The requirement for increasing participation is in fact a requirement for increasing money. Do you believe that near 100% participation obviates concern about this?
I’ve already explained the similarities. If I died tomorrow, my heirs would get all the money in my 401K. They’d get none of the money I’ve paid into social security, except for survivor benefits eventually. (I think.) The event covered here, unlike that for many other types of insurance, is hitting a certain age.
Social security is listed as OASDI on my check. That stands for old age, survivors, and disability insurance.
The concerns are purely demographic. If everyone in a population signed up for a pyramid scheme from day one, how long do you think it would last given the promised returns? Certainly not 80 years. And, like I said, pyramid schemes don’t have reserves.
But not to Social Security, whose cash flow imbalances can be fixed, i.e. is sustainable with only some basic management. IOW he’s wrong.
Not a quibble at all; it reveals a problem with understanding the nature of SS. There are many who think SS is an investment, that you have an account you pay into that you withdraw from after retirement. It is nothing of the sort, it is a transfer system, not an investment at all.
He didn’t. He said the *number of payers *must necessarily increase. That’s false; it doesn’t.
Right back atcha.
No, it is lent to the government, and the ensuing revenue is spent. There is a corresponding obligation, which is an asset. If I buy $10K in T-bills, am I give the money to the government?
By your lights, China is up shit creek, since they have just given billions to us without any asset in return.
Yes you are correct that the money goes to fund deficit spending. It is indirect but the results are the same. Any excess money that should be put away to keep the program solvent is spent.
I was not meaning to neglect fraud, and you are absolutely right on that point. Just to make it clear: SS is not a Ponzi scheme. But in some ways, it is like one, which is the point I have been making in this thread. Mainly, it is current investors (or payers, or use whichever term best suits you) who are paying out to current retirees, and that the base of investors has been growing for years. This growth of payers has been necessary to pay for the increase in retirees. If we look at the demographics of the US, it becomes clear that this trend will continue. I see two clear parallels to a Ponzi scheme, even though it is not a Ponzi scheme. Is it really that hard to see that?
There’s a lot of confusion about Ponzi schemes and Pyramid schemes in this thread. Ponzi schemes are based on fraudulent claims of investment. The investors don’t get there money back because it was stolen and never invested. Pyramid schemes are clearly unworkable and just rely on people believing they will profit by getting in early, and someone else who invests later will get ripped off.
Social Security has been sold by politicians as something it’s not. It is just a plan for the government to pay people money. The money is collected from taxes. That’s all there is to it. Some people don’t like the plan. Some people do. It will definitely fail financially if payouts exceed collections, but the payouts and collections can be modified at any time, so there is no circumstance which would ever force financial failure. On the other hand, politicians don’t need to be forced to mess things up, it seems to come naturally to them. It’s effecacy as a social program can be debated forever without resolution.
No, it’s clear you are being obtuse. I’ll try once more.
Except for the parts where current payers’ monies are going to current retirees, like in Ponzi schemes? Or the part where the increase payouts due to an increase in retirees has been paid for (largely in SS case) by an increase of payers (investors, whichever) like in a Ponzi scheme? You are unable to see the similarities here? Really?
I have already mentioned the two ways: increase the tax or decrease payouts, both of which are resisted, as we have been coasting on an increase in payers for years.
Because SS is not a Ponzi scheme. But is like one in some ways. I am amazed that you will vigorously avoid conceding this completely reasonable point.
Not a similarity, but exactly what has kept SS going for so long. So it’s nearly identical in both cases, but not a similarity? What counts as a similarity in your book?
You’ve been entirely unreasonable here Elvis. There are clear similarities here that those who aren’t rolling their eyes so much are able to see. Is the use of comparison often overblown, and not all that accurate? Yes. Can a comparison be made, are there similarities? Yes.
A caveat is needed here: you cannot have trillions of dollars in cash sitting around, it needs to be put to work, buying T-bills our IOUs (which is the case) or some other investment.
