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Social Insecurity

brantc

Muse
brantc
Joined
Feb 14, 2009
Messages
541
Social Security from a friend of mine....

"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..

Be sure and show it to your kids. They need a little history lesson on what's what and it doesn't matter whether you are Democrat or Republican. Facts are Facts!!!"

Our Social Security

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%

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!
 
brantc said:
And the worst part about it is uninformed citizens believe it!
Click to expand...

Yeah, they need to start getting their information from 5 year old spam emails instead. If everyone did that, we'd all be so much better off.
 
I feel sorry for people that pass on or post anonymous emails like this one. They leave themselves open to believing any tripe that comes in their mailbox that confirms their bias.
 
My sister-in-law has learned to at least ask about these things. Of course, when she asks, the usual answer is, "It's nonsense"
 
Regardless, SS is a mess and this Ponzi scheme is and will be kept alive only by increased witholdings, reduced benefits, and increasing the age of eligibility.

I guess this is where some useful idiot chimes in that SS is not a Ponzi scheme because it says right on their web page that it isn't a Ponzi scheme...
 
As long as old people continue to die, Social Security is not a Ponzi scheme.
 
brantc said:
Social Security from a friend of mine....

Facts are Facts


And the worst part about it is uninformed citizens believe it!
Click to expand...

Facts are facts unless they are lies.

And the worst part is, unsceptical citizens just post any sort of rubbish on the internet and think, 'it's on the internet' or 'I got it in an e-mail, it MUST be true'.

TheDoLittle said:
Remember, Snopes.com can be your friend.

http://www.snopes.com/politics/socialsecurity/changes.asp
Click to expand...

I love Snopes.

Lurker said:
I feel sorry for people that pass on or post anonymous emails like this one. They leave themselves open to believing any tripe that comes in their mailbox that confirms their bias.
Click to expand...

I love this site.

:)
 
I would agree that Social Security has elements similar to a Ponzi scheme but one of the definitions of a ponzi scheme is that it offers returns higher than what one would normally expect to get. Every conservative I know decries Social Security and their anemic rate of return.
 
WildCat said:
Old people who participate in Ponzi schemes don't ever die?
Click to expand...

When someone "invests" in a Ponzi scheme and dies, the operator of the Ponzi scheme still has an obligation to honor that investment and send money to the estate. That's why it eventually falls apart.

When someone on Social Security dies, the obligation ends (except when there is a valid beneficiary as established by Social Security policy).

Its the same logical error over and over again. Ponzi schemes pay prior claimants with money from new investors. Social Security pays prior claimants with money from new investors. Therefore Social Security is a Ponzi scheme.

Dogs have four legs. Cats have four legs. Therefore, cats are dogs.

Its not an investment scheme, its a lottery. Only instead of determining whether you win or lose based on ping pong balls in a mixing machine, its based on how long you live. Live long enough, you get a payout. Fail to live long enough, you don't. Figure out the odds of how long people live, how much money they make, and how many people are buying tickets, and you can figure out the taxes and benefits pretty easily.

As long as the population demographics stay the same, you can run the scheme forever with the same odds and numbers. But if the demographics change, the odds change and you have to change the taxes and benefits. You might have to raise or lower taxes, raise or lower payouts, change eligiblity requirements, or make other alterations, but that's to be expected. You don't make a long distance drive without turning the steering wheel a bit.

But as long as people die and we don't have to pay them anymore, Social Security in some form or other could be run forever.
 
I agree that SS needs reform, but it's far from a Ponzi scheme. That weaselly guy on the Daily Show said the same thing last night, and it struck me as silly hyperbole.
 
Lurker said:
I would agree that Social Security has elements similar to a Ponzi scheme but one of the definitions of a ponzi scheme is that it offers returns higher than what one would normally expect to get. Every conservative I know decries Social Security and their anemic rate of return.
Click to expand...
That's why most Ponzi schemes eventually fall apart, because those early returns can't be made permanent.

With SS the first recipients got way, way, way more than they ever put in, if they put in anything at all. Unfortunately, later participants cannot drop out.

But the scheme is the same - those receiving benefits get them not from any actual investment, but from others who are paying in. And because of demographics the only way to keep[ it all afloat is through higher witholdings and lesser benefits.
 
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WildCat said:
I guess this is where some useful idiot chimes in that SS is not a Ponzi scheme because it says right on their web page that it isn't a Ponzi scheme...
Click to expand...

It's insurance, not an investment scheme, unlike a Ponzi. We know how it is funded, unlike a Ponzi. It needs reworking because of population changes, not because it inherently requires exponential new investors, unlike a Ponzi.

