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Friday, Oct. 26, 2012 | 2:02 a.m.
Another view?
View more of the Las Vegas Sun's opinion section:
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Rep. Joe Heck and all the others who have claimed Social Security is a Ponzi scheme are just plain wrong. Social Security is an insurance program, not an investment. The name says it all: Federal Insurance Contributions Act, or FICA. There is a big difference between insurance and investments. With insurance, you know when you pay in that you may not get a dime back.
In the Ponzi scheme, the investors expected to get back all their original investment, plus interest on top of it.
After 75 years, Social Security is still solvent, and with a little tweaking, like raising the cut-off a bit higher, it will be good for the next 75. It has been taking in as much as it pays out, and it’s not going to fail unless it gets changed by conservative Republicans. That would be a terrible tragedy for many of our children and grandchildren when they get to old age.
The Sun has endorsed Heck in his race, deal with it.
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Janice says "After 75 years, Social Security....with a little tweaking, like raising the cut-off a bit higher, it will be good for the next 75."
Somebody needs to tell Reid and Obama who continue to refuse the fix SS
raising the age to 79, changing the inflator calculation and increasing the the cut of are all easy simple fixes that Obama and Reid have refused to do
Until SS is fix it will be a PONIZI SCHEME. In the Ponzi scheme, the investors expected to get back all their original investment, ONLY if more suckers feed the bottom. We have LESS people feeding it.
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Rep. Joe Heck and Governor Rick Perry were absolutely dead on center right in their descriptions of social security. Why? Simple. The first in get the most out and last in get the least out, if anything. That is a classic ponzi scheme by all accounst of the definition. Sadly, in politics, telling the truth often gets the speakers in trouble.
CarmineD
Social Security, like any other insurance plan, needs adjustment from time to time. Either the benefits need to be reduced or the premiums have to increase or some combination of the two. There aren't any Ponzi schemes that have lasted 75 years. Social Security is a valuable program and worthy of a country that professes our values.
So, if Social Security is an "insurance" plan, who watches over it to see it is truly "solvent?" Pencil-pushing bureaucratic drones? Drones beholden to the very thieves (politicians) who have stolen its assets from the very beginning to pay for their grandiose schemes? Social Security fits exactly the definiton of a Ponzi scheme in that it depends on future "suckers" to invest so as to pay off present ones. There is no "trust Fund." Never really was. Why do you think FDR and his fellow travelers chose 65 as the age to begin collecting from the "trust fund?" Because, in those days, the life expectency fell far short of 65 years of age. They were certain most "recipients" would be dead long before they collected a dime and, therefore, they could use the money flowing into the "trust fund" to finance their Socialistic wet dreams. There's nothing new in what those criminals did in devising the "Social Security" scheme. It was merely another way to fleece the American taxpayer.
Why did the Sun endorsed this Ayn Rand devotee ? We need rich doctors like Heck, in Government like we need wholes in our heads. Republicans aim to see that any reform fails and that markets are the answer to everybody and anything. This means that democracy died starting with the passage of Taft- Hartley and the war continues against Social Security. The banking and medical hierarchy are who Chris Hays says are failing us in his book "Twightlight of the Elites". A vote for any Republican is a nail in the coffin of democracy.
I really wish the Sun had an ignore button so I wouldn't even have to bypass "lvfact(less)101". Add Carmine, Cassler, and a few others to such an option please as reading such posts actually ends up making the readers less informed about issues but certainly propagandized. Show where the posts are, minus content, and how many people have chosen the ignore option for a poster.
Author, a little tweaking? Huh? Please explain 10K baby boomers retiring every day.
This generation that just started to work is the 1st generation that will pay more into Social Security than what they will withdraw.
lvfacts101 -
Sure there's a Social Security Trust Fund. It has $2.6 Trillion worth of Treasury notes in it. If you believe those are worthless, how much are the green pictures of dead people in your wallet worth? You remember, those pictures that you are so scared to death will be taken from you by lazy grasping liberals.
No one ever mentions that social security has been raided more than once by both political parties.The money that was taken out has not been paid back.This is the real reason social security is in trouble at this time.
