Social Security is Not a Ponzi Scheme, Mr. Perry

[Quantum Windbag]

If any investors other than the Fed owned those bonds, the Treasury would have to pay full interest on them. Because the Fed owns them, the Treasury only pays expenses of the Fed, saving the rest. Do you not understand basic mathematics?

You are seriously one of the dumbest people I've ever met.

Do you not understand that spending money on something else is not saving it?

Do you understand that interest in excess of Fed expenses isn't actually spent on something else - or anything?

Look, its simple jackass. Say you buy a 5 year $1000 note that pays 1% interest. Now the Treasury has to pay you $10 a year for 5 years, then $1000 at the end.

Say you sell that note to the Federal Reserve before the principal comes due. Now the Treasury has to only pay enough of that $10 per year to cover the Fed's expenses - that's typically about 10%, so they only pay the Fed $1 a year. So they pay the Fed $1 a year instead of $10, and $1000 at the end - saving the taxpayers $9 a year.

Its really simple.

They then take that money, spend it on something else, and then borrows the amount of money we just "saved."

Like you said, really simple, and proof that the government is not not saving the taxpayer any money.

 

[flacaltenn]

Because when the government borrows money it spends it. Whether it borrows from the Chinese, or American banks, or insurance companies investing their premiums, or money market funds, or Social Security, or your kid's savings bond, the government borrows the money and spends it on government expenses.

The government also takes in revenue. If SS needs to draw on principal or interest, the government can pay that out of revenues, or by borrowing.

In those cases it receives money from third parties and pays interest and premium to third parties. When it embezzles from FICA funds and then defers issuing REAL debt at the same time, it is hoping that you are stupid enough to die already or be to old to remember that you already paid for 2010 SS deficits back in 1998.

The government also takes in revenue. If SS needs to draw on principal or interest, the government can pay that out of revenues, or by borrowin

You left out the key first 4 questions. So your analysis is incomplete. Why does the govt need to borrow that $58Bill + phoney interest again in 2010 if they already spent the $58Bill back in 1998? Are they spending it TWICE? Realize at this point Social Security benefits are only getting paid ONCE..

(disregarding the shenanignans that they are playing by showing more "redemption" for 2010 than was neccessary to actually pay beneficiaries)

What EXACTLY was of value in the Trust Fund in between 1998 and 2010 due to the pocketing of the $58Bill? And what kind of "investment" was it exactly?

Bottom line is NYC.. Back in 1998 they TOOK the FICA excess with only a promise to pay future beneficiaries with future funds. Defeated the whole PURPOSE of a Trust Fund for a "pay as you go" system to smooth out bumps in demographics.

The whole concept of the Trust Fund was to store value to DEFRAY future liabilities.. Didn't happen. It's a complete fiction. It's Aesop's Fables for govt lovers..

REALITY?? We are on own as deficits arise in the SS balance sheets. Kiss the old FICA overcharges goodbye. They do us no good now. Congress NEUTERED the Trust Fund as a buffer for defraying future costs by stuffing it with IOUs. They are winging it as they go along..

Tell me whether you're interested in going back to what SHOULD have happened..

What the fuck are you talking about?

Social Security took in 677 billion last year and paid out 584 billion. that's not a deficit.

The Trust Fund's purpose is to produce interest income, which when added to the payroll tax revenue for any given year, pays the current recipients. Adjustments to income vs. outflow are all that are needed to keep from any unmangeable drawdown of the principal in the Trust fund.

See now NYC -- you didn't read the prospectus closely like they tell you to on TV... You've asserted this several times and I didn't respond because those numbers add the phoney "interest from the Trust Fund" to the receipts. Which I just showed you -- comes from NEW debt and NEW taxes not the Trust Fund..

To wit..
Social Security Is in Far Worse Shape Than You Think - DailyFinance

The annual report of the Social Security Trustees, published in August 2010, forecast that the primary Social Security program, the Old Age and Survivors Insurance Trust Fund (OASI), would not exceed its tax receipts until 2018. Unfortunately, it happened in fiscal 2010, which ended in October. That year's outlays for the OASI fund were about $580 billion, while receipts came to only $540 billion -- a whopping $40 billion shortfall.

I can't STOP you from claiming those transfers of "interest" mean something of value to taxpayers. But you sure can continue to call me a fucker and stamp your feet and declare that Soc Soc books are balancing if you want to...

 

[Toro]

I've been away and am not going to scroll through 20 pages to see if this has already been posted, so sorry if this is being repeated.

But Paul Krugman says - correctly - that SS is not a Ponzi scheme.

Well, I gather that a lot of right-wingers are quoting selectively from a piece I wrote 15 years ago in the Boston Review, in which I said that Social Security had a “Ponzi game aspect.” As always, you should read what I actually wrote. Here’s the passage:

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).​

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.

