# Are Social Security & Medicare "Ponzi schemes" or not? **URL:** \ **Category:** Great Debates\ **Created:** [June 15, 2010, 2:57am UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249 "2010-06-15T02:57:18Z")\ **Posts on this page:** 14\ **Page:** 6
**Author:** ![ElvisL1ves](https://avatars.discourse-cdn.com/v4/letter/e/5daacb/32.png) [@ElvisL1ves](https://boards.straightdope.com/u/ElvisL1ves)\ **Post date:** [June 16, 2010, 3:46pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/101 "2010-06-16T15:46:25Z")
> [@IdahoMauleMan](#): > > P1. Nearly all of SS benefits are not means-tested. So while it is certainly an income transfer system, it is only very rudimentarily a rich-to-poor transfer. Not even that, since the income at which taxes are due is capped, and at a fairly low level too, barely six figures. Somebody making a billion a year pays no more in SS taxes than someone paying 125K a year. The transfer is mostly from middle-class current workers to retired workers. So who are the “rich” you claim are being transferred from? > [@](#): > > P2. I was laboring under the poor misconception that it was actually MY money…you know, since it was deducted from my paycheck and all. That’s how taxes work. Once you pay them, the money is no longer yours, but everyone’s via our government. That’s how a democratic republic works. > [@](#): > > I don’t want the government speculating with anything. Investing in itself is speculating? > [@](#): > > Especially since it’s not the government’s money. It’s mine. No it ain’t. Deal with it. ---
**Author:** ![ElvisL1ves](https://avatars.discourse-cdn.com/v4/letter/e/5daacb/32.png) [@ElvisL1ves](https://boards.straightdope.com/u/ElvisL1ves)\ **Post date:** [June 16, 2010, 3:52pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/102 "2010-06-16T15:52:26Z")
> [@xtisme](#): > > ‘True ponzi scheme’(s) fail because they don’t have the same scope or power to force people to pay into them. Um, no, but because they require an ever-increasing amount of pay-in dollars, typically by requiring an ever-increasing number of suckers, in order to make the earlier suckers appear to be getting an actual return. They fail because there is a finite amount of money and people on Planet Earth. SS only requires a balanced cash flow. > [@](#): > > And it’s debatable whether or not it will be perpetual at this point. Only if basic, responsible maintenance is made to the system. > [@](#): > > Both systems could fail completely or partially, which merely means that the ‘ponzi scheme’ simply took longer to fail than most…but then, it also had that larger scope and the governments gun behind it, which sort of explains why it took so long… Do you not yet understand that a Ponzi scheme is doomed to fail, and SS is not? Why do you persist in using that term, knowing it’s key definition is inapplicable? Do you not think that’s spreading an ignorant falsehood? ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [June 16, 2010, 4:14pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/103 "2010-06-16T16:14:31Z")
> [@IdahoMauleMan](#): > > I’m sorry I’m so stupid. I’m thankful that people like you and Elvis1Lives and Dick Dastardly are so patient with me, helping me to fight my ignorance and clear up the misconceptions that are in my head. We’re trying. But it’s hard. 😃 > [@](#): > > P1. Nearly all of SS benefits are not means-tested. So while it is certainly an income transfer system, it is only very rudimentarily a rich-to-poor transfer. Here’s a good hint for fighting your ignorance: Work on refuting your opponent’s _strongest_ argument, not his weakest. I wrote “It transfers money, _ **to some extent** _, from the rich to the poor. It transfers money from the short-lived to the long-lived. It transfers from those without dependents to those with dependents.” Perhaps I should have omitted the first clause; you ignored clauses 2 and 3 which expose your misconception more clearly. > [@](#): > > P2. I was laboring under the poor misconception that it was actually MY money…you know, since it was deducted from my paycheck and all. After you pay for a haircut, is the money you gave the barber still your money? After you buy a car is the money you paid for the car still your money? _ **Why in tarnation’s name do so many Americans insist on saying the taxes they pay are still their money??** _ (Now it may be that some politicians or other program explicators have misled you and I don’t defend such confusing. I _will_ say that the misconceptions I see just in this thread indicate why politicians may feel a need to over-simplify.) > [@](#): > > I am certainly willing to take ownership of my contribution and invest it according to my own risk/reward profile, and live with the results. > > Are you? If Social Security were a voluntary program, I might well have opted out. It isn’t. Get over it. ---