I agree with the letter writer that some tweaks need to be made.Also a new law should be put in place to make it illegal to raid the social security trust fund. People who have private pensions, or other govt.pensions are the biggest complainers about doing away with social security.
Name calling such as ponzi scheme or pyrmid scheme won't make it solvent.It only angers the 54 million Americans who are currently receiving benifits,and the other countless millions of Americans currently paying into it.If you really want to give it a name I suggest we call it govt.raider's of the lost fund.
SS is NOT solvent, not in the long run anyway, and it'll inevitably require some combination of tax increase or benefit reduction lest it go over the edge. Both parties like to play scare tactics with it, and neither seems willing to seriously address it (maybe after Nov 6th they will). Given our demographics, with fewer workers paying in relative to recipients, some combination of raising the retirement age and means testing are likely -- something simple, like for every $10 you earn you lose $1 in SS benefits plus raising the age to 67 for 20-40 year olds and 70 for those under 20. (Play with the numbers, it shouldn't be that hard for the SSA to lay out multiple options and for the CBO to calculate the impact.) Failing to address it would be an abdication of responsibility by the next Congress & Administration, and they will need to be held accountable for the failure in 2014. (Based on recent national polling trends, I'm assuming Romney wins, the House remains GOP, and the Senate ends up essentially deadlocked with either party having a 1-2 vote majority.)
My error in my last post it should have been,"govt.raider's of the trust fund".
41 asked " how much are the green pictures of dead people in your wallet worth?"
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Answer
Not much after the last 4 years. The fed prints more dead pictures and Obama sell bonds to China
3/14/2010
"PARKERSBURG, W.Va. -- The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.
For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits -- billions more each year.
Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes -- nearly $29 billion more.
Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs -- in the form of Treasury bonds -- which are kept in a nondescript office building just down the street from Parkersburg's municipal offices.
Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.
Social Security's shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. But experts say it is a warning sign that the program's finances are deteriorating. Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there's concern that the looming crisis will lead to reduced benefits.
For more than two decades, regardless of which political party was in power, Congress has been accused of raiding the Social Security trust funds to pay for other programs, masking the size of the budget deficit.
More than 52 million people receive old age or disability benefits from Social Security. The average benefit for retirees is a little under $1,200 a month. Disabled workers get an average of $1,100 a month.
Social Security is financed by payroll taxes -- employers and employees must each pay a 6.2 percent tax on workers' earnings up to $106,800. Retirees can start getting early, reduced benefits at age 62. They get full benefits if they wait until they turn 66. Those born after 1960 will have to wait until they turn 67.
In the short term, the nonpartisan Congressional Budget Office projects that Social Security will continue to pay out more in benefits than it collects in taxes for the next three years. It is projected to post small surpluses of $6 billion each in 2014 and 2015, before returning to indefinite deficits in 2016."
CarmineD
God help us if the globalonyist gets in, it can only go from bad to worst.
Solution to SS: Sweet smelling death chambers when you can no longer produce at an equivalent rate of a 40 year old.
"Sure there's a Social Security Trust Fund. It has $2.6 Trillion worth of Treasury notes in it. If you believe those are worthless, how much are the green pictures of dead people in your wallet worth?"
The $2.6 trillion notes are not regular US Treasury notes. They are special notes that can only be held by the US government. They can't be sold or purchased on the open market.
When the Social Security admin "cashes" in one of these notes then the US Treasury borrows cash on the open market by selling a regular US Treasury note and then pays the Social Security administration. It adds to the US deficit.
The same is try when the US Treasurys pays interest on these special notes. It borrows cash on the open markey by selling a regular US Treasury note. It adds to the US deficit.
There is not a chest full of $2.6 trillion in cash or property in the "trust fund". It is just an entry in journal ledger.
It has no market value.
Last year, the US Congress was withholding the ability of the government to issue new debt. Obama stated that this will stop the Social Security Checks from going out. If there were truly a market value of $2.6 trillion in the trust fund then why would the lack of new borrowing impact the issusance of Social Security checks?
