Social Security is Not a Ponzi Scheme, Mr. Perry (It's Worse)

Reason ^ | 09/08/2011 | Sikha Dalmia

[SeekAndFind]

Rachel Maddow and her MSNBC guests are scandalized that Rick Perry stuck to his guns that Social Security is a Ponzi scheme during the presidential debate tonight. “This kind of rhetoric will hurt him in the general elections,” they reassured each other. They didn’t flat out say that Perry was wrong, but actually he is. Social Security is not a Ponzi scheme. It is much worse.

Here are three reasons why:

One, a Ponzi scheme collects money from new investors and uses it to pay  previous investors—minus a fee. But Social Security collects money from new investors, uses some of it to pay previous investors, and spends the surplus on programs for politically favored groups—minus the cost of supporting a massive bureaucracy. Over the years, trillions of dollars have been spent on these groups and bureaucrats.

Two, participation in Ponzi schemes is voluntary. Not so with Social Security. The government automatically withholds payroll taxes and “invests” them for you.

Three: When a Ponzi scheme can’t con new investors in sufficient numbers to pay the previous investors, it collapses. But when Social Security runs low on investors—also called poor working stiffs—it raises taxes. Indeed, Cato Institute’s Michael Tanner points out,

Social Security taxes have been raised some 40 times since the program began. The initial Social Security tax was 2 percent (split between the employer and employee), capped at $3,000 of earnings. That made for a maximum tax of $60. Today, the tax is 12.4 percent, capped at $106,800, for a maximum tax of $13,234. Even adjusting for inflation, that represents more than an 800 percent increase.

And given that the worker-to-retiree ratio is expected to fall from 3-1 today to 2-1 in 2030 (down from 16-1 in 1950) these taxes will only go up unless the government decides to kick retirees in their dentures and slash benefits.

Rick Perry should stop soft-peddling the issue and tell it like it is.

[Mr. K]

I think i am going to write a book on the history of social security - and include comments from the people who originally objected to it and how they were right all along and stuff

[Vigilanteman]

Four: If you lose your investment in a Ponzi scheme, you can at least deduct the loss from your taxable income when you file your IRS return. No deductions are allowed from income confiscated by Social Security.

[Bigh4u2]

One thing the author forgot to mention:

Once you start collecting SS, that’s taxed too!

[mo]

SS is at the same point that brought Bernie Madoff down a few years ago. Redemptions exceed wealthy suckers.

[Jane Long]

Unlike regular Ponzi schemes...you CANNOT choose not to play (SS) :(

[sickoflibs]

RE :"Rachel Maddow and her MSNBC guests are scandalized that Rick Perry stuck to his guns that Social Security is a Ponzi scheme during the presidential debate tonight. “This kind of rhetoric will hurt him in the general elections,” they reassured each other. They didn’t flat out say that Perry was wrong, but actually he is. Social Security is not a Ponzi scheme. It is much worse."

I notice when the FICA/SS tax got cut ~ January, which Obama is calling for an extension of, both Dems and Republicans called it the 'payroll tax' cut giving no reference to Social Security which is now funded by new debt instead of those specific taxes, err I mean by those 'SS trust-fund' IOUs to itself.

[gleeaikin]

The SS tax is 12.4%. When did that happen? When I used to have self-employment income I think I was paying at least 15%. You mean they have actually lowered the rate??

[BuffaloJack]

Social Security = Ponzi Scheme at Gun Point

[Salvavida]

It turned into a Ponzi scheme for several reasons, not the least of which is the murder of over 40 million Americans via abortion that would be paying into the system.

So by taking life without regard to personal responsibility or sanctity of life: you have a social crisis built on a scheme that cannot recover, as it is written.

[freespirited]

There is SS tax, 6.2% each from employer and employee (temporarily down to 4.2 for employees, I think). Then there is Medicare tax, something like 1.45%. Add it all together and you are correct, it’s > 15% for a self employed person, who pays the employer and employee share.

Minus the little deduction they give ya! Big of them.

[Made In The USA]

Disagree with Mr. Maddows assessment, I believe telling the truth about a failed socialist concept will help Gov. Perry and any other candidate with the balls to tell it like it is. The electorate is a lot wiser and better informed than what the liberalette would expect. The clarity is there, and now we are coming together to defeat Marxists like barry obamo.

[DoughtyOne]

I don't get what is reasoned about this photo and caption.

Through payroll deduction, today's seniors paid into the Social Security system for upwards of 45 to 50 years. Now they are supposed to be bad people because they played by the rules and take Social Security payments as was intended for all of those 45 to 50 years.

Most people didn't have a choice of opting out of Social Security. It was a scheme devised by the government, forced on most U.S. Citizens.

This photo shows an older woman, with the caption, "Social Security - Because it's your money, even if they have to tax every last cent out of your grand-kids to get it." This implies the older person has some sort of choice here.

Well there is a choice. The older person can take Social Security payments as was promised to them, or go off somewhere and die.

I don't remember seeing this woman and her fellow youth trash seniors when they began to pay into Social Security. They did so with the understanding that some day they would be older and draw Social Security payments too. That was the premise, or they wouldn't have been forced to make Social Security payments.

Acting as if this woman plotted and schemed for decades to screw today's youth, is preposterous.

It's beneath us to promote this level of ignorance.

Social Security should be replaced by a system owned by the person having social security deducted from their paychecks. Over their career they would be responsible for making the decisions that would see their retirement grow to provide much larger and better retirements than their current Social Security draw will ever be.

I doubt that today's seniors would object to a system like that, and would probably be quite jealous seeing what could have been done with the funds they paid in.

