Ponzi! Ponzi! Ponzi!

The truth about Social Security

Ponzi! Ponzi! Ponzi! There, I said it. To the extent people believe there are trust funds with their names on them, Social Security is absolutely a Ponzi scheme. So is Medicare. People need to hear it.

Many people think that when the government takes payroll tax from their paychecks, it goes to something like a savings account. Seniors who collect Social Security think they're just getting back money that they put into their "account." Or they think it's like an insurance policy—you win if you live long enough to get more than you paid in. Neither is true. Nothing is invested. The money taken from you was spent by government that year. Right away. There's no trust fund. The plan is unsustainable. Medicare is worse.

Mitt Romney and other Republicans who scoff at Rick Perry shamelessly pander to older voters. They should tell people the truth.

Still, I'm not convinced Perry has more than a sound bite. In his USA Today op-ed this week, the most he says is, "We must consider reforms to make Social Security financially viable." He doesn't say what kind of reforms.

Charles Ponzi promised to make money for investors by taking advantage of price differences in coupons for postage stamps. Trouble is, he paid some early "investors" with money wheedled from later "investors."

What sustains a Ponzi scheme is deception. If people really knew how it worked, they wouldn't sign on.

Social Security and Medicare are different. You could say no to Ponzi. I wouldn't advise saying no to the government. Not if you want to stay out of prison.

Social Security is nothing more than a promise from politicians. The next gang can break the promise.

Twice the government has argued before the Supreme Court that Social Security is not insurance. In 1960, Health, Education and Welfare Secretary Arthur Sherwood Flemming submitted a brief to the courts stating: "The contribution exacted under the Social Security plan is a true tax. It is not comparable to a premium promising the payment of an annuity commencing at a designated age."

In a ruling that denied a man's property claim to Social Security benefits, the Supreme Court said, "It is apparent that the noncontractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits is bottomed on his contractual premium payments."

So anyone who believes Social Security is an investment plan really has only himself to blame.

If you want evidence, listen to how politicians talk about your Social Security "contributions." They are taxes and nothing more. No one pretends they are premiums. In fact, President Obama and the Republicans want to stimulate the economy by extending a cut in the payroll tax for workers and cutting the employer's share of the tax—but without reducing Social Security benefits.

Now, I like tax cuts more than the next person, but as Freeman editor Sheldon Richman points out, this one has a complication the politicians don't seem to care about:

President Obama's jobs program calls for cuts in both sides of the payroll tax. That tax finances Social Security and Medicare. Social Security and Medicare are already taking in less money than they need to pay retirees. So they will have to cash in more of the Treasury IOUs left behind when previous surpluses were used to finance general expenditures. But the Treasury is also already running a deficit, a trillion dollars-plus. So it will have to borrow more in the capital markets in order to pay back the Social Security and Medicare funds. Unless Obama makes up the lost revenue by changing the tax code. But then money will be withdrawn from the economy in the form of higher taxes so it can be put back into the economy through the payroll-tax cut. Somehow that's supposed to stimulate the economy.

Like all jobs programs, Obama's latest plan is a scam. The economy would create ample opportunities to earn income—and make it easier for people to look after themselves in retirement—if the government would just slash spending, taxes, regulation and privilege.

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  • Almanian||

    This is sooooooooo yesterday's RealClearPolitics. NEXT!

  • Old Mexican||

    Like all jobs programs, Obama's latest plan is a scam.


    Well, he's nothing if not consistent.

  • Almanian||

    Like all jobs programs basically his entire Presidency, Obama's latest plan is a scam.

    Fixed

  • Old Mexican||

    Re: Almanian,

    Looks great, but I believe that such was implied when I wrote: He's nothing if not consistent.

  • jacob the barbarian||

    Think about your audience for a minute.

  • Old Mexican||

    I'm heartless - remember? ;)

  • Old Mexican||

    By the way, Peter Schiff's testimony before the Congressiona Jobs Commission - you have to see it.

    http://www.youtube.com/watch?l.....r_embedded

  • Tman||

    Schiff: "I'm in the Economic and Financial Gloom and Doom business and thanks to this body, The Obama admin and the Federal Reserve, business is BOOMING."

    Dang I wish he had won in CT.

  • Fist of Etiquette||

    He wants to do away with all protections so he can abuse his employees and pay them next to nothing. Better they not be employed at all!

  • Old Mexican||

    Re: Fist of Etiquette,

    Better they not be employed at all!


    That is the bliss they're enjoying right now... under King Obama The Handsome.

  • Tony||

    Getting practical about the budget consequences of cutting taxes all of a sudden when it's working class people's taxes being cut is just so very special.

  • Mainer||

    Tony|7.12.11 @ 1:18PM|#
    What I often fail to acknowledge is that often I'm merely playing devil's advocate. I try not to have too many deeply held beliefs, if I can help it.

  • Shorter Tony||

    Please suck my cock. PLEASE?

  • Jersey Patriot||

    Agreed.

  • prolefeed||

    Talking about how an illusory cut in taxes that will not do anything to actually help working class people get the jobs they want, and might result in even more of them not having jobs, under the pretense of creating jobs -- you somehow have a problem with that pulling back the curtain on the Wizard of Oz?

  • Edwin||

    Tony, Social Security is doomed to bankruptcy or at least massive reductions in benefits in the future to the point where most Americans will be getting back less than they put in. It's not invested in anything other than our future tax dollars - that is, our taxes were invested in more of our taxes, as idiotic as that is.

    Face it, social security is doomed unless there are some massive changes, and no amount of your babbling about taxing the rich is going to change that.

