Is Social Security A Ponzi Scheme?

[Lil Red]

I'm hearing this tossed around, and I guess I don't know if I agree. What are your thoughts about S.S. being compared to a ponzi scheme? Fair? Unfair?

[Amppax]

That's an insult to good ponzi schemes everywhere.

[dairygirl4u2c]

i can see why people might say it is. espeically when it's questionable if it will stay intact an such. but it's not a ponzi scheme. if it were funded, and people paid into it, then there's no substanceless 'throwing the hot potato around' going on.
we've paid so much into it, yet borrowed against it for so long. now the bill is coming due. and they jsut want to cut cut cut. i'm pretty sure the only way to preserve it, is to increase taxes, along with if preserving medicare. im sure reform will help a lot, but the boom generation is really starting to draw on it all, starting right about now.

[Basilisa Marie]

I really think that calling it a ponzi scheme is just typical inflammatory rhetoric. I do think one of the biggest issues with it is the fact that the baby boomer generation is coming into it, and there just aren't enough workers paying into it to really support that population bubble. I don't think it's quite a ponzi scheme because I don't see a problem with my paycheck supporting the elderly...actually I think it's part of a just and moral society to do so. Plus wayyyy fewer people retired early in the Depression; most everyone worked until they died, or were close to it. I also don't see a problem with reducing payouts if need be, or raising the retirement/payout/whatever age. People are just angry that someone is going to have to sacrifice, whether it be paying more money or getting a benefit later in life, and no one wants to smell of elderberries it up and do that because no one else had to before when [i]they [/i]were paying into it.

[kamiller42]

Social security adheres to the textbook definition of ponzi scheme. Look it up.

People may have worked longer during the Great Depression, but they also didn't live longer. Average life expectancy was 63.3. Today, it's 78.3 in the U.S. Females, 80.8!

Social security was sold as a safety net for the elderly. Those days are long gone. Social security is a much larger social welfare program today.

[XIX]

The entire government definitely resembles a Ponzi scheme. All the evidence you really needs for that is the hopelessly escalating debt.

Saying that social security is a ponzi scheme is like saying that a drop of water in an ocean is wet. Or something.

[dairygirl4u2c]

social security is not a ponzi scheme. it's not fraudulent, doesn't rely on investers, and most importantly, is funded continually, and there's no risk of collapse if it's funded properly.
it's good to see the ones here saying it's not a ponzi scheme are at least explaining themselves, instead of ducking out and telling others to look it up.

here's a respectable nobel prize winner, explaining why it's not a ponzi scheme.

[size=3][color=#A81817][font=arial, helvetica, sans-serif][color=#808080][font=arial, helvetica, sans-serif]September 14, 2011, [i]4:25 PM[/i][/font][/color][/font][/color][/size]
[size=3][b] The Ponzi Thing[/b][/size]


[size=3]Well, I gather that a lot of right-wingers are quoting selectively from a piece I wrote [url="http://www.bostonreview.net/BR21.6/krugmann.html"]15 years ago in the Boston Review[/url], 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:[/size]
[size=3][indent][/size]
[size=3]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).[/size]
[size=3][/indent][/size]
[size=3]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.[/size]

[size=3]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.[/size]

[size=3]But anyway, anyone who uses my statement as some kind of defense of Rick Perry [b]and all that is playing word games[/b]. 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[b] is [url="http://www.ssa.gov/history/ponzi.htm"]nothing at all like a classic Ponzi scheme[/url].[/b][/size]

[size=3]Of course, the usual suspects won’t pay any attention to what I’ve just said. But if anyone is actually listening …[/size]

Edited September 16, 2011 by dairygirl4u2c

[Mr.Cat]

Taxation can be viewed as theft too. Compulsory education can be viewed as kidnapping. Capital punishment can be viewed as state sanctioned murder...

