The truth shall set you free, including the truth about Social Security

A Ponzi scheme is a pretty simple animal:  You pay old investors using money put in by new investors.  When you run out of new investors, nobody gets paid.

Social security is also a simple animal:  We pay old taxpayers money put in by new taxpayers.  Because there are more old taxpayers than there are new taxpayers, and because these old taxpayers no longer contribute much, if anything, to the pot,  pretty soon nobody gets paid.

Ponzi schemes cannot be reformed.  They are inherently flawed.  Their painful death is inevitable, since it is programmed into their composition.  We know with certainty that the sun rises in the east and sets in the west.  It always has and it always will.  We also know with certainty that Ponzi schemes inevitably run out of money.

Perry used his prominence to state something that all honest people know to be true:  Social Security is inherently unsustainable.  It’s not a fraud, but it’s destined to failure.  As demographics change, and as we suffer through the repercussions of the Stimulus, that failure will occur sooner, rather than later.  No amount of tweaking will prevent that from happening.  The only way to “fix” Social Security is to do away with it:  give some lump sum payment to those who already depend on it, give phased out payments to this who are uncomfortably close to depending on it, and tell everyone else “We’re sorry we screwed you.”

As far as I’m concerned, Perry gets big kudos for having the honesty to take his high-profile and use it to announce that the Emperor has no clothes.

Be Sociable, Share!
  • SADIE

    A companion and historical piece to your post Bookworm.



    1999 Los Angeles Times op-ed titled “Ponzi Game Needs Equitable Solution,”

    1985 editorial commenting on Social Security’s 50th anniversary, the Wall Street Journal says the system was designed like a Ponzi scheme.

    A July 1994 Chicago Tribune column by Cato Institute head Edward Crane dubs the offices of the Social Security Administration “home of the world’s largest Ponzi scheme.”

     September 1994, conservative columnist Jeff Jacoby made the same point: “Not being a politician, I can say anything I like about Social Security — even the truth. And the truth is that Social Security is an immense Ponzi scheme that is slowly bankrupting young Americans in order to enrich their elders.”

    “This is a Ponzi scheme, and people don’t know that,” said Simpson in August of 1996.

    1996, liberal Michael Kinsley published a piece at Slate titled, “Social Security: From Ponzi Scheme to Shell Game.”

    http://www.nationalreview.com/articles/print/276859

  • http://bookwormroom.com Bookworm

    Who noticed that Rush, in talking about Rick Perry’s Social Security statement and the wrong-headedness of other Republican candidates if they attack him, said “I’m not endorsing Perry . . . YET”?  The “yet” was a throwaway, but I think it spoke volumes.

  • MacG

    See. I told you it was NOT a Ponzi Scheme – it’s a Shell Game! So there. Neener Neener. :)

  • MacG

    At first I thought he said Fonzi Scheme and that might been fun but I figured that I musta mis-heard that because Happy Days are not here again.

  • Mike Devx

    A recent article on why this Ponzi scheme is not sustainable:

    —–

    There were only 1.75 full-time private-sector workers in the United States last year for each person receiving benefits from Social Security[...] 
    That means that for each husband and wife who worked full-time in the private sector last year there was a Social Security recipient somewhere in the country taking benefits from the federal government.
    Most state and local workers are part of the Social Security system and pay Social Security taxes; and, since 1984, all federal workers have been part of the system and pay Social Security taxes. However, unlike private sector workers who pay Social Security taxes with private-sector dollars, government workers pay their payroll taxes out of wages government pays them with tax dollars or with money that was borrowed by government and taxpayers must eventually repay.
     
    —–

    Even had Social Security been restricted to retirees, and not expanded as it has been, as our life expectancy increased, the Ponzi scheme collapses under that weight of recipients.

    The argument is academic anyway: When Reagan and the Democrat Congress dissolved the Social Security trust fund and subsumed it all into the General Fund, they set up the disaster: Politicians simply raided the money to pay for other programs, and now the surplus is gone.  We’re already in Social Security debt, today, and its only going to get worse.

    1.75 payers to each receiver cannot be sustained in any such scheme.  And, being in the General Fund, it is just another entitlements program, a redistribution scheme that hits private sector employers and employees the hardest.

     

  • bizcor

    I heard Rush say that. I also heard him list a couple dozen other people who also called it a Ponzi scheme including Milton Freidman. You can see Sadie has found a few people who feel the same.
     
    Just got done listening to the “debate” and they were gunning for Perry and they had help from Wolfe Blitzer. Blitzer is the one who initiated the Social Security question and it was the first one out of the box. These events are not debates. They are question and answer sessions. The questions are usually loaded.
     
    Perry’s biggest hurdle was not so much the Gardasil issue but the “Dream Act” they have passed in Texas. That isn’t goooing to sell well to the Tea Party.
     