    And this is all on top of massive financial doom for many other programs on state and federal levels.

    $500,000 per person in federal debt alone, Tony. $500,000 per person plus whatever the states need to pay - that's an amount of money that just doesn't exist Tony. IT DOESN'T EXIST no matter how much you babble about rich people.

  • Tony||

    You're just wrong about SS. You can modify the SS tax cap to solve the problem entirely with minimal pain. More importantly, there is no crisis in SS--not for decades. Meanwhile there are real problems that need addressing. And looking for excuses to decrease the safety net for all the people suffering from the real crises won't do anything to help.

  • Edwin||

    "And looking for excuses to decrease the safety net for all the people suffering from the real crises won't do anything to help."

    Who's doing that? Am I doing that? Did I say that? I've only talked about fiscal sustainability
    The only way you can defend your nonsense is by inventing imaginary boogeymen

    And no you can't solve the problem like that. There's a bajillion baby bopomers set to retire, and all the projections have been way under, so it's probably going to be way worse than we think.

    Last thing I read is SS won't be able to mneet its p[ayments in 2037, that's not that far away, though it may technically indeed be "decades". The fact that we even have to talk about when money is going to run out is atrocious. It should be especially atrocious to your liberal sensibilities and the things you supposedly value. But it's not, and all you can do is spout denial.

    What would be so bad changing the rules so that the money could actually be invested? Why is raising taxes the only solution ever?

  • Edwin||

    and then phasing it out over time for the younger generation. The worker-to-retiree ratio is just too low and getting lower. It is clearly impossible for most Americans to get back even the same as what they'll put in, particularly the middle class. Remember the middle class Tony, the ones you keep saying you care so much about?

  • Nicholas Card||

    The problem is phasing it out. Now that we've gone down the SS road, it will be virtually impossible to get rid of. The end result of dissolution will be the young generation will have to pay for both the current retirees and their own retirement. Since the problem in the very beginning was no one had enough money for retirement, how are we going to expect people to have enough money for two retirements?

    Don't get me wrong, I really want SS dissolved, but I don't think "phasing it out" is enough of a plan.

  • Brandon||

    There is no crisis in SS- If you conveniently ignore the fact that the Trust Fund is actually a liability to the general fund now, and SS has had negative cash flow since early this year, so it's now adding to the deficit by being converted to interest owed to third parties instead of interest owed to the trust fund.

  • ||

    "You can modify the SS tax cap". So someone earning > $106,800 who's already paying $13,243 per year in social security tax isn't paying enough? If they earn an additional $100,000 you want to extract another $12,400 from them - on top of a federal income tax scheduled to go up to 39.6% sixteen months from now? On top of state income tax? On top of medicare tax? That sounds reasonable - NOT.

    How about a better idea? How about if high earners get sick of being bled dry by the leeches, stop working so hard and tell all of the liberals to go fuck themselves?

  • ||

    The simple fact is if that even with the stock market crashes, had people had the money in the market (which is about the worst place they could put it outside of letting the government piss it away) they would actually have something now.

    The money is gone. Spent. It is now far worse than a ponzi scheme as the funds people people pay are not even sufficient to pay for the program. Money must now be taken from the general fund.

    If peoples money had been put in an account of some kind, then they would not now be a burden. You could then supplement people who had genuine hardship form the general fund. Right now, essentially, the entire thing is taken from the general fund.

    Broke plan is broke.

  • Cyber Government||

    There's no trust fund.

    Incorrect. There's a virtual trust fund.

  • ||

    Virtual, meaning not, as in virtual hunting (nothing to hunt), virtual focus (no emanations there) or virtual world (not reality). Thus virtual trust fund means no trust fund.

  • ||

    There is a fund of T-bills. It exists. It's real.

    I think the problem is that the government takes in the SS money, spends it, *AND* issues the T-Bills.

    Or something.

  • ||

    And how does the government redeem its t-bills? By using taxes collected from other sources. If you redeem a bond someone else comes up with the principle and interest. If the government redeems a bond it has to come up with the money. So what's the point of the t-bills except as an accounting gimmick?

  • ||

    If Perry is elected and actually does something to really reform Social Security, I'm going to call him the Ponz.

  • Jaime||

    AAAYYYYY!!!!

  • Potsie||

    Sit on it, Pro L!

  • ||

    For some years, I thought that you played Will Riker.

  • ||

    Hey, John Stossel,

    Will this be a topic on your next (or future) show? I think it'd make a good one.

  • Spencer||

    I thought if the government did it, it isn't illegal (for the gov't only, of course). Right? Isn't this how they get away with tasing innocent people, etc.? Why not with Ponzi scheme.

  • Raven Nation||

    "Once the government declares something legal, it's no longer immoral."

  • ola||

    "Many people think that when the government takes payroll tax from their paychecks, it goes to something like a savings account."

    Stossel, can you find one of these sorry sons of bitches to interview? I know that's probably a throwaway line, but c'mon. Has there been one breathing american in the last 30 years who actually believe this tripe? Stossel, you are getting right up there with others in the media at your ability to make shit up.

  • ||

    They may say that they don't believe it, but nonetheless they treat it as though it's an "investment": "I paid in all these years and I should get it back."

  • L13||

    I had this very comment from my father; he was a brilliant engineer and manager, but he has a blind spot about a mile wide when it comes to getting "his money back" from Socialist Security.

  • ||

    That's because Social Seucrity works hard to maintain the fiction. Every year, just like with my actual investments, the SSI sends me a statement telling me how much I've paid in and what my benefits will be when I retire. No where in the statement does it mention that congress could eliminate or change my benefits at any time for no reason.

