Rick Perry Backs Off Social Security 'Ponzi Scheme' Comments

Of course, it's a Ponzi scheme. A ponzi scheme works until you run out of new investors, and that's pretty much what's happening now. There are less new contributors than there are recipients. They are going to have to cut back benefits. Obama, Romney and Perry have all admitted that we have to cut SSI benefits, because the current system isn't sustainable.

I agree that we have to reform SS but you are misinformed on a few fronts, as are most people using this rhetoric, including Rick Perry. (Didn't he get a C in his Econ101 class?)

First, a Ponzi Scheme by definition means there is no economic basis for the returns promised, and usually the returns promised are extraordinarily high. A Ponzi Scheme promises a (usually high) rate of return that is paid entirely out of those who are giving their money to participate. That does not apply to SS because SS is funded out of taxes derived from the economy. When the economy grows, so do the contributions into the fund. Unlike a Ponzi Scheme, which has no fundamental economic basis to promise the returns, the US government has the power to tax economic activity. Thus the power to fund SS is derived from the growth in the economy. You can - like Reagan - reform SS by taxing people more if that's what we so choose. You cannot fund a Ponzi Scheme in any other way than sucking people into the Scheme.

Also, unlike a Ponzi Scheme which promises people returns of 50% or 100% returns, or even higher - that's how they get people to participate in the scheme - SS is crediting people's accounts at a mix of US government bond interest rates, or about 4% today. You aren't going to get anyone into a Ponzi Scheme by promising them returns of 3.75%.

Also, you are incorrect to characterize that we are "running out of new investors." The population continues to grow. The economy continues to grow. That there are fewer new contributors to total recipients is irrelevant because there are always fewer new contributors to recipients. The ratio of total contributors to recipients is still 3:1-4:1. The reason why we have had a dip in the surplus is not because "its bankrupt" but because of the recession. Unless you think the US is growing to grow at 1% a year for the next 3 decades - which it won't - then we will revert back to trend when the economy resumes its long-term trajectory. SS is funded out the growth in the general economy. As long as the economy is growing, there is no problem funding SS. You may have to reform it - which we do - but it is not in structural decline.

The reason why we have to cut back benefits is not because its a "Ponzi Scheme." It's because we are living longer than we currently thought when we created and reformed the system. This is a graph of population projections at various points in time in the UK, but it is similar to what happened in the US.

My point on running out of new investors is not that we will run out of taxpayers, but there will be less of them and they won't make as much. We have a population of 310 million, but only about 153.6 million of them are in the "labor force". Now, yeah, those not in include the retired, children, the disabled, etc, but the fact is, there are more people in the wagon than pulling it right now.

There are several other problems. You rightly point out that people are living longer on average, and that's the problem. WHich means if you retire at 65, you are going to get back everything you paid in by 72. If the average lifespan is 78, you are drawing purely from investors for six years.

The other half of the problem is the shrinking base. My generation was part of the baby boom. My parents had five kids. My siblings all have two kids each and I don't have any. So essentially, counting spouses, we have 8 people that will be supporting 9 in the previous generation. (Results not typical, but it illustrates the problem.) People are putting off having kids, and having less of them. And when they do get jobs, they won't be the nice union jobs our parents enjoyed, but low paying "McJobs".

(This is where I get a little off the reservation from other republicans, so bear with me.)

So I might be able to enjoy an okay retirement in 20 years. I doubt my neices will. This is what Perry is trying to point out. By the time these kids get ready to retire there won't be enough money coming in to cover it.

Then you have the other part of the problem. The Lock Box that was pretty much left on the counter wide open with a "Steal Me" sign on it. Up until recently, SSI took in more than it paid out. The rest it converted into bonds that are now going to have to be paid back. This will mean more borrowing or more taxes. So in part, it's worse than a Ponzi Scheme.

I agree with everything you wrote until the last paragraph. SS is a poor system and we have to reform it. People should be given the option of investing their own retirement account, and the rest should be run like a real pension fund.

But the reason why SS went into deficit was because of the severe recession, not because of any structural issues. SS is like a defined contribution plan that invests in nothing but government bonds. If you took 6% of your paycheck and your employer matched it, then took those funds and invested entirely in government bonds, you would have the same type of account as you have at SS. But nobody would call your government bond retirement account a "Ponzi Scheme." The difference is that the government runs your account for you, and the securities it invests in are nontradeable.
 
Rick Perry Backs Off Social Security 'Ponzi Scheme' Comments :lol:

WASHINGTON -- Texas governor and Republican presidential candidate Rick Perry recently walked back his claims that Social Security is a "Ponzi scheme," but other Republicans have made similar statements in recent months, saying the entitlement program is a "scheme" to take money from the American people.