But anyway, anyone who uses my statement as some kind of defense of Rick Perry and all that is playing word games. I explained what I meant in that Boston Review article, and it was nothing at all like the claims that Social Security is a fraud, is destined to collapse, and all that. Social Security is and always has been mainly a pay-as-you-go system, which is nothing at all like a classic Ponzi scheme.

Of course, the usual suspects won’t pay any attention to what I’ve just said. But if anyone is actually listening …

The Ponzi Thing - NYTimes.com

 

[saveliberty]

When it is run like it currently is with only one logical conclusion Toro. Yes it is.

Sorry, I appreciate your technical understanding and respect that it is not an exact fit.

 

[Neotrotsky]

When it is run like it currently is with only one logical conclusion Toro. Yes it is.

Sorry, I appreciate your technical understanding and respect that it is not an exact fit.

Not to defend Perry, but it appears as well he was implying more "ponzi like"


As before ....

No doubt, the young workers of today will be lucky if they break even when they retire as the number of new contributors dries up. In fact they will receive less than what could have been provided by private investments.

Fundamentally, it depends on a growing and growing number of contributors to keep those who pay more than those who collect. We have about 3 working for each retired. In 30 years from now that ratio will be reversing itself to a lower level.


There is no doubt Social Security has fundamental flaws in it that
make it "Ponzi like".


Notice , Samuelson when he wrote that in 1967, he assumed a growing population and a national product rate that would keep it afloat-
two false assumptions ...

Even Krugman admits the young of today will stand to lose in the long run


Left wingers are just fearful of any reform that would make the gov't's role less
and replace it with more personal responsibility.

God forbid, people should have more control over their own money
After all, what good is a gov't program for a statist, if they can't hang it over peoples'
head every election to get votes through false promises or fear

 

[JakeStarkey]

The SS system is easily remediated: means testing, old retirement ages, SS funds in only go out as benefits to retirees. The Congress has to keep its hands off the $$$ for other stuff. Young workers will receive more than they pay if the easy remediation is done.

The numbers of workers to retirees will drop but never will go 3 retirees to 1 worker, or 2 retirees to 1 worker, or even 1 to 1. But since someone made the silly claim, they can give objective evidence for it, please.

Hard Righties can't stand the idea that SS is easily reformed and will destroy any political group or their politicians if they try to "Ryanize" it. Classical liberals know that SS is hear to stay, and most of them understand the classically liberal mandate is to fix it.

 

[Dragon]

See, it's necessary to understand right-wing code-speak. Those who say that Social Security is a Ponzi scheme obviously don't know what a Ponzi scheme is, nor do they care, but if you understand what they mean, it doesn't really matter. What they're really saying isn't that Social Security is a Ponzi scheme but that Social Security is bad. "It's a Ponzi scheme" is simply code-talk for "it's bad."

This means that any logical refutation of that claim is pointless, because they're not really saying or thinking that SS is a Ponzi scheme. They're just saying and thinking that it's bad. So if you show all kinds of proof involving the definition of a Ponzi scheme, historical examples of Ponzi schemes, the fact that Social Security is neither a fraud nor an investment mechanism and a Ponzi scheme must be both, the fact that Social Security has been ongoing for decades and no Ponzi scheme can do that, the fact that Social Security is projected to be solvent with minor fixes indefinitely and that is absolutely impossible for a Ponzi scheme -- it won't matter.

Because in their code-speak internal translators, saying "It's not a Ponzi scheme, here, I'll prove it" gets turned into, "It's not bad, it's good, I'll prove it." And they will respond "Yes it is bad, and all that stuff doesn't prove it's good," which will be code-talk translated for the rest of us that don't speak right-winger with the substitution of "a Ponzi scheme" for "bad." And confusion will continue all around.

 

[JakeStarkey]

Dragon, the Hard Right nimrods know they are loser nimrods, so, yeah, they know what is going on. They just hate that they are loser nimrods.

 

[Neotrotsky]

Truth is hard for those on the Left
In fact, it is there worst enemy

Anyone who makes the silly claim that it can be easily remedied is disingenuous or politically naive
But since someone made the silly claim, they can give us objective evidence (numbers) of these "easy political" fixes, please
Most posters know, that these will not be forthcoming from the source of these silly claims


Two liberal economists
can't be wrong


Again

The Hard Left wingers are just fearful of any reform that would make the gov't's role less
and replace it with more personal responsibility.

God forbid, people should have more control over their own money
After all, what good is a gov't program for a statist, if they can't hang it over peoples'
head every election to get votes through false promises or fear​

 

[Quantum Windbag]

I've been away and am not going to scroll through 20 pages to see if this has already been posted, so sorry if this is being repeated.

But Paul Krugman says - correctly - that SS is not a Ponzi scheme.