Bill Clinton administration stated this about the trust fund: "These [trust fund] balances are available to finance future benefit payments and other trust fund expenditures--but only in a bookkeeping sense. These funds are not set up to be pension funds, like the funds of private pension plans. They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. The existence of large trust fund balances, therefore, does not, by itself, have any impact on the Government's ability to pay benefits."
Can anyone comment on, in what year did the Republicans start calling social security a ponzi scheme or pyramid scheme? It's been around for over 75 years. It seems that the new name has only been used in the last few years.
When Social Security was first started the retirement year of eligibility was set to be one year higher than the average life span of all Americans.
In other words, it was originally set up so that a majority of Americans would not see a single dime of benefits.
Originally the tax was .5% of the salary paid by the employee and .5% of the salary paid py the employee.
Now it is 7.5% for both for a total of 15%.
In reality the employee has to produce enough work value to paid for both shares of the tax.
So you the employee is putting in 15% of your money each year into Social Security.
If you die before you are 65 than all your family gets is $600.
This generation that is just starting to work will put more into social security then they will withdraw.
It is for sure not a pension or retirement fund.
There is no legal obligation for the government to pay you a specific amount or any amount when you retire. So one day when the government can't borrow any more and taxes are at the max then they will reduce payments to retirees or they will print so much money the payments will be worthless.
samspeaks,
While looking for early references to Social Security as a Ponzi scheme I came across this:
"Even liberal economist and New York Times columnist Paul Krugman used the terminology in 1996, writing, '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).'" - http://blogs.star-telegram.com/politex/2...
Not only was it interesting for the date, but because it is quoting Krugman.
Don't look for Social Security to go broke any time in the immediate future...
The Democrats won't allow that to happen. The danger to Social Security is what will happen to it if the Republicans get their greedy little hands on it....
As we all know, they will give it to Wall Street and sooner or later Wall Street will destroy it....
Can anyone on this board tell all of us how much money would be in Social Security today if the two political parties hadn't stolen from it over the last 40+ years?
10 trillion.....15 trillion.....20 trillion dollars? Who can count that high?
Sorry, Social Security is not a ponzi scheme.........
Right-wingers love to call it that but that's what people with limited thinking skills do.....
Those are the same people who continued to pick inept candidates for president and if they can steal the election for their inept candidate, they then allow those same inept leaders to take us to unneeded wars that costs trillions....
Does the name George "clueless" Bush ring a bell?
Byboftx,
Thank you for the update,I agree people will get more back than they put into social security.However like all trust funds they earn interest thru - out the years.Ira's and 401k's investers also get more back than they put in,same reason they also earn interest.
We can't just go by what we put in, the money grows as it earns interest.Just like all investments. Maybe people should look at what the Govt. took out and has not paid back.If and when the govt.pays back social security it will be taxpayer money doing it.So we the tax payer's,pay all the way around.
El-Lobo,
"Don't look for social security to go broke in the immediate future".
Have you ever noticed that when you bring up the subject about the money the Govt.took from the social security trust fund( and has not paid back)it falls on deaf ears.
The question should be who created the social security short fall problem? It wasn't the worker's who put money into it year after year. Some folks for over 50 years.Laws need to be passed so this dosen't ever(govt.raiding) happen again.
"However like all trust funds they earn interest thru - out the years."
Yes, and no. Where does the interest come from and how does it accrue? Answer: IOU's from the bonds that the US government uses to pay the monies it borrows from social security fund. The interest on the SS fund on the US bonds adds to the Federal debt and deficits.
CarmineD
"but because it is quoting Krugman."
Even Paul Krugman gets it right every once in awhile. Like a blind groundhog, if it scratches and digs enough it finds a nut.
CarmineD
Krugman quote ?
"Ira's and 401k's investers also get more back than they put in,same reason they also earn interest."
Depends Mr. Pizzo what the IRA's and 401K's are invested in. If they are stocks and assets that go down, not only is no interest earned, but the holders lose their principle too.
CarmineD
SS certainly has similarities to the Ponzi scheme. But what it most definitely is not, is insurance. Democrats fought long and hard, and were finally successful in foisting the "insurance" myth on the American people. It is nothing more than welfare.
"The Roots of the Social Security Myth"
http://mises.org/pdf/asc/essays/attarian...