Perry has previously taken a hard-line stance against Social Security. In his 2010 book, "Fed Up!" he suggested the program was unconstitutional, put in place "at the expense of respect for the Constitution and limited government." He also wrote that Social Security is "set up like an illegal Ponzi scheme."

Perry has since backed off. His spokesman, Ray Sullivan, told the Wall Street Journal Thursday that the book was not meant to reflect the governor's current views on Social Security.
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That is gonna work real well with the public.

I wrote in a book and said it in a debate but I dont really mean it.

I said it just for votes.
 
Then you have the other part of the problem. The Lock Box that was pretty much left on the counter wide open with a "Steal Me" sign on it. Up until recently, SSI took in more than it paid out. The rest it converted into bonds that are now going to have to be paid back. This will mean more borrowing or more taxes. So in part, it's worse than a Ponzi Scheme.

I agree with everything you wrote until the last paragraph. SS is a poor system and we have to reform it. People should be given the option of investing their own retirement account, and the rest should be run like a real pension fund.

But the reason why SS went into deficit was because of the severe recession, not because of any structural issues. SS is like a defined contribution plan that invests in nothing but government bonds. If you took 6% of your paycheck and your employer matched it, then took those funds and invested entirely in government bonds, you would have the same type of account as you have at SS. But nobody would call your government bond retirement account a "Ponzi Scheme." The difference is that the government runs your account for you, and the securities it invests in are nontradeable.

But here's the thing. Even when times were good, those bonds were expected to start coming due by 2013. The recession only means we hit having to "pay" those IOU's two years earlier, and in that regard, it just means we are reselling the bonds to different owners- such as the Chinese government. God help us if the Chinese ever come looking for their money.

Maybe if you ONLY got in what you paid into it, than it would be a real solid investment. But if you live past 72, you are getting someone else's money, and if you die before 65, you don't get any of your money. That's the point.
 
Rick Perry Backs Off Social Security 'Ponzi Scheme' Comments :lol:

WASHINGTON -- Texas governor and Republican presidential candidate Rick Perry recently walked back his claims that Social Security is a "Ponzi scheme," but other Republicans have made similar statements in recent months, saying the entitlement program is a "scheme" to take money from the American people.

Perry has previously taken a hard-line stance against Social Security. In his 2010 book, "Fed Up!" he suggested the program was unconstitutional, put in place "at the expense of respect for the Constitution and limited government." He also wrote that Social Security is "set up like an illegal Ponzi scheme."

Perry has since backed off. His spokesman, Ray Sullivan, told the Wall Street Journal Thursday that the book was not meant to reflect the governor's current views on Social Security.
<more>

That is gonna work real well with the public.

I wrote in a book and said it in a debate but I dont really mean it.

I said it just for votes.

Not what he said at all.

What he said is, "It was a terrible system, but it's the system we got and we have to keep our commitments."

Social Security was never a real retirement program. There was never an account marked "Joe B" waiting for me to retire. The money I paid in and my employers paid in were immediately paid out to current retirees and people faking disabilities...


This picture has made its rounds on the internet, and it's telling. It's from a social security office in Austin TX.

None of these folks look old or disabled.

a6d48ad621.jpg
 
But here's the thing. Even when times were good, those bonds were expected to start coming due by 2013. The recession only means we hit having to "pay" those IOU's two years earlier, and in that regard, it just means we are reselling the bonds to different owners- such as the Chinese government. God help us if the Chinese ever come looking for their money.

In a bond portfolio, bonds are always coming due. They are then rolled over into new bonds or are used to redeem liabilities. SS is structured like a bond fund, whereby the liabilities and assets are debited and credited based on receipts and payments as if the fund were buying, selling and redeeming bonds.

As Care4All has posted, there is a study which has concluded that even if there are no changes in SS, by 2037, recipients will still receive 75% of what they are promised. Of course, 100% is preferable, which is why it has to be reformed. But the system is not in such dire shape that it is going to soon collapse, as a Ponzi Scheme implies.
 
But here's the thing. Even when times were good, those bonds were expected to start coming due by 2013. The recession only means we hit having to "pay" those IOU's two years earlier, and in that regard, it just means we are reselling the bonds to different owners- such as the Chinese government. God help us if the Chinese ever come looking for their money.

In a bond portfolio, bonds are always coming due. They are then rolled over into new bonds or are used to redeem liabilities. SS is structured like a bond fund, whereby the liabilities and assets are debited and credited based on receipts and payments as if the fund were buying, selling and redeeming bonds.