    Compare this to Medicare, which doesn't seem to send me anything. It just takes from my paycheck and gives to someone else with no apparent pretense as to what future benefits I am accruing.

  • some guy||

    Compare this to Medicare, which doesn't seem to send me anything. It just takes from my paycheck and gives to someone else with no apparent pretense as to what future benefits I am accruing.

    The future benefit you are accruing is that, when you retire, no doctor will accept your insurance.

  • Sons of Taffeda||

    "Has there been one breathing american in the last 30 years who actually believe this tripe?"

    I read oped sections of major newspapers and in the letters section, that very belief shows up fairly regularly.

  • Tango Mike||

    You're kidding me, right? Thinking your money goes into an account is probably the most common interpretation of SS for the masses. Not everyone is as smart as you, ola.

  • ||

    "Has there been one breathing American in the last 30 years who actually believes this tripe?"

    Yes.

    The ignorance of the average American is astounding. Many if not most do in fact believe that, judging from what I have seen.

  • ||

    Has there been one breathing american in the last 30 years who actually believe this tripe?

    Walk into any convenience store on Wednesdays & Saturdays before 11pm and ask a dozen Seniors buying Powerball tickets. I guarantee you, if they have any idea at all, half will bear a family resemblance to the line you don't believe. I'd be shocked if more than two got it right.

    A lot of them will be irritated you even thought about it enough to ask.

  • ||

    Too true. It's funny my grandmother is always going on about the need to get government out of peoples lives and lower taxes, things I am all for, but you should see her face the moment SS is brought up. I think it is a case where deep down they have this nagging feeling that we are right on the matter, but given human nature it is easier to deny that there is a problem than admit you got baboozled out of thousands of dollars.

  • ||

    Most tax-deniers believe there is a Treasury account based on their SSAN. Go to Quatloos for more info.

  • ||

    I talked to a friend yesterday who didn't know what FICA was.

  • some guy||

    Does this friend work? Under the table, I guess?

  • anon||

    I don't know, we have a hard time communicating, he doesn't speak english.

  • Copernicus||

    Fucking
    Insurance
    Cunt
    Asshole

    I'm pretty sure it's a safety net for tourette syndrom. AAh! Slut!

  • ||

    I hear comments all the time that illustrate just how common this line of thought is. "It's my money", "it's not an entitlement", "I paid in all these years and damned if I'm not getting MY money back", etc. I don't think Stossel would have any trouble at all finding people. In fact, I'd like to see him bring a half-dozen of them on his show ... and then ask how they can justify their position of not accepting ANY reduction in benefits, knowing full well how badly they're f***ing over my generation.

  • ||

    It would be a good show though I doubt that argument will get through. I've made that one to seniors over and over again. I've used colorful imagry, asking them to imagine a chainlink being added onto a chain the rests ontop of their grandchildren. They won't have it.

  • ||

    I'm now 75, but when I was a teenager I was always complaining about paying FICA because my grand-children would never be dumb enough to pay me. However, I think most people, although knowing the truth, don't admit it to themselves.
    Of course, they are still dumb enough - unfortunately.

  • ||

    Socialism security was the dependency racketeers foot in the door. Judging by the rabid defense of the program by entitled seniors, and the looming chaos that will ensue when it fails, the program is working exactly as planned.

  • mj||

    Maybe we wouldn't need it per se, but my grandmother who's probably going to be in an assisted living facility the rest of her life and paid ss her entire life would probably be the kind of people who get fucked here.

  • teh rael O2||

    unless ur granny's [WEALTHY], the gop has no interest

  • Old Mexican||

    Re: mj,

    [...] my grandmother[...]would probably be the kind of people who get fucked here.


    She can consider herself lucky. Many people go through life without getting laid. Especially Double Asshole there...

  • Kreel Sarloo||

    You know, except for some of us heartless libertarians :), no politician is talking about significantly changing the benefits that current beneficiaries of Social Security get. So, I'd say your gran is pretty safe.

    The question is, are we going to continue an unsustainable entitlement or are we going to make incremental changes over time to change the system from an automatic entlement to a means tested program to supplement the incomes of the aged who cannot work and have been improvident or unlucky enough to have not provided for this eventuality.

    Able-bodied people should not be able to quit their jobs and start sponging off the taxpayers just because they have reach some magic age.

  • Old Mexican||

    Re: Stupid Doltish Sockpuppet,

    Getting practical about the budget consequences of cutting taxes [sic]


    Oh, so they're all of a sudden taxes. And here I thought they were my contributions for my future retirement and my medical expenses...

    [Note to sockpuppet: Of course they're taxes as you accept above, a fact that proves that SS and Medicare are nothing more than Ponzi schemes.]

  • shorter old mex||

    all govt revenue is teh [PONZI] !

  • Old Mexican||

    Re: short of brain cells Double Asshole,

    all govt revenue is teh [PONZI] !


    You're easily confused by terms, Double Asshole. No wonder, when you call not raising tax rates of 10 years a "tax cut."

  • ||

    Mr. Stossel,
    How dare you describe these pyramid funds as "ponzi schemes"? (Honestly, I did not know we were not supposed to use that word either. PC is tough to keep up with.)At least the pols won't waste time debating improvements for Social Security and Medicare. They have a new word to obsess over.
    Best regards

  • Sons of Taffeda||

    "Neither is true, writes John Stossel. Nothing is invested. To the extent people believe there are trust funds with their names on them, Social Security is absolutely a Ponzi scheme"

    Of course it is. that's why they mail everyone those bullshit SS statements every year. Madoff provided make-believe statements to his clients too.