No, it is not sufficiently like a Ponzi scheme to apply that name except for disinformation purposes and riling up the peasants. A Ponzi scheme is an out and out fraud on all the incoming participants who think of it as an investment, when it in fact is started by a “Ponzi” purely for profit and without regard to long term benefit to the incoming. The original Ponzi when he started may not have understood why it was bound to fail: people down the road are bound to be entirely out of everything.
Social security simply is not a good investment because most people get far less in benefits than they put in. People getting benefits get a minimal amount of money each month with which to pay for food and shelter, and it doesn’t really cover that, but for those people, it is the essential nut every month.
:rolleyes:
Okay, so will I.
Go back and read the part where I said “Except for the only part that matters.” :rolleyes:
Both of which demonstrate that SS is NOT unsustainable. Go back and read that too. :rolleyes:
Then you need to go back and read the parts about the key features of a Ponzi scheme being **unsustainability **and fraudulence. :rolleyes:
Go do your homework, kid. :rolleyes:
The government issues bonds even when there is a surplus. So, the state of the government deficit has no bearing on what Social Security does with their surplus.
What do you mean by “put away?” Put in a mattress? Put in a lock box? Put into investments that can’t go down, like mortgage CDOs? If I have a surplus in my life, and I choose to buy T-bills with it, am I not putting the money away?
Sure I understand that conservatives believe the government has no future - and when in power, they seem to do the best to make that prophecy come to pass. The rest of the world disagrees, as shown by the flight to treasury notes due to the uncertainty in Europe, causing their interest rates to drop.
I’m pretty sure that this is not true unless we believe taht life expectancies will continue to increase at their current rate forever.
ermm, I think youa re ariving at faulty conclusions becaue youar e starting off with faulty premises.
Now you’re stretching.
This is a valid criticism but the only recent to cut entitlements was when Democrats cut Medicare part C (if there is waste anywhere in the medicare system Part C is it) in the healthcare reform bill and the Republicans are cricifying them over it. Until we can depoliticize entitlements, we will not see any sanity in the process. We need BRAC commission for medicare and to a FAR lesser degree SS.
Well, a raven is like a writing desk also. I think it is very clear that those who call Social Security a Ponzi scheme are trying to scare people. It is also like many other things which are not scary.
Now, the fact is that it is not necessary for there to be an increasing number of people to fund the system in principle. The problem we are running into today is that people are living far longer than envisioned when the system was set up. If some horrid disease killed everyone at 75 the system would be awash in money. No one who supports Social Security denies that there has to be some tinkering with the system in order to adjust for the demographic situation expected. We’d just like conservatives to follow in the footsteps of St. Ron and face the situation squarely, without accusations of fraud or even saying it isn’t a fraudulent scheme, it just shares many of the characteristics of a famous fraudulent scheme.
I think that is a myth. Even people paying the maximum contributiona re expected to experience a positive rate of return, assuming SS is still around when you retire.
Even then it is not fraud. There is a reason it is called a social security TAX and not a social security contribution.
For someone to seriously equate government programs such as Social Security and Medicare with Ponzi schemes belies an impressive ignorance of at least one or the other - and most likely both. More likely, of course, is a willingness to engage in hyperbole with no concern about whether one distorts reality in the process.
But in response to the question of why this meme is so tenacious, I think the reason is pretty obvious; the people promulgating it perceive themselves as deriving some benefit therefrom.
Of course it is a myth. But facts can be so much less sexy…
And the problem with Medicare is rising health care costs in general - exactly the same problem private insurers have. Obama was very clear that without cutting health care costs the federal budget was going to be unsustainable. Republicans shutting up about “death panels” would be helpful too. Reagan did a good job building a bipartisan consensus on this, I wonder if the reason was that he didn’t grow up rich and knew how important Social Security was for people other than fat cats.
Perhaps this is true if you freeze everything. The beauty of SS is that you can raise the cap or reduce benefits or make whatever adjustments you need to maintain solvency. people seem to be under the impression taht we will drive SS into teh ground ebfore we make any sort of changes to SS and history simply does not support this. We have made adjustments to SS many many times over the years and we will do so again if we need to. People have been talking about raising the cap for years and now it seems to be a matter of when and not if. People have been talking about reducing benefits for eyars and once again it seems like a matter of when and not if.