As Care4All has posted, there is a study which has concluded that even if there are no changes in SS, by 2037, recipients will still receive 75% of what they are promised. Of course, 100% is preferable, which is why it has to be reformed. But the system is not in such dire shape that it is going to soon collapse, as a Ponzi Scheme implies.

BUt that implies that we actually CAN refinance the debt... Which is unlikely unless we raise the shit out of taxes (which is probably what Democrats want) to make good on the debt.

And going back to that picture, when you have all sorts of people who aren't old trying to get on it... well, collapse is a lot sooner than you think.
 
That's to much.

This guy is seriously the front runner?

:lol:

I know, you usually get liars like Hussein in the lead. Maybe people are starting to finally wise up that there are no easy, painless solutions to our problems that Democrats constantly promise us and yet never deliver.
 
But here's the thing. Even when times were good, those bonds were expected to start coming due by 2013. The recession only means we hit having to "pay" those IOU's two years earlier, and in that regard, it just means we are reselling the bonds to different owners- such as the Chinese government. God help us if the Chinese ever come looking for their money.

In a bond portfolio, bonds are always coming due. They are then rolled over into new bonds or are used to redeem liabilities. SS is structured like a bond fund, whereby the liabilities and assets are debited and credited based on receipts and payments as if the fund were buying, selling and redeeming bonds.

As Care4All has posted, there is a study which has concluded that even if there are no changes in SS, by 2037, recipients will still receive 75% of what they are promised. Of course, 100% is preferable, which is why it has to be reformed. But the system is not in such dire shape that it is going to soon collapse, as a Ponzi Scheme implies.


I concede your superior expertise on all things economic...but I remember my old man cautioning me repeatedly in high school..."save for your retirement son...Social Security won't be around for you to count on."

That was twenty years ago, during thend late 80's...pretty good times economically.
 
But here's the thing. Even when times were good, those bonds were expected to start coming due by 2013. The recession only means we hit having to "pay" those IOU's two years earlier, and in that regard, it just means we are reselling the bonds to different owners- such as the Chinese government. God help us if the Chinese ever come looking for their money.

In a bond portfolio, bonds are always coming due. They are then rolled over into new bonds or are used to redeem liabilities. SS is structured like a bond fund, whereby the liabilities and assets are debited and credited based on receipts and payments as if the fund were buying, selling and redeeming bonds.

As Care4All has posted, there is a study which has concluded that even if there are no changes in SS, by 2037, recipients will still receive 75% of what they are promised. Of course, 100% is preferable, which is why it has to be reformed. But the system is not in such dire shape that it is going to soon collapse, as a Ponzi Scheme implies.


I concede your superior expertise on all things economic...but I remember my old man cautioning me repeatedly in high school..."save for your retirement son...Social Security won't be around for you to count on."

That was twenty years ago, during thend late 80's...pretty good times economically.

From Star Parker:

SNIP:

"So what about Texas Governor Rick Perry’s claim that Social Security is a “lie” and a “Ponzi scheme”?

He’s right on both counts. Americans should be singing hallelujah that we have at least one politician not afraid to tell the truth.

This isn’t about ideology. It’s about arithmetic."

http://www.dakotavoice.com/2011/09/...utm_campaign=Feed:+DakotaVoice+(Dakota+Voice)
 
That's to much.

This guy is seriously the front runner?

:lol:
Secretariat coming down the lane 50 laps ahead of the field! It's Rick Perry with jobs for Americans being ahead of all the other 50 states. The WINNER's CIRCLE!!! :rolleyes:

Ain't America grand, Mr. Sallow. :)

And 95% of those new JOBS are above the minumum wage, as Perry so aptly corrected Brian Wilson during the GOP debates....:clap2:
 
Rick Perry Backs Off Social Security 'Ponzi Scheme' Comments :lol:

WASHINGTON -- Texas governor and Republican presidential candidate Rick Perry recently walked back his claims that Social Security is a "Ponzi scheme," but other Republicans have made similar statements in recent months, saying the entitlement program is a "scheme" to take money from the American people.

Perry has previously taken a hard-line stance against Social Security. In his 2010 book, "Fed Up!" he suggested the program was unconstitutional, put in place "at the expense of respect for the Constitution and limited government." He also wrote that Social Security is "set up like an illegal Ponzi scheme."

Perry has since backed off. His spokesman, Ray Sullivan, told the Wall Street Journal Thursday that the book was not meant to reflect the governor's current views on Social Security.
<more>


Well Perry's current views on social security could have not been more clear than during the debate--he called social security a ponzi scheme. Now while I agree with what he stated--he didn't have a PLAN to fix it--which scared the holy b-g's out of millions of seniors in this country that are also VOTERS.