  • sevo||

    "Madoff provided make-believe statements to his clients too."
    And Madoff didn't force a single soul to invest.

  • Joe Biden||

    Social Security is not a Ponzi scheme. On the contrary, I like to think of it as a Fonzi scheme. It's cool.

  • Shorter Joe Biden||

    It's a big fucking deal!

  • George M||

    I don’t believe there is any similarity between Medicare and Social Security, I’ll definitely say NO to Ponzi. It’s just my thought, I don’t know what others will think.

  • ||

    George,
    I think we live in an age where people simply choose their own reality.

  • L13||

    And the village idiot's vote counts just as much as the successful entrepreneur.

  • ||

    That's always been the fact.

  • ||

    Medicare's problem is that it provides an open-ended commitment to cover medical costs at the most expensive stage of life. That problem goes way beyond the size of the tax base or the fact that there is no trust fund.

  • Libertarian||

    Fuck the Boomerz!

  • ||

    That's mild gerontophilia...

  • Strawman||

    You can fix the social security crisis by eliminating the $106k cap on FICA.

    That ALONE will fix the matter.

  • Red Rocks Rockin||

    No it won't.

  • ||

    So your solution to the SS Ponzi scheme is to force people to throw even more money into it. And that will help how? The Congress will spend all the extra money and just issue larger t-bill amounts. There will still be nothing in the trust fund but liabilities, not assets.

  • Bobarian||

    And raising the eligble age

  • Edwin||

    no it won't

    do the math

  • teh rael o2||

    means testing will tho

  • some guy||

    Then no one can claim that it is an "investment". If you means test it, it becomes an obvious system of wealth transfer. If you means test SS, it becomes exactly what its founders said it was not.

  • sevo||

    "means testing will tho"
    So long as the means test is whether you have a buck left in your pocket, it might.

  • GW||

    The great part about SS is that it's the ultimate hypocrisy program. The same seniors who are bitching about getting to keep their benefits today were the same average joes who 30 years ago were bitching that they'd never see a dime, and wanted the program halted. Now that the tables have turned, and they are on the other side of the transaction, they of course demand the program.

  • Strawman||

    Exactly.

  • ||

    True but wtf do you expect them to do? They were forced. This is the insidiousness of socialism. It pushes people to accept evil even when they know it is evil.

  • Liberty 4 me but not 4 thee||

    "...listen to how politicians talk about your Social Security 'contributions.' They are taxes and nothing more."

    BINGOOOO!!!
    WE HAVE A WINNER OVER HERE, FOLKS!!!

    ... and ditto for the ObamaCare "penalties." They are "taxes and nothing more," despite all the double-talk and spin from the politicians. As such, they are authorized by the 16th Amendment simpliciter, Commerce Clause be damned.

    Goodnight now. Your mom and I will see you in the morning.

  • Strawman||

    Do the math. You'll see that it works.

    Do the following as well

    1. ZERO Corporate Income Tax.

    2. Vigilantly go after individuals that try to use Corporate resources for personal use (this will be a collateral consequence of ZERO Corporate Income Taxes).

    3. Eliminate the distinction between CAPITAL GAINS income and EARNED income. If you make money, you are TAXED.

    4. Eliminate ALL PERSONAL DEDUCTIONS, EXEMPTIONS, TAX CREDITS, TAX Shelters, and the like for all INDIVIDUALS and CORPORATIONS. Corporations can only write-off the costs of goods sold...period.

    5. As mentioned earlier, remove the $106K Cap on FICA.

    6. Senior Citizens or disabled people with assets that render income to be more than TWICE the US Median Income are NOT ELIGIBLE for Social Security. They should be happy with the fact that they are RICH already. If they become poor, they are welcomed.

    ***What is unpopular about my ideas is the fact that EVERYBODY would have to pay taxes. Big deal...we can handle it.

  • Strawman||

    ...Oh, and one more thing. Universal Catastrophic Health Care. Create a SPECIAL tax (like FICA) so we don't have to go through all of this MANDATE bullshit. That's what OBAMA should have done in the first place.

    The poor, elderly, and disabled people are ONLY eligible to go to MAYO clinics designated to them. NO one else can go to these clinics (to protect the sacred Free Market for doctors). The MAYO clinics will have ONLY salaried employees paid for by EVERYONE.

  • Brandon||

    So you would just seize private property and nationalize it? And what about those who live outside Florida, Arizona or Minnesota? I get the feeling you haven't really thought this deal out.

  • GW||

    Or we could do the Constitutional thing and just kill Social Security off.*

    *By "kill SS off" I mean functionally, we'd have to transition away from it over a period of a couple of decades or so, and younger people like me would take it in the pooper and pay the taxes knowing we'd never get benefits. Someone has to be left standing when the music stops. Might as well be those of us who can afford to plan for it.

  • Bob Bradley||

    All good points.

  • ||

    "to protect the sacred Free Market for doctors"

    Can't protect something that doesn't exist. That's the problem. In fact the AMA was responsible for getting rid of it.

    "Eliminate the distinction between CAPITAL GAINS income and EARNED income. If you make money, you are TAXED"

    Awful idea. Most often capital gains is taxing you for the fact that they are inflating your currency relative to your other assets.

    My gold isn't worth more. My cash is worth less. Why should I be taxed for trying to have my savings not inflated away?

    Just phase out the SS ponzi scheme and be done. It's a bad idea. It's unconstitutional. Just trash it.

