Picking Apart the ‘Ponzi Scheme’: Is Rick Perry Right?

You know, there’s a reason why Molly Ivins needled Perry so much. I hope you guys don’t plan to elevate him to the level of a serious candidate. I’m not looking for a photogenic president with a lot of “good hair” on his head. I’m looking for competence, experience, and an actual plan for someone other than the top10% of the country.

From the U.S. Securities and Exchange Commision website:

“A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.”

That sure sounds like Social Security to me. And the article’s point that the government backs it up because they can raise taxes is total BS–think about who these increased taxes are going to come from.

Backing up SocSec with the “full faith and credit” of the government doesn’t mean as much these days as it used to, what with the government being massively indebted. And a large amount of that is due to future SocSec liability. I’m no economist, but I know a modest number of current workers in a declining economy CANNOT support all those baby boomers who will soon be demanding the SSI checks. So while SocSec may not be an outright fraud like a textbook Ponzi scheme, it is a deceit via politics that involves taking several people’s investments to pay off someone else. That’s where Perry gets his comment. And as far as I’m concerned, he’s right, and I knew this in junior high school back in the 80s. Oh, and of course there’s the one major fact in all this that NONE of the talking heads ever mentions……….. SocSec and all the other New Deal social programs were intended to only operate for 3-5 years, depending on the program. They were supposed to be shuttered a long time ago, but politicians realized welfare gifts were a means to buy votes.

If Ponzi requires fraud to be attained and fraud is an intentional deception, then the method of obtaining the front-end funding does not matter whether it be given voluntarily (the private world) are taken by law (the government world). The fraud is committed when the federal government claims that our “investment” is secure in a “trust fund” and will be paid back to us (should we live long enough) in excess of what we put in. What is so hard to understand about that? We all know that SS is paying out more than it collects and future payments depend on future collections. If this does not constitution a Ponzi scheme, nothing does.

Gov Perry is grossly mstaken with his accusation that the the Social Security System is a Ponzi Scheme.

It is one of a very few well designed,fair programs administered by the federal government. BUT the program has been improperly executed by the federal politicans — those in the legislative and the executive branches.

Juts imagine how much surplus money wojuld have been in the bank had these thieves in washington not spent the excess SS funds collected each year when more people were paying in their SS taxes, than was being paid out in SS benefits. TRILLIONS. That was how it was designed so that when the baby-boomers started drawing there would be money there for them.

Ronald reagna and Tip O’Neill reralized there was a huge problem with Social Security and raise the limits and the taxation amounts in Regan’s preesidency and they collected 2 – 3 TRILLION more dollars in SS taxes tom make the program solvent out to 2075!

Of course all those thieves in Washington since then spent that money, too! That includes peo[ple like Joe Biden, Barack Obama, Hillary Clinton, John Boehner, Paul Ryan, John McCain, Harry Reid, Nancy Pelosi, Ron Paul, ect. ect. They are all complicit in this theft.

So instead of having TRILLIONS of dollars secured in the SS lock box — we have boks and books full of IOUs from the federal government!

As a result we now a broke SS system and people like Rick Perry calling it a ponzi scheme. There’s no doubt people in Washington should go to prison for the rest of their lives, but its not the system that is a ponzi scheme — it is those in government who run it, and STEAL friom it.

Time and time again we find that those in government cannot be trusted to run anything where money is involved..

“Ponzi scheme” is a most apt way to describe the evolution of the SS system into its present condition. One may pick and parse, but there is hardly a better term to explain what has happened with SS. It was begun with better intentions, but has become a fraudulent and potentially broken promise to the American worker.

Ask any 30 yr old if they will be a millionaire and you’ll get a similarly answered question backed up by the same lack of experience. No one is required to pay into the system… they can leave their citizenship at the border, because this is something the AMERICAN people do for their golden citizens, its a social contract that says if your employer discards you the nation will help you.

