Ever since Texas Governor Rick Perry attacked Social Security as a Ponzi scheme as an opening gambit in his presidential campaign we have been treated to a spirited debate in the media on the truth of this proposition. Those of us who consider this to be ill-informed nonsense that has the effect of misleading the public about the state of Social Security's finances were told to lighten up. After all, what is wrong with debating the topic?
In this spirit of free and open debate, perhaps our attention should be devoted to the question of whether the Washington Post is a criminal enterprise. While it is ostensibly a newspaper that purports to give the public an objective take on key events in the country and the world, it has been involved in several actions that raise serious questions about this status.
For example, a few years back its management came up with a plan to have high-priced dinner events where lobbyists would be given direct access to the papers' reporters. The plan was to have the reporters lead discussions on important issues. The lobbyists would be given the opportunity to argue their positions, ensuring that the reporters knew these arguments the next time that they wrote on the topic. Needless to say, those who could not afford the price of admission would not get the same opportunity to educate the Post's reporters.
Thankfully this plan was nixed by some clearer-thinking folks in the Post's management after it got leaked to the public. But there is a more general question of whether advertising dollars influence the Post's news and editorial content. For example, the pharmaceutical industry is one of the Post's leading advertisers. It regularly runs large ads touting the benefits of new drugs.
Does this have any influence on the fact that it routinely misleadingly touts trade agreements that will increase protection for the industry's patents in other countries as "free trade" agreements? Do these ads affect the paper's editorial position that strongly supports such agreements?
Do the ads affect its willingness to run pro-industry columns? For example, it ran a 2007 piece from a Manhattan Institute-affiliated researcher "Yes, New Drugs Save Lives," that purported to find huge health and economic benefits from new drugs. It turns out that the research finding large benefits for new drugs also shows that higher income is strongly associated with shorter life expectancies.
These items, and many others, could be cited as evidence that the Washington Post is in fact not a real newspaper, but it is rather engaged in the business of selling its status as one of the country's premier newspapers to the highest bidder. Personally, I don't think the Post is engaged in corruption of this sort. The biases within the paper are more subtle. They are attributable to the narrow social circles inhabited by its editors and senior reporters much more than the direct influence of advertising dollars.
More importantly, the Post's editors and reporters would no doubt find it incredibly offensive that there would be a major national debate on the integrity of the newspaper. This should say a lot about how the public, the vast majority of whom either currently or in the future will be largely dependent on Social Security, should view the debate over whether Social Security is a Ponzi scheme. The comparison is quite deliberately intended as a slander against the integrity of the program. It has no meaningful basis in reality.
At the most basic level, Social Security has 100 percent transparency in its finances. Anyone who cares can find the past, current, and projected future income and cost of the program in great detail in the annual trustees reports. The basis of every Ponzi scheme is deception: the claim of enormous returns. There is zero deception in Social Security.
And, these projections show that the program can pay all benefits for the next 35 years with no changes whatsoever. They also show it can pay more than 75 percent of benefits indefinitely. A tax increase that is less than 5 percent of projected wage growth over the next three decades would make allow it to pay all benefits into the indefinite future.
The way in which Social Security is ostensibly similar to a Ponzi scheme is that it depends on new workers in the future to meet obligations that it incurs today. This also happens to be true of any debt issued by either the government or the private sector.
If the size of the working population in the United States collapsed tomorrow, then it would not have the tax revenue to pay off government bonds. Similarly, if the public stopped buying General Electric's products, it would also be unable to pay off its bondholders. Yet no one in their right mind would describe the bonds issued by the federal government or General Electric as Ponzi schemes.
The reality is that there is no realistic basis for the comparison between Social Security and a Ponzi scheme. The proper response to Governor Perry's charge should have been to ask whether he had any understanding at all about the country's most important social program. He had committed a gaffe of monumental proportions. The media should have focused on exposing the governor's ignorance, not trying to imply that in some alternative universe he might be right.
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Liars Inc. is in full swing, and thanks to tv and the internet lies fly into the minds of the ignorant public or vote for the very people who are going to impoverish them.
Your premise is that truth is the objective of so-called "communication." For all we know, Gov. Perry was carefully following the professional advice of Frank Luntz (http://en.wikipedia.org/wiki/Frank_Luntz) who specializes in using words to create desired effects on the audience. Effectiveness at achieving one's end is the point, not the truth.
In a world where word manipulation is - in fact - the norm, it is IMPOSSIBLE to arrive at the truth. One can only give in from exhaustion to one stream of manipulation over another stream.
People like Luntz creates doubts in the public's mind about all public writers, yourself included.
This situation is terrible. It is killing us. It is fundamentally dysfunctional. This must be fixed.
For a possible solution, see "Reform Society - Save Ourselves" at -
http://americanconversationgroup.blogspot.com/p/key-essay.html
Best wishes,
Daniel Hough Jones
The Sunday morning carnivals are a good example of watching the same politicians , analyst (expert) , pundit year after year lie without being corrected while the host , who pretends to be knowledgeable , ignores the lies . The host is pretending to not affect the outcome of the political contests .
After watching the Bush gang pillage Fannie & Freddie , the present day Republicans want to give what is left of the people's money and livelihood the same treatment . And when they lie about the condition of the people's retirement insurance (annuity) and the people's health insurance all we get is a blank stare from the hosts of these Sunday morning carnivals .