Governor Rick Perry when calling social security a "ponzi scheme" was appealing to a strong anti-federal government faction of the Republican party... because he is basically calling social security criminal. That was the point wasn't it? To call the federal government crooks and implicate social security recipients as the same... oops!

To be a bit frank, the United States has mismanaged social security for decades... it's not just a problem of longer life expectancies or the great recession.

The real questions are: do we want to give benefits to those we recognize to be in need and can we improve that system?

Rick Perry is a politician, even if you agree with what he said, do you really believe him? That he is going to be anti-federal government and kick the "bad socialist crooks" out of Washington? lol[center][img]http://editorialcartoonists.com/cartoons/AnderN/2011/AnderN20110908_low.jpg[/img][/center]

Edited September 16, 2011 by Mr.Cat

[kamiller42]

[quote name='Mr.Cat' timestamp='1316203373' post='2305570']
Taxation can be viewed as theft too. Compulsory education can be viewed as kidnapping. Capital punishment can be viewed as state sanctioned murder...[/quote]
Taxation is authorized by the U.S. Constitution. Compulsory education is not a federal issue; it's handled by the cities, school districts, and state. Capital punishment is also a state matter.

[quote]Governor Rick Perry when calling social security a "ponzi scheme" was appealing to a strong anti-federal government faction of the Republican party... because he is basically calling social security criminal. That was the point wasn't it? To call the federal government crooks and implicate social security recipients as the same... oops![/quote]
I know Perry speaks with a Texas drawl sometimes, so it might difficult to understand what he is saying. He did not say social security is criminal. He did say the way it is currently being run is. It's no different than what you said. No different than what Warren Buffet and other liberals said in the movie I.O.U.S.A.

If you believe in status quo works for social security, vote for Obama and democrats.

dairygirl, I, a conservative, highly suggest you watch the left leaning I.O.U.S.A. to get a better understanding of the problem. It IS a ponzi scheme. The participants are the investors investing in their retirement. And when I retire, I am not getting [u]my[/u] money back. I am getting the money of new participants in the program. That's ponzi right there. Lastly, checks getting mailed does not mean it's funded properly. Congress has raided the fund and left a bunch of IOUs.

The Nobel peace prize... comes in every box of Cracker Jacks.

[Norseman82]

Yes, I believe it is run like a ponzi scheme, simply because only enough taxes were collected to cover current benefits (with maybe a small surplus that is invested in US bonds, which basically is the public debt, so it can be said that social security surpluses are used to finance deficit spending). The idea that my FICA taxes are being deposited into an account similar to an IRA is a myth; they are used to pay current retirees' benefits, and hopefully there will be some surplus. If that were not the case, then why would the FICA tax have had to be raised so much since its inception in 1935?

[url="http://www.ssa.gov/oact/progdata/taxRates.html"]http://www.ssa.gov/oact/progdata/taxRates.html[/url]

[Mr.Cat]

[quote name='kamiller42' timestamp='1316214748' post='2305606']Taxation is authorized by the U.S. Constitution. Compulsory education is not a federal issue; it's handled by the cities, school districts, and state. Capital punishment is also a state matter.[/quote]The United States Supreme Court ruled that Social Security is constitutional. But you entirely missed the point. Merely because something is similar to another practice, does not make it that practice.[quote name='kamiller42' timestamp='1316214748' post='2305606']I know Perry speaks with a Texas drawl sometimes, so it might difficult to understand what he is saying.[/quote]Dude... I am Texan... And no he is not hard to understand.[quote name='kamiller42' timestamp='1316214748' post='2305606']He did not say social security is criminal.[/quote]So you are saying calling it a "ponzi scheme" is not at least an illusion to criminal activity? Even though it is named after "Charles Ponzi" who was convicted of mail fraud and larceny? Even though by definition a "ponzi scheme" is criminal?[quote name='kamiller42' timestamp='1316214748' post='2305606']So you are saying that a He did say the way it is currently being run is. It's no different than what you said. No different than what Warren Buffet and other liberals said in the movie I.O.U.S.A.[/quote][media]http://www.youtube.com/watch?v=DI-1PQUuC2c[/media]