    If you have to have compulsory retirement accounts. And if you have to you can have a supplemental program to help the people who really need it. But at least for the most part the old will no longer be preying on the young.

    And all that savings will be the capital stock the economy needs to grow.

  • Dylan||

    I'm 28. I won't be factoring in SS or Medicare as part of my retirement. It's sunk cost.

  • ||

    Same here. I'm 30. Almost $70k sunk into it now and I assume it's all a lost cause. Sad to think how much I could accomplish with that $70k to invest in our business ... ugh. I try not to think about it.

  • some guy||

    It's beyond "sad". It's infuriating. You should be irate. I'm irate.

  • Copernicus||

    Why hasn't anyone sued the Federal Government for exemption? Just "opt out". Don't tell me you can't "opt out", I know that. That's where the lawsuit comes in. I'm sure someone has already done this but I'm too lazy to look. Where's my cabana boy?

  • Anonymous Coward||

    Oh Reason, time for Dr. Krugnuts!

    Paul Krugman, circa 1996 (when dinosaurs ruled the Earth):

    Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today’s young may well get less than they put in).

    And here's Paul Krugman in 2011, backpedalling so hard he's leaving a trail of smoke:

    Notice what I didn’t say. I didn’t say that the system was a fraud; I didn’t say that it would collapse. I said that in the past it had benefited from the fact that each generation paying in to the system was bigger than the generation that preceded it, and that this luxury would be ending in the years ahead.

    So why did I use the P-word? Basically because Paul Samuelson had done the same; he was basically just being cute, and I was emulating him — which now turns out to be a mistake.

    So remember, just because it looks like government-sponsored fraud, smells like government-sponsored fraud, and tastes like government-sponsored fraud, doesn't mean it's really fraud. Think of Social Security as the margarine of fraud.

  • Red Rocks Rockin||

    I Can't Believe It's Not Fraud

  • BradK||

    This is the kind of logic that earns one a Nobel prize.

  • sevo||

    "Think of Social Security as the margarine of fraud."
    Yeah, except it isn't the 'low-priced spread'.

  • ||

    So its worse than normal fraud.

  • ||

    Artificial margarine.

  • ||

    AAAAHHHH! I was tricked by the page 2 button, again!

  • ||

    Two comments: it's odd that people criticize Social Security for being nothing but a collection of IOUs even though their own bank savings works the same way. Your bank holds an electronic IOU for money you have deposited; it's not actually there in the vault. Originally this IOU was backed by the full faith and credit of the bank, and if the bank folded you were screwed, but eventually it was backed by taxpayers through FDIC insurance. The same thing with Social Security–its IOU has value because it is backed by taxpayers.

    Even currency itself only has value because it is backed by the US government, i.e., taxpayers. There is no intrinsic value of paper money; it's a promissory note that can be traded. Your SS "account" is another promissory note. Could they change the rules? Sure. But they could also decide to tax you on your Roth IRA or print more money and inflate the currency so nothing unique there.

    It's also odd that people are so uncritical of one of the main problems of Social Security solvency. That being that even though productivity has climbed over the last 30 years wages have been relatively flat for the middle class over that time. Ideally, growth should compensate for the pyramid structure of Social Security, but it has been flat wages increasing divorced from actual growth and a recession kicked off by Wall Street malfeasance that have contributed to weakening the solvency of social security. No one asked why wages have not kept up with growth when criticizing SS solvency just like no one asks why Americans pay 17% of income for health care while other counties pay 11% (and have better outcomes) when criticizing Medicare costs. Fix health care costs and you fix Medicare. Get the nation more toward full employment with rising wages that match growth and you'll fix SS.

  • Red Rocks Rockin||

    That being that even though productivity has climbed over the last 30 years wages have been relatively flat for the middle class over that time.

    As pointed out elsewhere, if government spending was so stimulative, our economy should be roaring since it's done nothing but climb ever since Hoover was in office.

    Ultimately, what we've seen the last 40 years or so, ever since Nixon's price freeze speech, has been an attempt to paper over a material economic decline with inflation and currency devaluation. The only thing that's kept us thus far from being kicked to the curb as the peg of last resort is the fact that no one's bothered to invade us yet.

  • sevo||

    "The only thing that's kept us thus far from being kicked to the curb as the peg of last resort is the fact that no one's bothered to invade us yet."
    Disagreed.
    What's saved us is that other major currencies are in even worse comparative shape.

  • ||

    I think you must see that if you lay off people from the public sector, they can no longer demand goods and services. Then the private sector contracts as well because of fewer customers. Austerity is a downward spiral, macroeconomically.

  • Red Rocks Rockin||

    I think you must see that if you lay off people from the public sector, they can no longer demand goods and services.

    Then by your logic, every job should be a government job.

    Until you face the fact that without a strong private sector, the public sector is worthless, then your version of the economy is fated to go the way of all bureaucratic systems once they pass the maturity stage--bloat followed by budget cuts and then implosion.

    Austerity is a downward spiral, macroeconomically.

    If that were true, the economy would have completely collapsed following Harding's budget cuts.

    Your great fallacy lies in the assumption that recessions can be prevented.

  • ||

    Auesterity is nothing more than medicine given to economy/patient when things need to be rebalanced. If you spend too much for a period of time then you must make up for it with a period of austerity.

  • ||

    "Then by your logic, every job should be a government job."

    Ah, no. But if you start laying people off, from the public or private sector, then the multiplier effect ripples outward. Those people cannot buy as many goods and services causing more businesses to contract. Austerity is bad policy microeconomicly speaking.