**Author:** ![Kiber](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/kiber/32/317_2.png) [@Kiber](https://boards.straightdope.com/u/Kiber)\ **Post date:** [June 16, 2010, 7:19pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/104 "2010-06-16T19:19:29Z")
Most of the debate in this thread still derives from the fact that many posters consider their social security taxes to be an investment of some sort - somehow different from all the other taxes that they pay. This is, of course, completely false. But as long as they continue to believe that their SS taxes are somehow an “investment”, they will continue to be unable to understand the true differences between SS and ponzi schemes, pyramid schemes, etc. ---
**Author:** ![Markxxx](https://avatars.discourse-cdn.com/v4/letter/m/5daacb/32.png) [@Markxxx](https://boards.straightdope.com/u/Markxxx)\ **Post date:** [June 16, 2010, 9:55pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/105 "2010-06-16T21:55:57Z")
Don’t forget the societal benefit. If a bunch of old ladies steal tuna to be able to eat, this drives up the price of tuna at stores. So consumers pay more for a can of tuna, to make up for shrinkage caused by old ladies stealing it. Supposedly if the old ladies have SS they can buy it. Also if the old lady gets caught and sent to jail, now the taxpayers are paying her room AND board and the medical she know gets from the prison system and so forth. Social security seems like a rip off when one views it form their own individual vantage point. You have to look at money not only as benefiting YOU but benefiting you as PART of a greater society. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 16, 2010, 10:50pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/106 "2010-06-16T22:50:59Z")
> [@xtisme](#): > > ‘True ponzi scheme’(s) fail because they don’t have the same scope or power to force people to pay into them. They are purely voluntary…no one is holding a figurative or literal gun to your head, making you join. Unlike Social Security or Medicare, where the government can and does force compliance. And that is why they call it the social security tax and not the social security investment. We can argue about whether or not social security is good policy or if there isn’t a better way to achieve the policy goals of social security but calling it a Ponzi scheme is trying to associate a derogatory term to SS, a term that is derogatory because of the fraud, and then claim that the only reason you are using the term Ponzi scheme instead of the more accurate term transfer payments is because they both pay current beneficiaries with money paid by current contributors. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 16, 2010, 10:56pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/107 "2010-06-16T22:56:10Z")
> [@IdahoMauleMan](#): > > That’s why it’s a Ponzi scheme. Sure if you choose to use a defective definition of Ponzi scheme and ignore a much more appropriate term that people have been using for decades (transfer payments). To ignore the fraud element and say that the fraud element is replaced by the force element (which is how taxes work, whether you like it or not) is basically redefining Ponzi scheme. Can I redefine Nazi to mean Republicans I can see some similarities, can I legitimately call Republicans nazis because there are some common elements? Of course not. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 16, 2010, 11:00pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/108 "2010-06-16T23:00:03Z")
