Andy and Nicole: Good points on both sides, though I’m with my fellow Irishman on this one. Social Security is a Ponzi scheme, and the fact that we can’t get the money back from Ida Mae Fuller and the other early entrants into the racket doesn’t change that a bit.
Nicole writes, “In a Ponzi scheme, the only goal is to perpetuate the fraud to enrich its designers.” That’s precisely what Social Security’s been doing for decades: enriching the bipartisan political class, which has successfully blocked rational discussion of the FDR program and pretended to believe in such unicorns as the “trust fund” and the “lock box” in order to keep itself in office. Further, Nicole notes that “each victim of [a Ponzi] scheme believes that his principal is held in a segregated, individual account, earning a return.” Isn’t that exactly what most people still believe about Social Security? Sure, they shouldn’t, but they do — the legacy of treating Social Security as the “third rail” of American politics.
We can’t take back the money from the “net winners,” nor prosecute the designers for fraud (since they’re all dead), but by having this discussion we can force current officeholders to come clean about the true nature of this glorified welfare program and ”prosecute” them by throwing them out of office.
Can Social Security be saved? Maybe.
Should it be saved? Much better question.
The recent prosecution of an online gambling company proves this point nicely.
Gambling is, of course, not an honest business in any sense. At best you're paying for the privilege of losing all your money in an enjoyable environment. Without the enjoyable environment, it would just be plain old robbery.
But this particular business is considered a Ponzi scheme exactly because it failed to keep each bettor's account in a 'lock box'. I don't see how that makes it worse, but that's apparently the legal definition.
Reply to this commentLinkReport AbusePlease remind us of the good points that Nicole made.
Reply to this commentLinkReport AbuseMr. Walsh hits on perhaps the most significant reason for the resistance to privatization: the enormous loss of income for the Federal treasury, which provides sustenance for the bipartisan spending monstrosity which has become Washington, D.C.
STARVE. THE. BEAST.
Reply to this commentLinkReport AbuseI agree with every word, but a quibble about the starve the beast line. The problem is we can't starve the beast. The beast just presses a button called "the debt ceiling" and that prints all the money he wants to eat. For the time being, the beast will either take your earnings from you through taxes, or he'll just make the money you save worthless through the debt ceiling.
Reply to this commentLinkReport AbuseI think a more apt phrase is generational theft, as opposed to a Ponzi scheme. Calling it a Ponzi scheme is a passive depiction that conveniently leaves the perpetrators of the fraud unnamed. Generational theft simply makes the point that the boomers have run up deficits while in their earning years (i.e., getting more than they're paying for, with the resulting debt left for future generations), and are now adamant about receiving Social Security and other entitlement payments that far outpace their contributions over time. The children of the Greatest Generation.
Reply to this commentLinkReport AbuseWell said.
Of course, lost in all of this is a discussion of what should be done. We are in a once-in-a-century nexus of failed liberal policies combined with a wrecked economy piled on top of 20+years of obscene consumer debt forcing consumer retrenchment.
The United States Government needs to de-leverage like the rest of America. Repeal Obamacare, raise retirement ages when Government benefits can be collected (across the board, military too), and means test Social Security. If you're paying 80% tax on your SS benefits, you don't need SS. Although not a majority of SS recipient, a lot of my SS taxes are paying for blue birds to winter in Miami in January.
Also, give senior citizens the option to opt-out of SS in exchange for never having to file a tax return again.
Reply to this commentLinkReport AbuseIf SS is to be turned into yet another welfare system, I would prefer to dump the overhead altogether. Get rid of the program completely, and those who need welfare can apply to one of the dozens of programs that already exist.
Reply to this commentLinkReport AbuseThat's pretty much what I would like to see happen. We don't need multiple bureaucracies to manage the same basic problem. Welfare, Social Security, and to some extent the VA and military pensions. There is a lot of overlap, and they serve the same basic constituency.
Reply to this commentLinkReport AbuseMost voters do seem to believe that there is a trust fund wherein their forced donations lie, safely earning interest - that is, unless the Democrats don't control both House and Senate - then we hear talk of the evil Republicans "raiding" or "bankrupting" SS. In reality, both parties have treated this income as general fund $ to spend on other projects.
Many of us nearing retirement age understand that we may never be able to do so, since our forced contributions to this scheme have been spent and are unlikely to be replaced. And, the fact that we were forced to make these contributions for most of our working life meant that we had less to invest on REAL retirement savings plans.
Reply to this commentLinkReport AbuseUntil the day they died (well into their 90's) my grandparents both believed that they were only getting back from SS, the money that they had put into it. They even accused me of lying when I told them that they had exhausted that money years earllier.