Well, I gather that a lot of right-wingers are quoting selectively from a piece I wrote 15 years ago in the Boston Review, in which I said that Social Security had a “Ponzi game aspect.” As always, you should read what I actually wrote. Here’s the passage:

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).​

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.

But anyway, anyone who uses my statement as some kind of defense of Rick Perry and all that is playing word games. I explained what I meant in that Boston Review article, and it was nothing at all like the claims that Social Security is a fraud, is destined to collapse, and all that. Social Security is and always has been mainly a pay-as-you-go system, which is nothing at all like a classic Ponzi scheme.

Of course, the usual suspects won’t pay any attention to what I’ve just said. But if anyone is actually listening …

The Ponzi Thing - NYTimes.com

It is nice, now that he wants to defend SS because a Democrat is in office, that he points out that when he said that SS is a Ponzi game he never said the word fraud. I agree, he never said it, that does not make him wrong that SS is actually a Ponzi game, and that the only reason it is not a fraud is because it tells the truth about what it is doing.

I still stand by my assertion that anyone that set up the exact same program without the backing of the government would end up in jail, even if they were very careful not to be fraudulent in their claims.

 

[NYcarbineer]

In those cases it receives money from third parties and pays interest and premium to third parties. When it embezzles from FICA funds and then defers issuing REAL debt at the same time, it is hoping that you are stupid enough to die already or be to old to remember that you already paid for 2010 SS deficits back in 1998.



You left out the key first 4 questions. So your analysis is incomplete. Why does the govt need to borrow that $58Bill + phoney interest again in 2010 if they already spent the $58Bill back in 1998? Are they spending it TWICE? Realize at this point Social Security benefits are only getting paid ONCE..

(disregarding the shenanignans that they are playing by showing more "redemption" for 2010 than was neccessary to actually pay beneficiaries)

What EXACTLY was of value in the Trust Fund in between 1998 and 2010 due to the pocketing of the $58Bill? And what kind of "investment" was it exactly?

Bottom line is NYC.. Back in 1998 they TOOK the FICA excess with only a promise to pay future beneficiaries with future funds. Defeated the whole PURPOSE of a Trust Fund for a "pay as you go" system to smooth out bumps in demographics.

The whole concept of the Trust Fund was to store value to DEFRAY future liabilities.. Didn't happen. It's a complete fiction. It's Aesop's Fables for govt lovers..

REALITY?? We are on own as deficits arise in the SS balance sheets. Kiss the old FICA overcharges goodbye. They do us no good now. Congress NEUTERED the Trust Fund as a buffer for defraying future costs by stuffing it with IOUs. They are winging it as they go along..

Tell me whether you're interested in going back to what SHOULD have happened..

What the fuck are you talking about?

Social Security took in 677 billion last year and paid out 584 billion. that's not a deficit.

The Trust Fund's purpose is to produce interest income, which when added to the payroll tax revenue for any given year, pays the current recipients. Adjustments to income vs. outflow are all that are needed to keep from any unmangeable drawdown of the principal in the Trust fund.

See now NYC -- you didn't read the prospectus closely like they tell you to on TV... You've asserted this several times and I didn't respond because those numbers add the phoney "interest from the Trust Fund" to the receipts. Which I just showed you -- comes from NEW debt and NEW taxes not the Trust Fund..

To wit..
Social Security Is in Far Worse Shape Than You Think - DailyFinance

The annual report of the Social Security Trustees, published in August 2010, forecast that the primary Social Security program, the Old Age and Survivors Insurance Trust Fund (OASI), would not exceed its tax receipts until 2018. Unfortunately, it happened in fiscal 2010, which ended in October. That year's outlays for the OASI fund were about $580 billion, while receipts came to only $540 billion -- a whopping $40 billion shortfall.

I can't STOP you from claiming those transfers of "interest" mean something of value to taxpayers. But you sure can continue to call me a fucker and stamp your feet and declare that Soc Soc books are balancing if you want to...

I'm right you're wrong. I have no need to stamp my feet.

 

[Full-Auto]

What the fuck are you talking about?

Social Security took in 677 billion last year and paid out 584 billion. that's not a deficit.

The Trust Fund's purpose is to produce interest income, which when added to the payroll tax revenue for any given year, pays the current recipients. Adjustments to income vs. outflow are all that are needed to keep from any unmangeable drawdown of the principal in the Trust fund.

See now NYC -- you didn't read the prospectus closely like they tell you to on TV... You've asserted this several times and I didn't respond because those numbers add the phoney "interest from the Trust Fund" to the receipts. Which I just showed you -- comes from NEW debt and NEW taxes not the Trust Fund..