    "Until you face the fact that without a strong private sector, the public sector is worthless, then your version of the economy is fated to go the way of all bureaucratic systems once they pass the maturity stage--bloat followed by budget cuts and then implosion."

    This is all straw-man fallacy stuff. You're creating things I'm not saying just so you can knock them down.

    Ok, let me explain macroeconomics. Money has to continually flow from consumers to producers to consumers (the latter in the form of wages) in a loop or else the economy faulters. Right now corporations are sitting on 2 trillion dollars which they are not investing in growth because demand has fallen off. Without demand, businesses will never invest in growth; there is no point. Supply side economics (that's your genius Harding) thought that during a contraction (recession) the community would begin pooling saved money (brought on by *individual* austerity) because they are not spending which would then bring down interest rates because more money in banks means more available for investment -- cheap money would spur growth and re-right the system.

    People who came to be known as demand-siders (post-Harding) pointed out in a recession unemployed people don't have money to save so there is no opportunity to pool money to create cheap money for business borrowing. The circulation of money I mentioned before stalls out. The only agent powerful enough to jumpstart the economy is the public sector because they can force money to recirculate via taxation. They can tax that clotted 2 trillion and put it in the hands of consumers who then are able to demand more goods and services, which spurs growth and employment in the *private* sector, and even though the money took a detour though the public sector (like blood through an external heart machine) the point is to get off the public sector heart machine so the private sector economy can resume once again.

    Again, individual austerity, say, where a farmer forgoes dinners out to buy a new tractor (investment) works, but if everyone forgoes consumption spending then that hurts the economy as a whole. What works on an individual level does not work on a macroeconomic level.

  • sevo||

    ""Then by your logic, every job should be a government job."
    Ah, no. But if you start laying people off, from the public or private sector, then the multiplier effect ripples outward"
    --------------
    "Ok, let me explain macroeconomics."
    --------------
    "Again, individual austerity, say, where a farmer forgoes dinners out to buy a new tractor (investment) works,"

    I'll bet you think we haven't heard this bullshit before. I have a hint; I (and we) have. More times than I care to count.
    And while you're a pretty good bullshit slinger, you should check out:
    http://www.csicop.org/si/
    If you figured out that your 'cleverness' is, well, all too obvious, it might keep you from embarrassing yourself again.

  • CE||

    it's odd that people criticize Social Security for being nothing but a collection of IOUs even though their own bank savings works the same way. Your bank holds an electronic IOU for money you have deposited; it's not actually there in the vault. Originally this IOU was backed by the full faith and credit of the bank, and if the bank folded you were screwed, but eventually it was backed by taxpayers through FDIC insurance. The same thing with Social Security–its IOU has value because it is backed by taxpayers.

    But it's not the same at all. The bank's IOU to you is an actual IOU. If you die, your claim passes on to your heirs. With Social Security, there's no IOU at all (just current law which can change at any time), and if you die, your heirs have no claim.

    The funds you deposit in your bank are loaned out to other individuals and companies. If they repay as expected (with interest and with some percentage of defaults), the bank stays solvent and you can withdraw your money. The FDIC backstop is a separate problem.

    The money you are taxed under the guise of SS just goes into the general fund to be spent as Congress decides. Typically they decide to keep SS payments as they were the year before, but they can change the retirement age or the payouts at any time. When SS taxes were higher than SS payouts in the past, the government spent the money and issued the SSA Treasury bonds. Those bonds can only be paid back by increasing taxes, since the government had no money to lend the SSA in the first place.

  • ||

    "... the bank's IOU to you is an actual IOU."

    According to a contract, but the government has also established a contract with you.

    "There's no IOU at all (just current law which can change at any time) ..."

    You get that statement, and yes the law can change but so does the banks agreements with you in terms of raised fees and lowered rates. In a money market account, technically not even your capital is secure.

    " ... and if you die, your heirs have no claim."

    Well, in terms of widow benefits if you die young, etc., but generally your right; of course you could beat the actuary tables and then you can come out ahead.

    "The money you are taxed under the guise of SS just goes into the general fund to be spent as Congress decides."

    It's held in treasury notes, not cash, so unlike what some people here think it is invested, just not in something with a great return, but you trade that for safety. It doesn't drop 30% like the stock market has. Yes congress can misappropriate it but so can Wall Street by gambling with people's mortgage or banks in the S&L crisis, etc. That money is also in the "general fund," i.e., combined with others, of whatever private entity is managing it.

    "Those bonds can only be paid back by increasing taxes, since the government had no money to lend the SSA in the first place."

    All public sector securities are paid with tax money, so SS should not be any different.

  • sevo||

    "... the bank's IOU to you is an actual IOU."
    According to a contract, but the government has also established a contract with you"

    Lie.
    --------------------
    "There's no IOU at all (just current law which can change at any time) ..."
    You get that statement, and yes the law can change but so does the banks agreements with you in terms of raised fees and lowered rates. In a money market account, technically not even your capital is secure."

    Yes, and if a bank's terms change, I can go elsewhere. Are you ignorant of coercion?
    ----------------------
    " ... and if you die, your heirs have no claim."
    Well, in terms of widow benefits if you die young, etc., but generally your right; of course you could beat the actuary tables and then you can come out ahead."

    So you agree. Which, to be clear, makes a mockery of your claim.
    ----------------------
    ""The money you are taxed under the guise of SS just goes into the general fund to be spent as Congress decides."
    It's held in treasury notes, not cash, so unlike what some people here think it is invested, just not in something with a great return, but you trade that for safety. It doesn't drop 30% like the stock market has. Yes congress can misappropriate it but so can Wall Street by gambling with people's mortgage or banks in the S&L crisis, etc. That money is also in the "general fund," i.e., combined with others, of whatever private entity is managing it."