And you can bet--should Perry win the GOP nomination--that there will be ads all over this country has to what he stated during this debate.

You Perry supporters have got to look a little beyond the tip of your nose--and imagine Rick Perry running against Barack Obama--and then imagine the attack campaign ads--that are going to influence millions of voters in this country. What may work on a stage in Texas--doesn't necessarily work on a NATIONAL STAGE.
 
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But here's the thing. Even when times were good, those bonds were expected to start coming due by 2013. The recession only means we hit having to "pay" those IOU's two years earlier, and in that regard, it just means we are reselling the bonds to different owners- such as the Chinese government. God help us if the Chinese ever come looking for their money.

In a bond portfolio, bonds are always coming due. They are then rolled over into new bonds or are used to redeem liabilities. SS is structured like a bond fund, whereby the liabilities and assets are debited and credited based on receipts and payments as if the fund were buying, selling and redeeming bonds.

As Care4All has posted, there is a study which has concluded that even if there are no changes in SS, by 2037, recipients will still receive 75% of what they are promised. Of course, 100% is preferable, which is why it has to be reformed. But the system is not in such dire shape that it is going to soon collapse, as a Ponzi Scheme implies.

BUt that implies that we actually CAN refinance the debt... Which is unlikely unless we raise the shit out of taxes (which is probably what Democrats want) to make good on the debt.

And going back to that picture, when you have all sorts of people who aren't old trying to get on it... well, collapse is a lot sooner than you think.

We can refinance the liabilities in the trusts as long as there is trend line economic growth. But the problem is that we will not be able to fund it in it's entirety. That's why it needs to be reformed.

I think it's a good thing we are talking about it. I think it is a horrendous mistake to call it a Ponzi Scheme in the political arena. And I also think its very risky to do so when the economy is bad because people want security in times of crisis. But it eventually has to change because the math doesn't work.
 
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But here's the thing. Even when times were good, those bonds were expected to start coming due by 2013. The recession only means we hit having to "pay" those IOU's two years earlier, and in that regard, it just means we are reselling the bonds to different owners- such as the Chinese government. God help us if the Chinese ever come looking for their money.

In a bond portfolio, bonds are always coming due. They are then rolled over into new bonds or are used to redeem liabilities. SS is structured like a bond fund, whereby the liabilities and assets are debited and credited based on receipts and payments as if the fund were buying, selling and redeeming bonds.

As Care4All has posted, there is a study which has concluded that even if there are no changes in SS, by 2037, recipients will still receive 75% of what they are promised. Of course, 100% is preferable, which is why it has to be reformed. But the system is not in such dire shape that it is going to soon collapse, as a Ponzi Scheme implies.


I concede your superior expertise on all things economic...but I remember my old man cautioning me repeatedly in high school..."save for your retirement son...Social Security won't be around for you to count on."

That was twenty years ago, during thend late 80's...pretty good times economically.

I'm not counting on it either. But that doesn't mean it's a fraud, which is what a Ponzi Scheme implies.
 
In a bond portfolio, bonds are always coming due. They are then rolled over into new bonds or are used to redeem liabilities. SS is structured like a bond fund, whereby the liabilities and assets are debited and credited based on receipts and payments as if the fund were buying, selling and redeeming bonds.

As Care4All has posted, there is a study which has concluded that even if there are no changes in SS, by 2037, recipients will still receive 75% of what they are promised. Of course, 100% is preferable, which is why it has to be reformed. But the system is not in such dire shape that it is going to soon collapse, as a Ponzi Scheme implies.


I concede your superior expertise on all things economic...but I remember my old man cautioning me repeatedly in high school..."save for your retirement son...Social Security won't be around for you to count on."

That was twenty years ago, during thend late 80's...pretty good times economically.

I'm not counting on it either. But that doesn't mean it's a fraud, which is what a Ponzi Scheme implies.

If we pay in on the promise that we will get a return when we retire, and it's not there...that is a fraud.

We are forced to invest in the government retirement program on the condition that the government guarantees a return at a preset age.

If the government can't meet that obligation, we have been defrauded.

If the government decides to means test Social Security payouts...citizens will be defrauded...as that wasn't the arraignment when they paid in.


Could you imagine the uproar if a private 401k tried that ?

"Well, employee So-and-so, you invested the money you were paid wisely, and you are pretty well off, so we've determined you won't be needing your 401k...we're going to divide that money up and give it to these other people. Yes, you paid in and yes, we promised you a return, but we're broke, so you're getting screwed. Sorry.
 
