The Houston Chronicle quotes Texas governor and Republican Presidential candidate Rick Perry as saying that Social Security "is a Ponzi scheme for these young people. The idea that they're working and paying into Social Security today, that the current program is going to be there for them, is a lie ... It is a monstrous lie on this generation, and we can't do that to them."
http://www.mysanantonio.com/news/politics/article/Perry-has-woven-shroud-of-secrecy-as-Texas-2144596.php
ReplyDeletehttp://www.mysanantonio.com/news/news_columnists/scott_stroud/article/Fed-Up-is-likely-to-haunt-campaign-2144597.php
http://blog.chron.com/rickperry/2011/08/email-purges-withheld-documents-shroud-governors-office-from-public-scrutiny/
http://www.mysanantonio.com/opinion/columnists/bob_richter/article/Why-not-more-praise-for-Texas-favorite-son-2143146.php
ReplyDeleteTotally true. Finally a politician that speaks the truth.
ReplyDeletePeople in the know acknowledge that the entire trust fund - principal and interest have been loaned to the Treasury, and spent for current expenses.
ReplyDeleteThe dollars can't be in the Treasury (and spent) and in the trust fund at the same time.
That is why when the interest was redeemed the last 2 years (since outgo exceeded income, excluding interest), general revenues had to be raised. This is in violation of Roosevelt's goal for the program to be self-supporting, with no use of general revenues.
In a paper entitled "Analytical Perspectives, Budget of the U.S. Government, Fiscal Year 2009:"
Page 195 "At the time Social Security or Medicare redeems the debt instruments in the trust funds to pay benefits not covered by income, the Treasury will have to turn to the public capital markets to raise the funds to finance the benefits, JUST AS IF THE TRUST FUNDS HAD NEVER EXISTED."
http://www.gpoaccess.gov/USbudget/fy09/pdf/spec.pdf.
Don Levit
Oh no! Not another evil Republican for you to bash. Charles, this system is broken and you know it. But any hint at any change to fix it and you go into panic mode. I do this for a living too but I'm honest enough to realize this gravy train is heading for a derailment.
ReplyDeleteI'm a democrat beneficiary. I agree the current system seems odd but what else is there that will be cheap for the government.
ReplyDelete"I'm a democrat beneficiary. I agree the current system seems odd but what else is there that will be cheap for the government."
ReplyDeleteHave people buy their own disability insurance policies. I guess you have heard of Aflac.
Yes because private insurance companies always do better than the government. I have mine though the American International Group because I love my American multinationals but I hate my American government. I'm looking forward to a very happy retirement, suckers.
ReplyDelete"Have people buy their own disability insurance policies. I guess you have heard of Aflac"
ReplyDeleteThat does not address mr perry's concerns about ponzi schemes.
That just shift the direction of the so caled ponzi scheme to the private sector.
Signed,
7:21 AM, August 29, 2011
Anon above is correct. If Social Security is a ponzi scheme so is every insurance policy and pension plan in history. The mark of a ponzi scheme is not necessarily that "profits" are paid by new "investors." The mark of a ponzi scheme is that only those that got in at the beginning of the scheme actually receive any "profits." There are any number of perfectly legitimate investment vehicles in which premiums paid now are used to pay benefits to others. If every investment had to have a large pool of money (i.e, a trust fund) that would be able to pay benefits to all current beneficiaries without taking into account current premium payments, then every insurance policy in the history of the world would be illegal.
ReplyDeleteSo you can complain about Social Security all you want, but it most certainly is not a ponzi scheme.
Anon above:
ReplyDeleteI agree with you that insurers depend on current contributions plus reserves to pay claims.
SS got the curreny contributions right, in order to pay claims. Where it falls short of an insurer is that the excess contributions did not go to the reserves (trust fund). Instead, they went to the Treasury and were spent.
If an insurer did anything similar to that, the department of insurance would (or should) issue a cease and desist order.
Don Levit
Don I'm not sure what you're advocating. Are you saying that congress should begin the process of redirecting money back into the Trust Fund, or that the Trust Fund money is a lost cause?
ReplyDeleteNo Saj:
ReplyDeleteI believe that Congress should redirect the money back to the trust fund.
And, it should be invested similarly to the way they handle the federal employees' defined contribution plan.
Unfortunately, the defined benefit plan is handled just like Social Security -its trust fund must generate new monies when tapped, as if the trust fund did not exist.
Don Levit
I'm not sure how Mr. Levit's basic complaint could even be addressed. Even if the trust funds are in a lock box, and the surplus is taken completely out of budget calculations, the money is still invested in T bills so cashing in the bonds ultimately affects the overall budget. Should we invest the trust funds in the stock market (and risk a crash and complaints about the Feds manipulating the market)? Maybe the Chinese have treasury bonds we can invest in?
ReplyDeleteMaybe Ben Bernanke's mattress?
ReplyDeleteIf the Federal government honors its fiscal commitments, SSA is fully funded for years into the future. No other government program is fully funded beyond the end of the current fiscal year.
ReplyDeleteAnon 12:38
ReplyDeleteThe T-bills of the federal retirees' defined benefit plan were supposed to be in a lock box. Isn't that what a pension plan means?
Unfortunately, those T-bonds were loaned to the Treasury, just like the SS T-bonds.
To address the issue, the law has to be changed to allow investments in the private market.
One that comes to mind is fixed-indexed annuities, in which principal is guaranteed, even if, say, the S&P goes down, you capture a percentage of market gains, and are guaranteed 3%.
Now, isn't that more attractive than an unfunded T-bond, which requires new general revenues to honor?
Anon: 3:13
Social Security is not funded beyond the current fiscal year. How could it be - the entire trust fund is unfunded, so the only funding is current contributions.
In addition, the FASAB, the accounting advisor for the federal government, doesn't even consider SS benefits beyond the current year to be liabilities!
I can provide reputable government excerpts and links for those who are interested.
Don Levit
Even if Perry is elected, here is, I think, the worst that can happen to Social Security:
ReplyDeletehttp://coburn.senate.gov/public//index.cfm?a=Files.Serve&File_id=90fe9124-5865-425c-b7c0-5d9dad48fbb9
In other words, no fear, the "gravy train" will continue, plus now it will send millions more to attorneys as they are cut off.
Anon 5:49:
ReplyDeleteCould not access that link.
Can you provide a few more details of the crux of the article?
Don Levit