Now some dimwit is going to disagree with me :p .
 
Random said:
When someone "invests" in a Ponzi scheme and dies, the operator of the Ponzi scheme still has an obligation to honor that investment and send money to the estate. That's why it eventually falls apart.
Click to expand...
That's not why it falls apart. It falls apart because no money is actually invested, and you need an ever-larger pool of contributors to pay off the others.

When someone on Social Security dies, the obligation ends (except when there is a valid beneficiary as established by Social Security policy).

Its the same logical error over and over again. Ponzi schemes pay prior claimants with money from new investors. Social Security pays prior claimants with money from new investors. Therefore Social Security is a Ponzi scheme.

Dogs have four legs. Cats have four legs. Therefore, cats are dogs.

Its not an investment scheme, its a lottery. Only instead of determining whether you win or lose based on ping pong balls in a mixing machine, its based on how long you live. Live long enough, you get a payout. Fail to live long enough, you don't. Figure out the odds of how long people live, how much money they make, and how many people are buying tickets, and you can figure out the taxes and benefits pretty easily.

As long as the population demographics stay the same, you can run the scheme forever with the same odds and numbers. But if the demographics change, the odds change and you have to change the taxes and benefits. You might have to raise or lower taxes, raise or lower payouts, change eligiblity requirements, or make other alterations, but that's to be expected. You don't make a long distance drive without turning the steering wheel a bit.

But as long as people die and we don't have to pay them anymore, Social Security in some form or other could be run forever.
Click to expand...
So what differentiates SS from a Ponzi scheme is that SS is mandatory, so we don't have to worry about people dropping out once they realize their benefits are decreasing?
 
WildCat said:
That's not why it falls apart. It falls apart because no money is actually invested, and you need an ever-larger pool of contributors to pay off the others.
Click to expand...
But Social Security is different as it does not necessarily need an ever expanding pool of investors. Take two scenarios:

Charlie says that he is selling bonds that mature at an annual 100% growth rate. Bob is selling a retirement plan with an annual 100% growth rate, but which is non-transferable.

Now imagine that for some completely rational and logical reason, half of the people who buy either will die within one year. Thats just the way the demographics work.

Charlie sells two people a single $100 bond each. A year passes, and two people show up with $100 bonds looking for a $200 payout, one person who bought the bond originally, and the widow of the other. Charlie has to pay out $400 dollars to the bond holders. He needs four people to buy $100 bonds to pay them off. Each year the amount of new investors he needs doubles. This is a classic Ponzi scheme, and will eventually collapse.

Bob sells two people a $100 retirement package each. A year passes and one person shows up looking for his $200 payout (the other having died in an improbable eggbeater/jogging accident and could not transfer his retirement package upon his death). Bob only needs two new people to pay off the first two, since one of the first two died. Two investors a year and he can go indefinitely. This is a pay-as-you-go scheme, and can last forever.


So what differentiates SS from a Ponzi scheme is that SS is mandatory, so we don't have to worry about people dropping out once they realize their benefits are decreasing?
Click to expand...

Pretty much, yeah. Of course, the only reason we keep having to change the tax/benefit ratio is that the demographics are changing. We had a baby boom, and that meant a lot of workers earning money for retirees. Now they are starting to retire themselves and the ratio of workers to retirees is starting to change. If the demographics were steady, we could have a fixed tax/benefit ratio for Social Security and never worry about it again.
 
Random said:
This is a pay-as-you-go scheme, and can last forever.
Click to expand...
No kidding! But it's being sold as a retirement program, complete with a mythical "trust fund" that doesn't really exist except as an accounting gimmick.
 
WildCat said:
No kidding! But it's being sold as a retirement program, complete with a mythical "trust fund" that doesn't really exist except as an accounting gimmick.
Click to expand...

Regarding the trust fund, let's assume they would want to invest the money so as to get some return on the investment over time. They could invest in stocks but that might be considered risky. Now where would be a nice, safe, place to invest money be? Where is one area that people go to invest for a rock solid investment. Hmm, Treasury Bonds seem to have some popularity as safe investments. Let's invest there. Sure it may not return as much as stocks but it is more reliable.

So, where did the social security administration invest their money? Treasury bonds. Are we in danger of defaulting on those Treasury bonds? No. If you think so, what difference is there between that and all the debt that China holds? You better tell the Chinese that they are buying worthless bonds if you think the SS held Treasury Bonds are "worthless IOUs".

You allege that the Trust fund is mythical. Are your T-Bills mythical?
 
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