Krauthammer: Ponzi Would Be Social Security Commissioner If New Entrants Were Forced Into His Scheme
For several weeks, NewsBusters has been reporting that despite protestations from liberal media members, Texas governor Rick Perry is 100 percent correct when he calls Social Security a Ponzi scheme.
On PBS's "Inside Washington" Friday, syndicated columnist Charles Krauthammer put a fine point on this saying, "If Charles Ponzi had had the force of the law forcing people, new entrants, into his scheme, he’d still be going. He’d be commissioner of Social Security" (video follows with transcript and commentary):
GORDON PETERSON, HOST: Okay, another debate, another round of Social Security. Mitt Romney, sounding like the program's great defender. Romney says it is not a Ponzi scheme. Charles disagrees. I know that because I read it in his column this week.
CHARLES KRAUTHAMMER: Well, it is of course a Ponzi scheme. The only difference is that Social Security is mandatory, and if Charles Ponzi had had the force of the law forcing people, new entrants, into his scheme, he’d still be going. He’d be commissioner of Social Security.
Well, Ponzi died in 1949, so this might be an exaggeration on Krauthammer's part, but the point is a good one.
As much as media members try to push back on the truth - having themselves made the same assertion going back to at least 1967 - there's really no getting around it: Social Security is and has been a Ponzi scheme since the day it was enacted.
Once the press accepts this rather than fighting it, maybe a serious conversation can ensue that allows Congress and the White House to affect reforms that will preserve this program for generations to come.
The only question is whether that's possible, or will the fourth estate continue to demagogue all proposed solutions thereby dooming Social Security to the trash heap?
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Comments
Some finer points regarding social security and Ponzi schemes.
Submitted by big.league.slider on Sat, 09/17/2011 - 2:34am.
One might argue that under the original conditions that social security first operated, it was not so much of a Ponzi scheme. The payroll taxes used to fund the program exceeded the payouts, and there may have actually been a sort of trust fund existing.
The point at which the program became a true Ponzi scheme was when the payroll tax receipts were used for expenditures besides social security. In reality, if the excess payroll taxes collected during the first 40 years of the social security program were actually put into a "trust fund", and had been generating even marginal investment returns, the program would currently be overflowing with money.
I'd like to see the past and current members of congress that approved budget expenditures of social security funds for things other than social security held legally liable. Either that, or admit that social security taxes are unconstitutional.
Social Security
Submitted by Unsane on Sat, 09/17/2011 - 8:30am.
If the ratio of workers to retirees never, ever changed from the time the program was implemented until now, it for sure wouldn't have been a Ponzi scheme. And it may have worked. Problem is, I don't think those who designed this scheme could think that far ahead with any degree of accuracy. So it has become a Ponzi scheme over time.
"CONSUMED DEMOCRACY RETURNS A SOCIALIST REGIME" - Slayer, "Fictional Reality", from Divine Intervention (1994)
The problem is that to expect the
Submitted by hbnolikeee on Sat, 09/17/2011 - 10:37am.
ratio of working to retired to remain constant is nonsense and junk math.
You are right, but technically...
Submitted by Unsane on Sat, 09/17/2011 - 10:44am.
It COULD have happened. On paper. But what happened was a ratio that fell to 3 to 1 in current times. And I don't think anyone in 1935 could see that far ahead.
(By the way, to maintain the worker to retiree ratio as it was in, say, 1940, just how big would the United States be in terms of population.
"CONSUMED DEMOCRACY RETURNS A SOCIALIST REGIME" - Slayer, "Fictional Reality", from Divine Intervention (1994)
Social security has been distorted since it was enacted.
Submitted by drsamherman on Sat, 09/17/2011 - 4:30pm.
As I recall from political science and history classes, the Social Security Act was enacted primarily to be the income source of last resort. I don't recall that it was ever designed to be the massive wealth transfer program that it became, thanks to generations of politicians on both sides of the fence expanding it beyond the original intent AND squandering excess FICA tax revenue for other purposes than Medicare or the retirement, survivor and disability benefits.
Doing some looking around on the web, I found that Ida May Fuller was the first to receive a regular benefit check per http://www.ssa.gov/history/briefhistory3.html#idamay and the first person to receive any benefits was Ernest Ackerman per http://www.ssa.gov/history/briefhistory3.html#firstcheck
"Doing some looking around on
Submitted by stratman on Sat, 09/17/2011 - 11:49pm.
Yes, and both of them collected in excess of what they put into the system, Ida May in particular.
Social Security was a Ponzi scheme from the first payout. It was always a wealth transfer mechanism that hoped people would die before collecting, sort of an earlier spin on the Democrats' ObamaCare Death Panels of today. If anything, the Left is consistent in destruction by way of good intentions.