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In a Ponzi scheme, the bad guy(s) want to keep the scam going as long as possible, but in the end expect to run with the money. The government truly does want Social Security to work without an end. They just lack the resolve to make it happen.

What you didn't mention Toro, is that the new bonds are being issued at ever decreasing interest rates. Should that last for any length of time, the 2037 date will move forward by several years.
 
In a bond portfolio, bonds are always coming due. They are then rolled over into new bonds or are used to redeem liabilities. SS is structured like a bond fund, whereby the liabilities and assets are debited and credited based on receipts and payments as if the fund were buying, selling and redeeming bonds.

As Care4All has posted, there is a study which has concluded that even if there are no changes in SS, by 2037, recipients will still receive 75% of what they are promised. Of course, 100% is preferable, which is why it has to be reformed. But the system is not in such dire shape that it is going to soon collapse, as a Ponzi Scheme implies.


I concede your superior expertise on all things economic...but I remember my old man cautioning me repeatedly in high school..."save for your retirement son...Social Security won't be around for you to count on."

That was twenty years ago, during thend late 80's...pretty good times economically.

From Star Parker:

SNIP:

"So what about Texas Governor Rick Perry&#8217;s claim that Social Security is a &#8220;lie&#8221; and a &#8220;Ponzi scheme&#8221;?

He&#8217;s right on both counts. Americans should be singing hallelujah that we have at least one politician not afraid to tell the truth.

This isn&#8217;t about ideology. It&#8217;s about arithmetic."

http://www.dakotavoice.com/2011/09/...utm_campaign=Feed:+DakotaVoice+(Dakota+Voice)


Oh Perry is telling the TRUTH alright-and he has also given the BEST CAMPAIGN ad that will be used against him--with an incoming missle that will DEFEAT him against Barack Obama in the general election.

You see there are MILLIONS UPON MILLIONS in this country that receive Social Security checks each and every single month. And if they fear that Rick Perry is a threat to that monthly check--they will be crawling to the voting booth to vote for BARACK OBAMA.


Therefore, be very careful for what you wish for--it just may come true. In my opinion--Rick Perry is a walking--talking--self imploding candidate--who would defeat himself against a very sauvy--professional campaigner in Barack Obama.
 
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We can refinance the liabilities in the trusts as long as there is trend line economic growth. But the problem is that we will not be able to fund it in it's entirety. That's why it needs to be reformed.

I think it's a good thing we are talking about it. I think it is a horrendous mistake to call it a Ponzi Scheme in the political arena. And I also think its very risky to do so when the economy is bad because people want security in times of crisis. But it eventually has to change because the math doesn't work.

So if I'm getting the gist of your argument, you admit that there is serious problems with SSI, although not as serious as I seem to think they are, but you think it's horrible that Perry is using blunt language to frame the problem.

Kind of like everyone admits that Bernanke has been ineffective, and printing more money would cause problems, but you don't like the fact the word "Treasonous" showed up in the sentence, or that they'd treat him roughly in Texas.

I guess yeah, we could have nice civil conversations, with less heated rhetoric, but no one pays attention to that. I can do a thought out analysis of something, and it gets ignored, but I say a few inflammetory things, and it triggers a 20 page thread. So I guess I have to wonder if we are in a "civil" time.

Maybe it's time we got someone who is blunt, isn't afraid to call a spade a spade, and who doesn't muck around in bullshit.

I've said this, Perry is a LOT more right wing than I am. Especially on social and religious issues. But he strikes me as the only guy in this lot who will get anything done. Obama has already proven he can't, and Romney's record in MA is "Well, I'll just sign off on whatever you send up here."
 
He has it in his book, says it last week and now he changes his mind? He's a conservative, they only misspeak :eusa_liar: Just like Bachmann said that "subservient" means "respect" :lol: :clap2:
 
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He has it in his book, says it last week and now he changes his mind? He's a conservative, they only misspeak :eusa_liar: Just like Bachmann said that "subservient" means "respect" :lol: :clap2:

If you really think that this is what people are going to care about come next November, you are deluding yourself.

This will be all about one thing- the economy. If it's still in the crapper, Obama is done in one.

Maybe I am really, really, really getting to old for this, but this is looking more like 1980 every day.

Perry is Reagan. Despite a proven record as Governor of a large state, he's JUST TOO SCARY.

Obama is Carter, inept boob with an awful economy who just looks hapless in dealing with anyone.

and Romney is George H. Bush. The Establishment's Boy that really, the voters can't stand all that much.

I just hope that they change the script and Perry doesn't feel the need to take Romney as a Running Mate.
 

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