Saint FDR told them that this was how the system would work, and he would never have lied to them.
Reply to this commentLinkReport AbuseAnd remember the privatization debate in 2008? When the stock market crashed, every Democrat made the point that this is why we can't allow people to invest their own money for retirement? Better your savings are in Social Security where you KNOW that money is safe. For that matter a few Republicans made the same argument.
Reply to this commentLinkReport AbuseWhatever we call it, the govt has been selling SS as reliable retirement for everyone even while they knew it was a lie.
The misery upcoming generations will go through with both Medicare and SS is that when Republicans and Democrats say all sorts of good things about these schemes, too many people make the mistake of believing them.
But we'll go on perpetrating this lie because you have to stand four-square behind both programs to win elections. And you have to talk about both prorams together because they make up what is the cost of survival without work (soon SS won't even cover your medical bills). We won't even settle for just calling it welfare and make it a program for the destitute, even though we can't even afford that.
Instead we'll continue to instruct the nation that SS and Medicare are there for you to get you through your retirement. Most people won't discover it's a lie until it's waaay too late (I'd say any time after 35 is way too late to save what you will need).
Reply to this commentLinkReport AbuseDishonest politicians have perpetuated the myth that Social Security funds are "segregated" and held in trust for each individual. However, no single politician who has pushed this dishonest position will ever admit they are even partly responsible for the mess we are in today.
Over at despair.com they have a great poster which describes this phenomenon: "No single raindrop believes it is responsible for the flood."
Reply to this commentLinkReport AbuseI like to try and start conversations on what should be in the constitution for our next govt, since I am becoming more and more convinced that the current one is not salvageable.
I like to start with our current constitution and add or subtract from it.
Reply to this commentLinkReport AbuseTwo big additions are a lifetime limit on elected office. Say 20 years. And a requirement that anyone who gets their main support from the govt, be it welfare or paycheck, cannot vote.
I've had much the same thoughts, though I would exempt military service from from the voting restriction and I'd add the no one can receive retirement benefits on the basis of serving in an elective office
Reply to this commentLinkReport AbuseWe can't even begin to reform SS until we as a nation are willing to recognize that there is a problem.
With politicians like Romney attacking anyone who goes public with criticisms of SS, we are further away from solutions than we were last month.
Politicians who put their own interests ahead of the country is what got us into this mess.
Reply to this commentLinkReport AbuseHere on the Corner, Ramesh Ponnuru, Veronique de Rugy, et. al. have rolled their eyes at conservatives who say Soc. Sec. is their money. If you only read the 1960 Supreme Court Flemming case, or if you checked the fine print on your statement you'd realize this and get with the program.
This is a posture sure to tear apart the Right if more folks continue to pick up this meme. Every time I see a Cornerite try and sell this it always starts with disbelief: where on earth did anyone ever get the idea that Social Security was your money?
I, for one, want to see Soc. Sec. done away with. That probably won't happen, but when Cornerites act like we're nuts to think it was ever sold to us as our money for our retirement it makes me want to hold their heads in the toilet. And when a Republican candidate tries to sell me on that, I'll lose all ability to vote for him even in the general election.
Reply to this commentLinkReport AbuseLuther Gulick Memorandum re: Famous FDR Quote
"I suggested that it had been a mistake to levy these taxes in the 1930’s when the social security program was orgiginally (sic) adopted. FDR said, 'I guess you’re right on the economics. They are politics all the way through. We put those pay roll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no d#mn politician can ever scrap my social security program. Those taxes aren’t a matter of economics, they’re straight politics.'"
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Reply to this commentLinkReport AbusePonzi scheme is a bit like Death Panels. 100% technocrat accurate? No. Close enough that people understand it at their core? Yep.
That's why defenders of the Statist Quo are working so hard to fight the term. They're hardly linquistic purists. They fight it so hard because it hits so close to home. It is effective, persuasive, rhetoric.
Death Panels effectively killed Obamacare with the general public. It only passed in an exercise of raw, cynical, political power...and it will be repealed.
Ponzi Scheme has the potential to fundamentally alter the Social Security debate. For the people who genuinely need it, SS is Welfare. For the people who don't, it is a way to get free stuff by making the younger generations pay for it. Very few people even argue about this anymore. All they argue now is "It's popular, and you cannot change it."
The phrase tells older voters that they have been duped. There is no "lock box". There is no "trust fund". And, as Obama famously admitted when he could not guarantee checks in August, the whole system is paid with debt.
Those white-haired Tea Partiers understand this fully. That is why Ponzi Scheme works.
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