To wit..
Social Security Is in Far Worse Shape Than You Think - DailyFinance

The annual report of the Social Security Trustees, published in August 2010, forecast that the primary Social Security program, the Old Age and Survivors Insurance Trust Fund (OASI), would not exceed its tax receipts until 2018. Unfortunately, it happened in fiscal 2010, which ended in October. That year's outlays for the OASI fund were about $580 billion, while receipts came to only $540 billion -- a whopping $40 billion shortfall.

I can't STOP you from claiming those transfers of "interest" mean something of value to taxpayers. But you sure can continue to call me a fucker and stamp your feet and declare that Soc Soc books are balancing if you want to...

I'm right you're wrong. I have no need to stamp my feet.

Really? Does this make you sleep better at night?

Or maybe what things look like for those younger Americans.

The accounting might be correct, but the money is gone...................................

 

[NYcarbineer]

[I can't STOP you from claiming those transfers of "interest" mean something of value to taxpayers. But you sure can continue to call me a fucker and stamp your feet and declare that Soc Soc books are balancing if you want to...

Social Security paid out more in 2010 than just its payroll tax income. So where did the difference come from if it didn't come from interest earned?

You do realize that the taxpayer PAYS the interest on SS right? The government BORROWS SS funds, and has to pay interest on them. That's the point of SS lending the money,

like any other retirement fund does.

You really don't get it.

 

[NYcarbineer]

See now NYC -- you didn't read the prospectus closely like they tell you to on TV... You've asserted this several times and I didn't respond because those numbers add the phoney "interest from the Trust Fund" to the receipts. Which I just showed you -- comes from NEW debt and NEW taxes not the Trust Fund..

To wit..
Social Security Is in Far Worse Shape Than You Think - DailyFinance



I can't STOP you from claiming those transfers of "interest" mean something of value to taxpayers. But you sure can continue to call me a fucker and stamp your feet and declare that Soc Soc books are balancing if you want to...

I'm right you're wrong. I have no need to stamp my feet.

Really? Does this make you sleep better at night?

Or maybe what things look like for those younger Americans.

The accounting might be correct, but the money is gone...................................

The money is gone if you believe the full faith and credit of the US government is gone.

Can the US no longer afford to pay the annual interest on the Trust Fund?

 

[Neotrotsky]

Hey, Our gov't can always be counted on to "print" as much money as it needs
to cover its' debts

 

[saveliberty]

Glad you brought up the interest factor NYCarbineer. If the Treasury keeps printing more and more money, inflation will come into play and that will increase interest rates. Most likely we would have trouble paying interest on that large a sum with rates doubling or tripling. Very easy to see rates like that occurring.

 

[Full-Auto]

I'm right you're wrong. I have no need to stamp my feet.

Really? Does this make you sleep better at night?

Or maybe what things look like for those younger Americans.

The accounting might be correct, but the money is gone...................................

The money is gone if you believe the full faith and credit of the US government is gone.

Can the US no longer afford to pay the annual interest on the Trust Fund?

THE MONEY IS GONE.

The fact, checks could not be guaranteed should have been sufficient cause for alarm.

Instead youre telling us every things fine. If it was fine, why threaten the checks?


What should this figure be?

Government - Interest Expense on the Debt Outstanding

 

[Neotrotsky]

Comrades,
we must get creative to solve these issues
For example

1)Utilize Papa Obama care to properly "thin out the herd"
Granted, it will increase with Papa Obama care, but who
says we can't help it along

2) Just like Papa Obama's successful cash for old cars program
We could have a "Cash for Clunkers" senior edition
Yes indeed. Just wheel in the old folks for proper processing and some quick cash

3) The SCOTUS ruled long ago that no one has any legal right to Social Security benefits.
In Flemming v. Nestor (1960), the court said that "entitlement to Social Security benefits is not a contractual right"

I'm sure means testing applied to the "correct" groups could benefit us all

 

[OohPooPahDoo]

THE MONEY IS GONE.

Really? So they stopped paying Social Security benefits? My grandfather still gets his.

The fact, checks could not be guaranteed should have been sufficient cause for alarm.

The fact that checks can't be guaranteed when Tea Baggers decide to not pay for them? How is that alarming? No check can be paid when the paying party decides to not put enough money int he account to pay it! That's OBVIOUS.

Instead youre telling us every things fine. If it was fine, why threaten the checks?

If everything is fine - how come we can't just default on our debts and not worry about it? Is that a serious question? Are you stupid? Everything's fine with my finances, too, but if I decide to stop paying the house note - that might cause a problem.

 

[OohPooPahDoo]

Glad you brought up the interest factor NYCarbineer. If the Treasury keeps printing more and more money,

The Treasury doesn't create money. It prints currency, but it isn't money until the Fed places it into circulation.

inflation will come into play and that will increase interest rates.

When? barely over 3% on a 30 year treasury - don't think any time soon!