In this video, where Governor Rick Perry can, be clearly heard, is asked about his opinions about social security... namely that social security was [b]WRONG[/b] from the beginning and that [u]anyone involved in social security[/u] is involved in a [b]MONSTROUS LIE[/b]. Even in face of his own political advisers and fellow republican former Vice President Cheney disagreeing he responds again that it is a lie... possibly implicating his opponents as liars. It is pointed out that Rick Perry wrote that in [u]any measure[/u] social security has been a [b]failure[/b]. Governor Mitt Romney argues that social security does work but needs to be fixed, Governor Rick Perry admits that calling it a "ponzi scheme" [b]is[/b] [b]provocative language[/b] but [u]does not retract what he said before[/u], like that states should be able to opt out of social security. Which is a plan for abandonment not of amendment.

So it seems even Governor Rick Perry disagrees with you, even he agrees that it is offensive and provocative.[quote name='kamiller42' timestamp='1316214748' post='2305606']If you believe in status quo works for social security, vote for Obama and democrats.[/quote]You are going to get the status quo regardless who you vote for. But Governor Rick Perry wrote that states should be able to opt out of social security, meaning that his solution is to abandon social security. Until he clearly in no uncertain terms explains that his aims are not to abolish or abandon social security in any way, his position seems relativity clear to both liberals and conservatives.[quote name='kamiller42' timestamp='1316214748' post='2305606']dairygirl, I, a conservative, highly suggest you watch the left leaning I.O.U.S.A. to get a better understanding of the problem. It IS a ponzi scheme. The participants are the investors investing in their retirement. And when I retire, I am not getting [u]my[/u] money back. I am getting the money of new participants in the program. That's ponzi right there. Lastly, checks getting mailed does not mean it's funded properly. Congress has raided the fund and left a bunch of IOUs.

The Nobel peace prize... comes in every box of Cracker Jacks. [/quote]This is not a "conservative" or a "republican" position to call social security a "ponzi scheme". It is not fair or honest to give the illusion that it is. There are more than a few conservatives or republicans who disagree with this statement... and there are more than some who see exactly what Governor Rick Perry is proposing.

Edited September 17, 2011 by Mr.Cat

[Maggyie]

Ponzi scheme: "funding" process is deceptive and fraudulent, success rests on nobody finding out the nature of the investment structure

Social Security: funding process is transparent, everybody knows when the funding structure is broken

This is just one of many important differences.

[Winchester]

Theft does not cease to become theft because people with power over you authorize the behavior for themselves.

[Winchester]

[quote name='Maggie' timestamp='1316230424' post='2305719']
Ponzi scheme: "funding" process is deceptive and fraudulent, success rests on nobody finding out the nature of the investment structure

Social Security: funding process is transparent, everybody knows when the funding structure is broken

This is just one of many important differences.
[/quote]
Another hugely important difference: Those running a Ponzi scheme are not legally empowered to throw you in prison for not participating. SS is maintained by force.

[Maggyie]

[quote name='Winchester' timestamp='1316253112' post='2305788']
Another hugely important difference: Those running a Ponzi scheme are not legally empowered to throw you in prison for not participating. SS is maintained by force.
[/quote]

SS, unlike a Ponzi scheme, is maintained by the consent of the people. If the people don't want it, they can start a political movement to have it eliminated and elect officials who have elimination as a goal. This would be a difficult goal to achieve, because SS is a very popular social contract (as opposed to a Ponzi Scheme).

Incidentally, nobody forces the Amish to pay SS taxes, perhaps because the Amish do not collect. Perhaps if people who object to SS choose not to collect, or stop collecting once their benefits exceed their original contribution, there could be more progress made in eliminating the system.