    GREAT false equivalence!
    I can take money OUT of investments that don't meet my expectations.
    -------------------------------
    ""Those bonds can only be paid back by increasing taxes, since the government had no money to lend the SSA in the first place."
    All public sector securities are paid with tax money, so SS should not be any different."

    Which of course, ignores the requirement to *raise* taxes to meet the supposed promises.
    Where DID you learn such sophistry? You are truly skilled! You need to write copy for womens' cosmetics.

  • ||

    "Yes, and if a bank's terms change, I can go elsewhere. Are you ignorant of coercion?"

    First of all, there are only about 5-6 major banks left. Soon you will not have anywhere to go. Coke v. Pepsi is hardly a real choice; it's an illusion of choice. Secondly, all laws are coercion but I don't subscribe to anarchy as the solution. Also many people could not opt-out of company pensions either way back.

    "I can take money OUT of investments that don't meet my expectations."

    Yes, after you have been swindled you can take out what's left of your money. Just like after the mortgage market collapsed because of Wall Street shenanigans you now have the "freedom" to sell your house at a loss. Hooray for freedom!

    "So you agree. Which, to be clear, makes a mockery of your claim."

    Sometimes pensions don't transfer to the spouse, so it's not unique, but there are widow/widower benefits.

    "Which of course, ignores the requirement to *raise* taxes to meet the supposed promises."

    Taxes need to be raised whenever additional spending warrants the need, like for two unpaid wars, unpaid Medicare Part D plan, tax break without spending cuts. You can't just keep putting it on the credit card.

    "Where DID you learn such sophistry? You are truly skilled! You need to write copy for womens' cosmetics."

    Thank you! Now I'll let you get back to your Area 51, black helicopter, New World Order psychosis.

  • ||

    The purpose of government is to create income disparity.

    If you wanted the most equal distribution of wealth possible you would have a free market instead of a fascist one.

    The whole point of the progressive movement was to protect aggregations of capital from natural market forces which dissipate them.

    Business genius is rarely heritable. Political connections and power however are. Rockefeller couldn't count on his progeny to have the entrepreneurial acumen to safeguard his wealth.

    But he could count on the government to do so.

    And so it has.

    It is no accident that the larger government becomes, the more extreme income and wealth disparity becomes. That is the function of government, to create wealth diversity.

    This is also the purpose of the progressive income tax. Keep anyone from becoming wealthy. To recreate the classes and castes which the U.S. originally rejected.

    It used to be the american dream of class mobility was not just possible, but common. Thanks to the magic of big government this is no longer the case. The reliable way to get power and money is again now the old way.

    Government.

    "So long as government is allowed power over capital, capital will control government" - Me.

  • sevo||

    "Ideally, growth should compensate for the pyramid structure of Social Security, but it has been flat wages increasing divorced from actual growth and a recession kicked off by Wall Street malfeasance"

    Bull...................
    Shit.
    S/S was a Ponzi scheme from day one, and your sophistry simply shows you to be a lying bastard.

  • ||

    Well, who can argue with that.

  • sevo||

    "Well, who can argue with that."

    Certainly not someone slinging bullshit like this:
    "I think you must see that if you lay off people from the public sector, they can no longer demand goods and services. Then the private sector contracts as well because of fewer customers. Austerity is a downward spiral, macroeconomically."

  • ||

    You'd help your persuasiveness if you actually pointed out what is wrong with a thesis rather than just slinging pejoratives. I'll just assume you can't.

  • sevo||

    "I'll just assume you can't."

    Anyone slinging that amount of bullshit would.

  • sevo||

    Hey, bill, I decided to waste a bit of time pointing out your lies, hints, suggestions, and other attempts at propaganda.
    See above. You remain a liar.

  • ||

    So, politics requires we make good on the promises made to seniors, but reform the system for those now approaching retirement. Ok, separate the program into a 55- and a 55+ systems. Would there not be enough for 55+ then? As for the 55-, let them withdraw all they have so far contributed and do with it what they would (tax free). Would that work/

  • Fist of Etiquette||

    Stoss with a cop stache? Give me a break.

  • Fist of Etiquette||

    Lady in green just got punked.

  • Fist of Etiquette||

    Peter Funt caused 9/11?

  • Fist of Etiquette||

    They closed Texas until they could vaccinate all the motorists coming in.

  • Fist of Etiquette||

    Candid Camera predated the camera.

  • Fist of Etiquette||

    Soon ObamaCare will pay for those needle strikes.

  • Fist of Etiquette||

    Peer review will at least still stop Global Warming, right?

  • Fist of Etiquette||

    If they're so smart, why did they get photographed in a dunce cap for that book cover?

  • Fist of Etiquette||

    DON'T EVEN JOKE ABOUT KILLER BEES, STOSSEL.

  • Fist of Etiquette||

    Western Union was a phone denier.

  • Fist of Etiquette||

    You know who else didn't think the United States would be a threat?

  • Fist of Etiquette||

    Show me the Money Ball!

  • Fist of Etiquette||

    What are you gonna do if the competition is outspending you? Salary cap!

  • Fist of Etiquette||

    Why were people willing to go through the TSA x-ray machine? Have you seen the cost of an MRI these days?

  • Fist of Etiquette||

    DON'T LISTEN TO STOSSEL, JUST SHOUT OUT YOUR QUESTIONS WHEN YOU FEEL LIKE IT.