Today's seniors will in fact draw more funds than they paid into Social Security. That is the government's fault, for mismanaging the Social Security intake each month over the decades. It doesn't figure in any interest on the payments the individual paid in.

I personally can't believe that our government leaders never saw a problem with this. I have not understood how they could expand the numbers of people who get funds from Social Security that didn't pay into it. If someone wants to go postal, that's a good place to start.

Blaming today's seniors is so misguided, it causes me to seriously question the motives of anyone who would do it.

[sickoflibs]

RE :"This photo shows an older woman, with the caption, "Social Security - Because it's your money, even if they have to tax every last cent out of your grand-kids to get it." This implies the older person has some sort of choice here."

The senior has a-hell-of-a-more choice in accepting the money from the government than the next generation surfs do in having to work many extra years to earn it for them. If someone-elses money is DEEMED the recipients money than anyone getting a check for anything can claim someone-elses (not yet earned) money is really their own.

Here ya go:"I paid cigarette taxes with my welfare check so now the welfare is my money, I earned it"

[sickoflibs]

RE :"Most people didn't have a choice of opting out of Social Security."

Anyone can 'opt-out' of SS benefits, what you cant opt-out of is taxes, like that next generation of serfs who will have to slave away to pay for current senior voter's retirement cant 'opt out'.

[DoughtyOne]

RE :"This photo shows an older woman, with the caption, "Social Security - Because it's your money, even if they have to tax every last cent out of your grand-kids to get it." This implies the older person has some sort of choice here."

The senior has a-hell-of-a-more choice in accepting the money from the government than the next generation surfs do in having to work many extra years to earn it for them. If someone-elses money is DEEMED the recipients money than anyone getting a check for anything can claim someone-elses (not yet earned) money is really their own.

Where were you when today's retirees were paying into Social Security for the last 45 to 50 years?  You could make the same exact case that they were being abused for 45 to 50 years.  Were people who retired long before them evil too, to your way of thinking?

You act as if a group of seniors got together and came up with a plan to screw young people.  That's unhinged logic.

Do I think the Social Security system as set up is wrong?  Hell yes.  Is it today's seniors who are to blame?  Do I even have to answer that?

Here ya go:"I paid cigarette taxes with my welfare check so now the welfare is my money, I earned it"

Comparing a few cents of Welfare cigarette taxes to Social Security in this manner is a very poor example of logic.

People were required to pay into Social Security.
Those payments were directly connected to their own retirement.  So many quarters, so much pay, a certain level of retirement guaranteed.
Cigarette tax payments are not required of every citizen.  People voluntarily pay it.  If they don't want to pay it, they can opt out of purchasing cigarettes.  In 60 years, I have never made a cigarette purchase, paying taxes that may or may not contribute to Welfare.  You cannot opt out of Social Security.
Is all of welfare contingent on cigarette taxes alone?
Is every single person in this nation going to wind up on Welfare sooner or later?  I've never been on it.
Can any citizen simply state, I paid into welfare, today I choose not to work, so I want my welfare payment?
At 62 and above, do people automatically get welfare if they request it?

[Gilbo_3]

both of a have valid points...I understand the distaste that it leaves in my mouth to say that SS recipients are drawing an 'entitlement' or 'welfare'...its at one point disrespectful, but its also true...

if a gang of mejicans broke down my door tonight and stole everything Ive 'paid into' my retirement, it wouldnt be *right* for me to demand that the rest of the folks in the neighborhood pay my mortgage for me...

prolly a bad example, but Im beyond givin a ratz azz anymore...if ya qualify for the gimme, might as well get it while ya can,and im talking all the goodies at every level of grafternment, cause the bottom has to drop out sooner or later. but please, old folks, just dont bitch and moan that its 'yours' and that you are 'owed' the bennies because somebody stole yer money, and my kids hafta pay for it...

unfortunately, satanic communists designed the system to do this very thing, making a class of people beholden for a scrap of food or medicine...its simply another face of the evil that rules the world...for awhile yet...

[CharlesWayneCT]

I just ignore pictures, because frankly most freepers aren’t as good at pictorial political commentary as they think they are.

But I agree with you, the picture puts the blame in the wrong place.

[Gilbo_3]

Those payments were directly connected to their own retirement. So many quarters, so much pay, a certain level of retirement guaranteed

the lie and theft has occured from day one...no contract or binding features, simply a politicians greasy smile and *promise*...

the thieves are still runnin the same con, this many years later...and no, the retirees of today didnt concoct the scheme, but my kids didnt steal their money either...

we cant dig up FDR and hang him for treason, but we *could* do so for those who still have functional necks...

the ploy of SS wasn another of the tactics to divide and conquer the USA...it worked as intended by those who proposed it, and it worked as intended, as a slush fund for all kinds of graft and goodies for every politician since...

our rhetoric is dicey today, because theres no easy answers to 'fix' SS...the music has stopped, and there aint enuff chairs for everyone, but i'll be damned if my children are gonna be burdened for several trillion, before they ever have a choice in the matter...

they didnt steal the cash, why should they pay...???

[sickoflibs]

RE :”People were required to pay into Social Security. Those payments were directly connected to their own retirement’

You dont voluntarily pay income taxes or FICA taxes, so you dont ‘pay in’ to them. The government takes both of those from you if you work, like cigarette taxes if you buy them. It's called taxes.

Government cut FICA but didnt cut current benefits (future taxpayers stuck with that bill) and will not cut our benefits based on a FICA tax cut. One is taxes, the other is handouts.

Government takes from some, and gives to others. It's based purely on political ‘push’ (votes and donations).

They are taking from workers and giving it to the geezers because they are terrified of geezers voting them out of power, not the young serfs.

It's immoral!