So pack up all of you ponzi schemers, leave if you don’t like it, or vote to improve it, not dismantle it… Generations have benefited from it, and just because Repubs want to dismantle it is no reason to go along for the ride.

Younger people are not paying for seniors !!!!!!! Its time for the truth. The seniors have already paid for their benefits. And TODAY I’m paying for my benefits.

It annoys me when I hear my SS and Medicare payments are an entitlement. We paid for it and many don’t live long enough to collect.

WHAT’S WRONG WITH US ????

Remember, not only did you contribute to Social Security, but your employer did too. It totaled 15% of your income before taxes.
If you averaged only 30K per year over your working life, that’s close to $220,500 ! If you calculate the future value of $4,500 per year (yours & your employer’s contribution) at a simple 5% (less than what the govt. pays on the money that it borrows), after 49 years of working (me) you’d have $892,919.98. If you took out only 3% per year, you receive $26,787.60 per year and it would last better than 30 years, and that’s with no interest paid on that final amount on deposit! If you bought an annuity and it paid 4% per year, you’d have a lifetime income of $2,976.40 per month.
The folks in Washington have pulled off a bigger Ponzi scheme than Bernie Madoff ever had.

Entitlement? I paid cash for my social security “insurance”!!!! Insurance is what they called it, but if any insurance company handled your money the way the US government did, the State regulators would shut it down and the executives would be charged with fraud.

Just because they “borrowed” (took) the money from the SS insurance fund , doesn’t make my benefits some kind of charity or handout !! We paid for our SS insurance !!! And it was not a choice. The government should not have the choice to not to pay our seniors or reduce the amount of their monthly payments.
The President that STOLE our S.S.money was Lyndon B. Johnson–a Democrat!! That’s bad enough, but WHY haven’t the Republicans put it back??

Congressional benefits, aka. free health care, outrageous retirement packages , 67 paid holidays , three weeks paid vacation , unlimited paid sick days , now that’s charity, welfare, and they have the nerve to call my retirement “ entitlements“ !!!!!!

Someone please tell me what’s wrong with all the people that run this country!!!!!!

We’re “broke” & can’t help our own Seniors, Veterans. We are about to cut their benefits to save money.

Yet, in the last months we have provided aid to Haiti , Chile , and Turkey . And now
Pakistan , the country that gave sanctuary to bin laden. Literally, BILLIONS of DOLLARS!!!

Our retired seniors living on a ‘fixed income’ receive no aid, not even annual C.O.L.
increases because their fudged numbers show the there has been no inflation for, how many now, 3 years????) nor do our seniors get any breaks while our government and religious organizations pour Hundreds of Billions of $$$$$$’s and Tons of Food to Foreign Countries!

They call Social Security and Medicare an entitlement, even though most of us have been paying for it all our working lives. Now when its time for us to collect, the government is running out of money. Why did the government steal, I mean “borrow” from it in the first place?

AMERICA: Imagine if the GOVERNMENT gave ‘US’ the same support they give to other countries.

, but there is hardly a better term to explain what has happened with SS—it’s completely inaccurate. He’s a stupid man. period. Another wnger who uses the wrong over inflated drama queen words that do not at all represent reality. What Mr. Dumb Texan is saying is that HE is not able to fix it. Beyond his ability. yeah. We get that. The rest if all drama queen. Where’s his heels and boa, he’s all drama.

You know what? this is a non-issue. Elect Romney. He’ll fix it. That simple. Anyone remeber the winter Olympics in Utah???? a fiasco. First guy they hired spent nearly all the money yet didn’t build anything, was WAY behind schedule over spent. They fired him and brought on Romney. EVERYTHING changed. In the end, everything was built, designed, employees hired appropriately – GOOD qualified employees, no cronisms, was done on time, with money to spare, completely under budget. The biggest international event hosted in our country was a HUGE success thanks 100% to Romney. Worried about SS, then elect Romney. What ever hissy fit you have over him, get over it. He was my governor. He does a GREAT job. period. That’s all you need to know.

