It’s Republican”.
In 1995, the Senate Finance Committee appointed a commission to study the amended CPI’s effect on Social Security solvency. The commission determined that the COLA calculation introduced in the 1970s overestimated the cost of living calculation envisioned by FDR by a value approximately 1.2% per year; but Congress took no action. Through 2011, the COLA has averaged 3.73%. Over the last 36 years the COLA resulted in benefit payments that were 47% above higher than the original plan supported by Roosevelt. Had the COLA not been passed into law the current $2.5 trillion Social Security Trust Fund would be three times larger and the program would solvent, instead of currently $5.4 trillion under-funded.
Perry understands that for the last twenty-six years no Republican Presidential candidate has been willing to address the unsustainability of the Social Security funding for fear of being pummeled by Democrats. But recent Rasmussen polling indicates that although Social Security remains a popular with a 73% approval; only 30% of likely U.S. voters favor raising taxes to make sure the Social Security and Medicare trust funds have enough money to pay all promised benefits. Rasmussen determined that only “26% of voters under 40 believe it’s even Somewhat Likely they will receive all of their promised Social Security benefits. That includes only 5% who say it’s Very Likely those benefits will be paid.”
The key to President Obama’s election victory in 2008 was the 22% voter preference he enjoyed in under 30 voters. Perry’s denigrating of Social of Security as a Ponzi scheme may turn out to be a powerful wedge issue that may turn younger voters away from Obama this fall.
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They could limit the amount of money invested in private business to a percentage of the total amount of issued stock.
They could also invest the money in precious metals, municipal bonds and such.
If Obama is reelected (I give him a 1 in 5 chance today) SS will fail before the end of his second term.
If they are truly private accounts, the ownership is the individual, not the government.
Where then were the excess funds deposited, if not in government bonds, i.e. laundered into the general fund?
I’m not quite sure what McCotter’s plan will entail, but I’m almost certain that it will involve personal choice re: your investment. The fact that Peter J. Ferrara is involved at some level would solidify that.
Rick Perry:
We’re having a special guest at Monday’s debate. Those who correctly guess who it is by tomorrow at 6PM CT receive a bumper sticker! Make your guess below.
Now that’s a smart tease.
Two top guesses so far are Bush and Palin. LOL
I’ll go with Ted Nugent!
That’s a good guess.
Palin...she’s already said she’d be at the debate on the 12th. Maybe she ask some of the questions.
Gov. Rick Scott
LOL!
My first thought was that the debate is on CNN, so she'd be violating her Fox News contract...
And then I thought so what, she'd be a heck of alot better than Brian Williams! :)
Yes, it is CNN...but hey, maybe she’ll be there for FoxNews...no, she was invited by the Tea Party...she got whatever she needed from whoever to legally attend.
Where did she say this?
Hmm. CNN invites Sarah Palin and Rudy Giuliani to September 12th GOP debate
Maybe the CNN “invitation” to Sarah Palin and Rudy Giuliani to their September 12th GOP debate caused the tiny 4.2 earthquake we just had here in L.A. at the time of this post. According to TV Newser, CNN has announced the participants of what they are calling “The Tea Party Republican Debate.” The participants will include the expected. Rick Perry, Rep. Michele Bachmann, Mitt Romney, Ron Paul, Newt Gingrich, Herman Cain, Rick Santorum and for whatever reason, Jon Huntsman. But in an odd move, CNN also extended invitations to Sarah Palin and Rudy Giuliani.
Rick Perry definitely knows how to roll up his sleeves and get to business. He is showing courage to stand up to the old school madness of some of these federal programs and do what needs to be done to restore our great country. I think Rick Perry just gave “government business as usual” the bird! :-)
Hey Cas! How was the concert?
One thing I’m learning about Rick Perry is that his outlook on the role of government is not something he’s just recently dreamed up so he could run for President. He’s being seeing things the way he does for quite some time.
I ran across an interview he did with the Wall Street Journal a couple of years ago. Here’s a link...
http://online.wsj.com/article/SB10001424052970203550604574361014098225036.html
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