  • http://furtheradventuresofindigored.blogspot.com/ Indigo Red

    “Because there are more old taxpayers than there are new taxpayers …”

    Hence, the ‘need’ for unresitricted immigration as has been advocated by leaders on both sides of the aisle. A poor solution by any measure.   

  • SADIE

    bizcor
     
    Just finished watching the debate as well.
    Huntsman is like a wind-up toy – he just goes on and on. He’s not a Mormon – he’s a Bore-man!
    I agree with your take on Perry. I didn’t like any of his answers on immigration.
    Bachman was the only consistent candidate on the podium. She was the only one who answered the last question “What would you bring to the White House”  with the “Right” answer. The rest got all cutie cute and I wanted to pukie puke.
     
     

  • bizcor

    Sadie
    I’ll bet you’re a closet Ron Paul fan huh? :) I will tell Governor Huntsman you said so when I meet with him Thursday night.

  • SADIE

    At first I thought he said Fonzi Scheme
     
    MacG – your just jumped the shark ;)

  • SADIE

     
    oops…you just jumped the shark, I just jumped the post button before proof reading and proof drinking :)

  • MacG

    Sadie, (silent H) Haeee…

    Sorry that’s my best Fonz. :)

    Does that mean I’ll be in declining ratings until I am canceled? 

    I never drink and post then again maybe my thoughts would come out in a coherent manner but my typing would still suck %<)

  • SADIE

    three of Fonzie’s aaaayh’s
     

    Just kidding ya, I don’t drink (Jewish holidays only) but I don’t see great either. The font (blurr) from Bookworm’s program in still in size 8. Gee, I “used” to be that size. Now, I prefer to see my font the same size as the tags on my clothing – a 12! Come to think of it, I like the temperature to be the same as my age.

     
     

  • JKB

    I found this a while back.  It is an article from Time in 1939 where they already were quietly pointing out the Social Security scam even as the New Dealers were expanding the welfare state on it’s back.  I like that Congress had already absconded with the “reserve fund” and had to raise taxes.

    http://books.google.com/books?id=w0EEAAAAMBAJ&lpg=PP1&rview=1&pg=PA51#v=onepage&q&f=false

  • JKB

    Oops, that is Life Magazine, not Time.

  • MacG

    Sadie “Come to think of it, I like the temperature to be the same as my age.”  29? :)

  • Mike Devx

    biscor 6:
    Perry’s biggest hurdle was not so much the Gardasil issue but the “Dream Act” they have passed in Texas. That isn’t goooing to sell well to the Tea Party.

    Yes.  I knew a guy back when I was attending UT in 1993.  His mother and sister were immigrants who came legally eight years before.  She’d been trying at that point for those eight years to get her two sons in legally.  The waiting lines for legal immigration are very long.

    But if you come here *illegally*, you’re going to be allowed to stay, and your children will be here immediately, and they’re going to qualify for free, taxpayer-paid government assistance.  That’s just plain wrong, wrong, wrong, wrong.  So yes, big problem for Perry there, at least for me, a Tea Party admirer.

    The Gardasil issue is problematic on two fronts as well.  The main problem is the seizure of parental rights by the government, a position that flies at odds with most every other Rick Perry position in his conservatism.  Which leads to the second problem: Why did he do it?  It opens him up to the crony capitalism charge, playing favorites for that particular drug company.  He must recognize that he’s at risk of being labelled just as much an empty slick n sleazy politician with no integrity, same as Romney.

     

  • SADIE

    JKB
     
    WHAT A JEWEL OF A FIND! I could spend hours on this site. Thank you.

  • Mike Devx

    bizcor 6:
    > Just got done listening to the “debate” and they were gunning for Perry and they had help from Wolfe Blitzer. Blitzer is the one who initiated the Social Security question and it was the first one out of the box. These events are not debates. They are question and answer sessions. The questions are usually loaded.

    sadie 8:
    > Just finished watching the debate as well. [...]  I agree with your take on Perry. I didn’t like any of his answers on immigration. [...]  Bachman was the only consistent candidate on the podium.  [...] The rest got all cutie cute and I wanted to pukie puke.
     
    Just got home from a movie and caught up on y’all’s commentary.  Now, time for me to watch the debate, before my impressions get any more colored in in advance!

    I’m frustrated by the adversarial tone of these loaded questions they’re receiving.  I guess we can blame Bernard Shaw at CNN and his classic Dukakis “Kitty rape” question.  Now these journalist moderators, they’re all gunning for bear.   Hoping for THEIR shining question moment?  At this stage in the game, what we’re looking for is differentiation between the candidates.  Comparison and contrast.  “Getting to know you, getting to know all about you…”   And the journalists are actually getting in the way.  Playing silly games.  Or is it silly?  Are they being objectively adversarial, or is their usual blind Obama support actually causing them to be partisan?