SGTLIP,

What you are really for is individual accounts. The money you paid in is gone and soon others that “pay for their benefits” will be actually paying for yours. That’s the facts. Is it how it should be? No, but because the government cannot be trusted with the money we give them, that’s the way it is and the situation we’re in. We’re taking from Peter to pay Paul. Another fact is that many seniors outlive their lifetime contributions and end up being a net negative to the system. This is a much smaller problem, but a problem in terms of solvency nonetheless. SS was not designed to be a retirement system, but to keep those that hadn’t saved from utter destitution. Over the last 70 years it has been transformed to become a 401(k)/pension for most seniors. It is an entitlement because even the mere mention of changing it draws howls like yours of “don’t touch my benefits, I earned them”. Simply you feel entitled to them. It must be changed because government has proven it cannot be trusted to protect it. Whether that change affects anybody retiring in the next 20 years is something to debate, but it should be changed for future generations regardless.

BTW, Social Security is not a failure, rather, it’s a success. Since its inception in Germany by Bismark it has served the German people well. Before following the misguided notions of a fool, we might do much better by looking into the German version of this vital program.

Even if SS doesn’t meet the “pure” definition of a Ponzi scheme it’s still close enough for government work. The statement is much closer to a pound of truth and a grain of exaggeration than not. The current “beneficiaries” are being paid by those who came later and those later folks are expecting a payout that they’ll likely never receive. The real difference between a true Ponzi scheme and SS is that in the former some folks actually make money. In the latter we’re all worse off for the program’s existence.

Try a little math. Everyone gets a Social Security statement. Plug those numbers into a spreadsheet and play around with rates of return to see where you need to be to get the “benefit” the SSA is “promising” you. Don’t forget your employer contributions and don’t forget the difference between the SS benefit and an actual investment account. The latter will outlive you if you should die young. The former will vanish like a fart in the wind regardless of how much you’ve been paid. That is the true fraud of Social Security and it is very deliberate.

In the end, Ponzi scheme or not, Perry is right. We’ve all been had.

Posted by: SgtLip—But they did spend it and the money is gone, The only way to make your account whole is for your kids to forgo retirement. When you gave the government your money you abdicated your responsibility to them, and they acted irresponsibly. You have been robbed by your own government so that politicians could buy votes. You have been robbed and they only way for you to get your money is to rob some one else. Trying that will incite Civil War, doing nothing will incite Civil War, either way some one is going to get the poo end of the stick.

Ponzi/SS differences:

1. Ponzi contributions voluntary, SS not.
2. Ponzi contribution amount/benefits/timing controlled by individual, SS not.
3. Ponzi cannot just tax more in other areas to cover up for monies it has lost. Congress can.
4. Ponzi investor can withdraw at any time. SS “investor” not.
5. Ponzi scheme doesn’t guarantee money but will pay out to cover as long as possible. SS guarantees money until government defaults.
6. Ponzi schemer takes from Ponzi funds to pay for other things. Congress takes from SS funds to pay for other things. Oh wait, this is the “fraud” part and it’s the same. Go figure.

SNewsom2997 – 1. Where’s the opt-out form? I’d be glad to. Cannot be done on an individual basis to my knowledge, which was the point. 2. You wrote it yourself…government controls it, not the individual investor. 3. Ponzi can get more investors, SS doesn’t have to…they’re born. Congress can raise revenue whenver it wants. Whether they’re re-elected is a different story. 4. Yes, but if you want to withdraw from a Ponzi scheme you can assuming the schemer can cover. Not so with SS, your money is already gone. 5. Agreed, but SS claims it is in the “lock-box” full of IOUs.

If rick Perry really stood for something he would have proposed a bill to get the government out of the Social Security fund. Instead he wants to preach to the emotional..using dramatic statements that may bolster his popularity. Howeer, more and more, it sounds more like he is trying to sell his book.

