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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You left out the “lockbox” and the “trust fund” and how the money in each of these was “stolen”.
All the money is in Obama’s stash.
Taxpayers under 45 years old are going to be raped by Social Security. They should be furious about having to pay into this ponzi scheme. Maybe some are finally starting to wake up that the music has stopped and there are no more chairs left.
Precisely ... And the Gipper was right.
What we have now is a government run amuck, and the greatest thing about Sarah Palin is that she's the only one we can trust in cleaning things up --- BIG TIME.
In that regard, Palin's cleanup accomplishments in Alaska have scared the (censored) out of career politicians ... and crooked people.
PS - don't try and explain to people that Social Security is, and always has been, a tax.
You can try.....but I wouldn't waste my time.
You see, in Social Security Direct Deposit Fantasy Land, there is a Magic Rainbow Money Box where all of their Direct Deposits come from, and they better keep comin! Or else!
THe missing part of this story is how Johnson allowed politicians to have access to Social Security monies as part of the general fund. Up until then, politicians couldn’t raid the SS Trust Fund.
The first thought that crossed my mind when I heard Perry talk about Social Security was: “Oh oh. He just lot the race”, but in retrospect, I think the Republicans may may have have lost it all!
I’m surprised it took 30 years for that to happen. To think that was never going to ever happen was downright naive.
The scheme is over, pure and simple.
Retirement didn’t work out too well either.
All the good advice talked about the 3 legs of the stool:
pension, social security, and investments
My 42 year company went bk, ss is in the tank, and safe investments are paying 1% interest.
Ouch....wasted away again in Obamaville....
Well, I did pay into it and I'm getting S/S checks now. I still work (I'm 66) so I am getting my paycheck plus the S/S check.
Yeah they could. In fact the SS fund was being raided in 1943. Instead of combining the funds, which is what happened under Johnson, they would put the SS money in the "Trust Fund" and then promptly "borrow" all that wasn't needed to pay current retirees back out again.
“Johnson allowed politicians to have access to Social Security monies as part of the general fund.”
One more black mark against him in my view. No excuse to allow that and that fund was supposed to be sacrosanct.
“I suspect a raising to age 70”
Meanwhile sixteen year old Shakaka gets fat checks to pay for her baby with a new one on the way.
I’m already hearing from the “the workers who paid in need their money back crowd”. Perhaps I shouldn’t bother responding. See 113
If it is any consolation to you, I am a “Boomer” who recognizes I am in the same boat as the under-40 set—I will never get back what I “put in” as the feds have turned the SSS into a straight welfare plan. I am not counting on SS retirement at all. I think it will be a pittance—and I know folks who have been told just that by SS staff. The people who will get mucho benefits are the under 40 set who get on SS disability in their 20s and 30s—and there are a lot of them—who then only work in the underground economy, if that, while living on the federal teat. And it is easy to get it in most places for psychiatric problems — “depression”, etc, which the feds allow to be easily “proven”.
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