> [@IdahoMauleMan](#): > > I’m sorry I’m so stupid. I’m thankful that people like you and Elvis1Lives and Dick Dastardly are so patient with me, helping me to fight my ignorance and clear up the misconceptions that are in my head. We’re all happy to help > [@](#): > > P1. Nearly all of SS benefits are not means-tested. So while it is certainly an income transfer system, it is only very rudimentarily a rich-to-poor transfer. FDR knew it would never fly if he sold it that way, and it’s design has been to (at least try to) mimic a standard retirement scheme. It’s payout is extremely progressive. The rich (those who have had relatively high incomes for most of their life) get returns in the neighborhood of 3% while the poor can get returns in the neighborhood of 7 or 8% > [@](#): > > P2. I was laboring under the poor misconception that it was actually MY money…you know, since it was deducted from my paycheck and all. I don’t want the government speculating with anything. Especially since it’s not the government’s money. It’s mine. Nope it stopped being your money when they collected it. Its calle dthe social security TAX, not the social security INVESTMENT. > [@](#): > > I am certainly willing to take ownership of my contribution and invest it according to my own risk/reward profile, and live with the results. Yeah but thats not how social insurance or even pensions work. ---
**Author:** ![ElvisL1ves](https://avatars.discourse-cdn.com/v4/letter/e/5daacb/32.png) [@ElvisL1ves](https://boards.straightdope.com/u/ElvisL1ves)\ **Post date:** [June 17, 2010, 1:13pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/109 "2010-06-17T13:13:48Z")
Know what else? If you pay the tax via a payroll deduction, the usual way, it never gets to be your money at all! ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [June 17, 2010, 3:04pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/110 "2010-06-17T15:04:19Z")
> [@Markxxx](#): > > Social security seems like a rip off when one views it form their own individual vantage point. You have to look at money not only as benefiting YOU but benefiting you as PART of a greater society. As a Floridian I can relate. We have a **lot** of retirees here; Florida is a nice, warm place to die. And, except when stuck driving behind them, nobody minds very much. The state politicians certainly don’t mind at all: When retirees come here, they bring no social problems with them. They almost never commit crimes, they don’t have school-age children requiring public education, and they don’t need jobs. In fact, they **create** jobs, by spending their retirement pensions (SS and other) on the necessities of life. Their Medicare-subsidized health-care needs keep a lot of doctors and nurses and orderlies employed – health care is a major industry in Florida; and of course all those well-paid medical professionals then spend their own incomes and keep the economy ticking along. There would be quite a recession here, if some age-discriminate plague were to wipe out everyone over 65. In essence, younger, working people all over American are being taxed to subsidize Florida’s economy. Works for me! 😉 But whatever you call that, it ain’t a “Ponzi scheme.” ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [June 17, 2010, 3:13pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/111 "2010-06-17T15:13:38Z")
> [@ElvisL1ves](#): > > Know what else? If you pay the tax via a payroll deduction, the usual way, it never gets to be your money at all! Idahomauleman is either self employed and paying self employment taxes or he is bad at math and hasn’t actually paid 200K in social security taxes. ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [June 17, 2010, 11:37pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/112 "2010-06-17T23:37:39Z")
> [@Damuri\_Ajashi](#): > > Idahomauleman is either self employed and paying self employment taxes or he is bad at math and hasn’t actually paid 200K in social security taxes. I can absolutely guarantee that the cumulative lifetime FICA deduction (both mine and my employers during the time I was an employee, added to the time that I was self-employed) is greater than $200K. ---
**Author:** ![IdahoMauleMan](https://avatars.discourse-cdn.com/v4/letter/i/71c47a/32.png) [@IdahoMauleMan](https://boards.straightdope.com/u/IdahoMauleMan)\ **Post date:** [June 17, 2010, 11:39pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/113 "2010-06-17T23:39:01Z")
> [@ElvisL1ves](#): > > Know what else? If you pay the tax via a payroll deduction, the usual way, it never gets to be your money at all! Ah, yes. A true Big Government type. The above line is nice, crisp, taut, and explains pretty much everything that is wrong with the left. ---
**Author:** ![ElvisL1ves](https://avatars.discourse-cdn.com/v4/letter/e/5daacb/32.png) [@ElvisL1ves](https://boards.straightdope.com/u/ElvisL1ves)\ **Post date:** [June 18, 2010, 1:09pm UTC](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249/114 "2010-06-18T13:09:28Z")
Truthfulness is _wrong_? How so? [Previous page](https://boards.straightdope.com/t/are-social-security-medicare-ponzi-schemes-or-not/543249.md?page=5)