For one possible approach, see "Reform Society - Save Ourselves," at -
http://americanconversationgroup.blogspot.com/p/key-essay.html
Best wishes,
Daniel Hough Jones
Second, I see the taxes used by SS as income tax with a slight twist that makes them progressive, which is the payout structure provides for a higher future benefit per dollar paid in for lower incomes.
The interesting part of reading the comments is that two clear views are presented.
The first looks at SS as forced savings. With this view, the Ponzi scheme analogy makes sense because the investment in US government debt, by the US government, makes no sense and the returns are worse than a private account invested in US government debt for almost all participants. In addition, all the fixes (increase the cap, means test, etc...) all violate the concept that the saver gets a reasonable return.
The second view is that it is welfare for the old. In this view the system becomes the flaw. Public employees with separate pensions don't pay in, old folk who didn't work don't get benefits, and it doesn't work like an insurance payout because it pays out to everyone, not just to those who need it.
So, IMHO, this converstation is doomed unless we define what we are trying to accomplish and then build a plan to get there otherwise nothing will change and will require us youngsters to accept lower payouts or higher taxes.
http://www.ssa.gov/oact/progdata/assets.html
Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today’s young may well get less than they put in). --- Paul Krugman
Why because w/o it, you end up with most seniors on welfare and thats not free...
Repubs idelaogy seems to blind them to reality, science and history.. They actually think that western towns allowed people to walk around the streets armed and their were duals in the streets daily ( maybe about 50 in hundred and fifty years)!
In theend, Ayn Rand had to live of soc sec and she was grandfathered in...and got medicare...
Regards
chris matthews and the much lauded paul krugman have referred to social security as a ponzi scheme. fear not--i have already reported them to AttackWatch.
LOL.
Regards
Repubs never right!
If SOcSEC is insolvent, then pitty anyone with a private company pension plan and maybe some state plans since they have all been raided...Private by chop shop buyouts as done by Mitt Romney, state funds now being raided by Repub governors to balance budgets,, who then cut pension benefits so they dont have to pay the money taken back in, such as in Virginia, Wi, New Jersey.
When first created, it did grandfather people in because robber baron economics(again being pushed by Repubs) and the GreatDepression had left most with no pension or savings(just like now). It took many working to cover them. Today each person is paying in his whole life and in that case the number working is about 3 to one.
Private pensions by 1970s were so raided, underFunded, diappearing that the Government had to pass ERISA to insure them, required that in fact those promised pensions were being funded. The most common gimmick was also to have very long vesting periods of 20 years so only management would basically vest. The insurance only will cover a fraction of a persons pension, but better than nothing. Big government had again to step in as with clean air/water, because business unregulated in even the pension area was a CRIME in progress.
Regards
First, you need to update your research on private and public pension plans and the rules that surround them. Private firms no longer offer defined benefit pension plans because the accounting rules make them very expensive and volatile to earnings. The result is many defined contribution plans (which takes care of your vesting rules issue because they vest right away). Unfortunately public defined benefit plans don't have the same rules and have become significantly underfunded because of the investment performance over the last 10 years. Since the accouting rules let them spread losses over many years the problems don't show up until they are really bad and they take a long time to solve.
Second, the real question is the definition of solvency. If you have an actuarial view that you will not be able to meet your future obligations (the current situation with SS) you may be liquid (able to meet current obligations) but you are not solvent (have more assets than liabilities). So, the 1972 Republicans may be right, without any changes (such as the one signed by Regan) it would have been insolvent long before you retired (I did not say illiquid).
I think we should update that youth/age slogan to "If you're young and conservative, you have no brains. If you're old and conservative, you still have no brains."
If this surplus is blended into the general tax fund of the US, via default of the Treasury on the debt it represents, it effectively raises the "INCOME TAX RATE" of the middle class by that same percentage, retroactively making our taxation the most regressive in the world, if it isn't already. The surplus was utilized primarily for the benefit of the wealthy and for corporate welfare over the last decade, and those who received those benefits should be charged with repayment of the account, with interest, just as if it were a loan. A surcharge of at least 2% on (all) income above $1 million should be enacted, with the 2% also applied to corporate cash holdings and individual investments of the wealthy to recapture some of what was lost previously. This could fund the repayment of the surplus while current FICA deductions cover most of the retirement costs of the boomers. This would help assure the viability of the program for future generations of working class Americans.
This is exactly, and wholly, what Social Security is. The difference is that government law does the scheming to coerce new "investors" to contribute. Right now, the point at which the scheme breaks down is officially 2036, when the reserves will be exhausted and there won't be money to pay the "obligations". Given economic conditions, and the current plan to cut contributions in half indefinitely, the break-down point will almost certainly be sooner.
Having funding for 35 years, makes soc sec the most solvent of pension plans by far, and a fix for just raising the income cap as was supposed to be done in the Reagan fix to match inflation makes it permanently solvent!
Almost every single private pension fund by the late 1970s, was under funded, a ponzi scheme or just plain fraud as it was ineffect deferred compensation! You may remember ERISA having to be past as plans were underfunded and raided or structured so only top management ever vested!
Please note soc sec is not a pension fund.. its inusrance. design to fund the living! A private plan from would payout considerably less to those still leaving , about 1/3 less.
Note that unlike socsec/medicare, all other government pensions, VA and military are completely unfunded, no reserves and are completely broke at the end of every budget year.
Regards
The "person" getting rich from SS is the federal government. They have taken trillions from SS payments and used them for other spending.
I'm not arguing that SS does not provide a valuable benefit, or that it should be privatized. I just think people should be honest about what it is and isn't.