  • Fist of Etiquette||

    Where would we be without authority of cops and firemen and teachers...? Somalia?

  • Bee Tagger||

    Alisa Rosenbaum is asking a question

  • Fist of Etiquette||

    Peter Funt wants you to roll over for authority, just as long as his producer has a camera on you.

  • Bee Tagger||

    Anti-credentialism!

  • Fist of Etiquette||

    Before they know it, the Funts are walking away with their wallet.

  • Bee Tagger||

    Meatloaf has a question

  • Fist of Etiquette||

    He will do anything for love of authority but he won't do that.

  • Fist of Etiquette||

    What's more fun than a militant atheist? One who's also a magician.

  • Bee Tagger||

    yikes, magician gets second billing after comedian? To Penn's credit, he would never say that claim is legit.

  • Fist of Etiquette||

    Sounds like Beck should get a piece of that book.

  • Bee Tagger||

    ha, fantastic, Fox's summary on the bottom of the screen:

    Penn: "I Don't Know"

  • Fist of Etiquette||

    New Testament: Does more damage to the family than the welfare state?

  • Fist of Etiquette||

    "If you lose all of the atheists in the USA..."

    A reverse rapture?

  • Fist of Etiquette||

    Someone dressed as the PLCB and raped every drinking person in the commonwealth.

  • Fist of Etiquette||

    And, obviously, the one who increased the voltage to its highest level got cop of the year award.

  • CE||

    Social Security and Medicare are different. You could say no to Ponzi. I wouldn't advise saying no to the government. Not if you want to stay out of prison.

    Would you really go to prison if you didn't sign up for Social Security? Granted, it might be tough to find a job that pays very well....

  • ||

    Ask somebody like Wesley Snipes.

    Would you really go to prison if you disobeyed laws? Not always. Sometimes they shoot your dog, too. Occasionally they just shoot you.

  • ||

    SS isn't a Ponzi scheme, simply because it doesn't meet the definition of Ponzi scheme. It's a scheme), no doubt about it--it just ain't a Ponzi scheme.

    So Stossel tries to redefine a Ponzi scheme as anytime someone takes money from another who doesn't understand the thing they are buying or investing in.

    But that could happen in any free market transaction (we even have a saying--caveat emptor), so...John Stossel believes capitalism is a Ponzi scheme.

  • ||

    I fucking hate John Stossel. I appreciate that he has made a living parroting our opinions, good for him. But he's either a vapid mouthpiece or a LINO, I haven't figured out which.

    At any rate, what he should be saying is: Social Security is theft. Actually, since it's backed up by the largest armed gang in America (gang colors: black, sometimes navy blue or gray) it's really armed robbery.

    I assume the problem is that the right (eg., his employer, Fox News) doesn't want people talking about tax theft. Without tax theft, the right couldn't pay off all their cronies and lobbies, pass capture regulation, and indefinitely maintain their military-defense-terrorism-industrial complex.

  • ||

    Truth be told: Charles Ponzi was a Liberterian.

  • Clyde Froggel||

    Welfare that is all it is. Thanks for tell the truth to the Mass' it no different that food stamps. You see the Government can't collect money for a special group of people and that would be unconstitutional.
    What I really love is when they actually tell the people there is a trust fund that may go broke. Ha Ha Ha, there is nothing in a trust fund.

  • Raymond Stevens||

    How in the hell did I ever get on the mailing list of this freaking right wing rag.

  • ||

    Social Security is a tax and the payments are just welfare. Congress sets the conditions inorder to collect the funds. Read Helvring vs Davis in May of 1937. All the money collected goes into the general treasuary and cannot be earmarked for a special purpose. This was a cash cow for Congress when it was started. The average lifespan was about 59 years and you didn't start collecting until you were 65 years old. It was a great scam until the average lifespan increased to what it is today. Now it costs more than it brings in.

  • ||

    You really should not deciev people into believing Social Security is a Ponzi scheme. It is not. With a Ponzi scheme, there is intent to deceive. The U.S. government is not trying to deceive anyone. You are. SS would only be considered an illegal scheme if it were to lie to everyone that it exists and to bilk additional people based on that lie.
    It exists. My father and mother are both recipients. SS is based on workers contributions. As one generation retires, the next and even many in the retired generation will pay into SS. That is not a lie.
    There may be adjustments that need to be made (benefits based on need), which would be possible based on the cases you cite. But it will be there as a safety net for the needy elderly because they vote in droves.
    So stop with the scare tactics. Leave the seniors alone. Most will be fine. It's us I worry about.

  • Nicholas Card||

    How is there not an intent to deceive? The SS trust earns about 6%, but it pays out to current retirees 7-10% depending on income level. Even though it's only 1% difference at the low end, that 1% is completely fabricated returns. There is absolutely no justification for the payouts that SS does. If SS limited payouts, or increased collections, then it wouldn't have to be a Ponzi Scheme. But since it is artificially creating returns, and then lying about it, it clearly has an intent to deceive.

    Read more: http://govforliberty.blogspot......hemes.html

  • Nicholas Card||

    It's about time that more people stand up and call Social Security what it is. It is not a retirement program: it's a scam. Even if buying Treasure Bills is considered a true investment, the best rate of return is about 6%. However, retirees are earning between 7-10% depending on income level. In short, we are artificially fabricating returns a la Ponzi. Wouldn't he be proud?

    I explain all about SS and Ponzi schemes in my blog:

    http://govforliberty.blogspot......hemes.html

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