History Lesson on Your Social Security

Just in case some of you young whippersnappers (& some older ones) didn’t know this. It’s easy to check out, if you don’t believe it.

Franklin Roosevelt, a Democrat, introduced the Social Security (FICA) Program. He promised:

1.) That participation in the Program would be Completely voluntary,

No longer Voluntary

2.) That the participants would only have to pay 1% of the first $1,400 of their annual Incomes into the Program,

Now 7.65% on the first $96,000

3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year,

No longer tax deductible

4.) That the money the participants put into the independent ‘Trust Fund’ rather than into the general operating fund, and therefore, would only be used to fund the Social Security
Retirement Program, and no other Government program, and,

Under Johnson the money was moved to The General Fund and Spent

5.) That the annuity payments to the retirees would never be taxed as income.

Under Clinton & Gore Up to 85% of your Social Security can be Taxed

Since many of us have paid into FICA for years and are now receiving a Social Security check every month — and then finding that we are getting taxed on 85% of the money we paid to the Federal government to ‘put away’ — you may be interested in the following:

———— ——— ——— ——— ——— ——— —-

Q: Which Political Party took Social Security from the independent ‘Trust Fund’ and put it into the general fund so that Congress could spend it?

A: It was Lyndon Johnson and the democratically controlled House and Senate.

———— ——— ——— ——— ——— ——— ——— —

Q: Which Political Party eliminated the income tax deduction for Social Security (FICA) withholding?

A: The Democratic Party.

———— ——— ——— ——— ——— ——— ——— —–

Q: Which Political Party started taxing Social Security annuities?

A: The Democratic Party, with Al Gore casting the ‘tie-breaking’ deciding vote as President of the Senate, while he was Vice President of the US

———— ——— ——— ——— ——— ——— ——— –

Q: Which Political Party decided to start giving annuity payments to immigrants?

AND MY FAVORITE:

A: That’s right!

Jimmy Carter and the Democratic Party. Immigrants moved into this country, and at age 65,
began to receive Social Security payments! The Democratic Party gave these payments to them, even though they never paid a dime into it!

———— — ———— ——— —– ———— ——— ———

Then, after violating the original contract (FICA), the Democrats turn around and tell you that the Republicans want to take your Social Security away!

And the worst part about it is uninformed citizens believe it!

Posted by: Bill—From who, who are you going to take it from. The cannot restore what they don’t have, the money is gone, and they cannot make it magically reappear.

At least with a “ponzi scheme” the dummies need to volunteer their money…

SNEWSOM2997 – That is not an opt out form, those are just carve outs for special interests. That makes my point that the individual has zero real control. You’re also making my point that in some ways, SS is worse than a Ponzi scheme. Of course you can lose money in both, although the government purports that not to be the case for SS. As the payroll tax increases (it will have to) and benefits shrink, people will see that. 2010 proved that elections have consequences, not that Congress cannot raise revenue or reallocate monies when it has the political will (TARP, stimulus). I disagree with you on that. Agreed about the lock box.

Again, SS is a Ponzi scheme and is worse in several respects. Our discussion convinces me of that even more.

Yes, Social Security has been a great thing for the country, but it can’t be sustained and everyone knows it. It does seem like fraud to pay a mandatory payroll tax for a service that I’ll never receive benefits from. Sure you can argue the semantics all you like, but the bottom line is that Perry is right … not addressing the expected collapse of Social Security is foolish – and amounts to fraud on the part of the government.

How many times has the Government (US) crashed the economy…answer ZERO.
How many time has the PRIVATE SECTOR crashed the economy…answer 1929, 1997 and many times in between…
Enron, AIG, Bank of America, Chase, Stock market speculation…Greed…Greed…Greed.
Tech Bubble, Housing Bubble…
Private sector killed the Great Lakes with pollution and the US Government (the people) had to clean it up. I lived in a city with a SUPER FUND site…Crop Duster dumping Toxic pesticides/Herbicides in a pit in the ground.
As for Social Security…are you ready to send your money to your elderly parents who worked there whole lives and would have a tough time with out that Life line…allowing them to live with a little dignity…or do you only want to take it away from others?

So something that people paid into is a scheme? Perry, what is your problem?

I always knew that they were trying to do away with the middle class and the poor and here’s solid proof.

At least 20 years ago I recognized social security as a fraud and wrote a letter to my local newspaper. The essence of my letter was that social security has been presented as an insurance program. Insurance companies take your premiums and invest them to make sure they will have enough money to pay eventual claims. Social security taxes were not invested, they were spent. If an insurance company did the same thing the executives would be sent to prison and the company forced into bankruptcy. Unfortunately the government employees will not be sent to prison for same kind of chicanery. If Nancy Altman did not recognize it as a fraud 20 years ago she wasn’t paying attention.

Social Security can be given continuing strength by: 1. make all income subject to the FICA taxes (no cap). This will cover 99% of any shortfall. 2. raise the Social Security payroll tax rate from 6.2% to 6.7% to build the reserve fund. 3. return the retirement age to 65 retroactively. This pumps money back into the economy that is needed right now. 4. return the Social Security COLA formula to the best paying one, for the same reason as #3. 5. ADD (and only add) a mandatory 2% to 3% IRA style account to the Soc. Sec. program. This private sector componant may pay well (up markets) or $0.00 (down markets) and cannot be withdrawn or loaned against. 6. return the Social Security fund to being independent of the general budget. This reverses what President Lyndon Johnson approved and, stops politicians dipping paws into the honey jar. 7. set-up a separate tax for catagories of people (immigrants) who never paid into a participating Social Security system.
The above should repair the Social Security system for an additional century.

MR everyman–”" Well, a few of your ideas have merit, I have to give you that, but some fall short..
1.) If you subject all taxes to FICA, then you legally have to offer SSI benefits to all tax payers.. so it doesn’t really accomplish anything except make the system bigger.. Unless you are simply proposing STEALING money from wealthy people to pay for SSI without giving them any recompensation.. (I am sure Obama and the other wealth redistribution progressives would think this was a great idea..)
2.) raising the tax rate an additional 0.05% will do little.. remember it was 1% of $1400 when we started , now its 6.3% of 96,000..
3.) returnig the retirment age to 65 to “pump money back into the economy” is absolutely an abysmal idea.. Its going broke now.. returning the age to 65 will just break it faster.. remember that when it began, the average life expectancy was just over 69 (four years beyond the eligibility age of 65) Now, life expectancy is 79.. 12 years beyond the eligibility age of 67. the eligibility age does not need to be lowered, it needs to be RAISED to a minimum of 74 with the partial eligibility age going from 62 to 67… COLA should be suspended until the program is solvent and should only be raised when inflation meets a predetermed limit (ex: as long as inflation stays below 2%, then there is no cola..) Your last two points are spot on however, privatizing a portion in a protected (no loss fund) is the best way to move it from a completely government sponsored entitlement program to a self sustaining one with minimal risks to future recipients. (that was the corner stone of the Bush plan that congress shot down during his atttempts to privatize the program. Lastley i agree completely that it needs to be taken out of the general fund.. and congress should NOT be able to use the money for anything other than SS programs..

“For sure, it’s troubling that young taxpayers may not have Social Security benefits, but that’s not fraud, that’s a public debate,” Jackson continued.

Direct quote from the article. The problem is we’ve known for years that various administrations have raided the SS account to fund their pet/pork projects for years. The protestations of those paying into it (us) have gone ignored for decades. There is no way for us to NOT pay into SS, even when we KNEW the money would be stolen out of it to pay for pet/pork projects!!! We now have a SS account that is filled only with IOU’s from a gov’t that is broke because there are no more piggy banks left for them to raid.

At any other time when someone takes your money and doesn’t return it, it’s called a crime – theft. Except when the thief is that bastage Uncle Sam.