Did they teach in political science class >>>
Submitted by lrgon on Sun, 09/18/2011 - 10:43am.
that the federal government has no business being involved in the first place?
that's the problem with big gov programs-
Submitted by UndercoverConse... on Tue, 09/20/2011 - 5:51pm.
they probably also didn't predict having children of non contributing immigrants on SSI, or thought about people becoming citizens and contributing for only a year or less before taking out SS payments on "retirement".
every big gov program runs into problems that it's defenders claim "no one could have forseen". that may be true. But the bottom line is, we CAN forsee based on that track record that government programs will almost certainly become derailed. The solution is not to enact big programs with the proven certainty that they will boondoggle, but to NOT enact big programs in the first place.
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Raise the age of eligibility
Submitted by PeskyDane on Sat, 09/17/2011 - 6:22am.
Raise the age of eligibility again. That's the best way to save it... presuming you want to save it.
Or..
Submitted by Anon150 on Sat, 09/17/2011 - 9:27am.
Get to the real point and ask:
"Should the Federal Government be running a retirement program at all?"
Whaat shoiuld really be scary
Submitted by FastEd on Sat, 09/17/2011 - 10:43am.
is the amount of non-caring of the present generation of "workers". Without a clue, and not knowing what social security really is, they don't have any reason to care that there won't be anything in the "trust fund" for them. Add to that, that nobody has a pension anymore, or are any explainations of 401k's or retirements, (too far in the future) and you have to wonder if anyone will want to survive 'after' retirement - oh, wait, they might still be waiting for some 'hope and change', again.
"We the People . . " Hey, congress - I'm one of the people - start listening!
There is no sense in being stupid, if you can't prove it! - my dad V
Career polititians started
Submitted by jessieH on Sat, 09/17/2011 - 11:03am.
Career polititians started this ponzi scheme. Some of them are still in office. If we blame anyone, then let's blame them. Throw their asses in prison, like we did with Maddoff. No one is above the law.
Petty Cash
Submitted by billb on Sat, 09/17/2011 - 1:35pm.
We are always reminded that there is no "lockbox". That SS funds are being put into the "general fund." I've worked in more companies and started more businesses than most people. In every company I've encountered, any time money was borrowed by another department, an IOU was placed in the the account to verify the shortage. Now for the good part....ALL IOU's BORE THE SIGNATURE OF THE BORROWER!
Surely the SS IOU's all have signatures.
SURELY!
New law for liberals to ponder
Submitted by GregE on Sat, 09/17/2011 - 6:43pm.
How far would a NEW law like this get with Congress members travel the country giving speeches telling us this is what the program will be:
1) Look at your take gross pay, and subtract 13%. This is what the government is going to take from you. You cannot opt out.
2) The government will then give that money to someone else.
3) One day, when you can no longer work, those who are working will be doing what you had to do, that being give up 13% of their pay to give to you...............or, if you die before you begin that part of the program, you will have put in 13% of lifetime earnings that is gone into thin air. You cannot will it to anyone, it's gone. And you must participate in this for your entire working life. No opt out.
4) You must pay this to the government, monthly, by looking at your pay for the month, and writing a 13% check to the government. This payment will not be withheld from your pay. You are responsible for writing the check and mailing it each month. Failure to make payments could result in a prison sentence.
Sure, you could use that money to invest for yourself, but no, you will not be allowed to do this. You must write this check and send to the federal government.
They will say they are for it, because they know what you are describing and why. But, if they were honest and if there was no such program now and this was a new proposal, most would look at that and tell you that's nuts.
Just another useful bunch of facts
Submitted by Bill The Bold on Sat, 09/17/2011 - 7:22pm.
that always seem to so inflame denizens of these here parts.
SS is not a Ponzi scheme. The people pay into the fund and accrue benefits for later in life. When they are ready they get those benefits. The gov has used the trust as a source of cash but it wasn't just drawn out and replaced with a few I.O.U.s on paper. It was replaced dollar for dollar with U.S. Government treasury bonds. when the time comes, those bonds will be funded so the retirees can get what they put in. Unlike, say a private company's pension funds which have been spent without being replaced with debt instruments.
Pay atention
Submitted by Unsane on Sat, 09/17/2011 - 7:44pm.
Social Security has most certainly turned into a Ponzi scheme. There is no fund people pay into. Social Security exists as a transfer payment scheme. Your Social Security taxes go straight from your paycheck to a recipient. If it isn't gone the first month, it WILL be the second.
What made Social Security a Ponzi scheme? Two things its originators could not account for, in all likelihood:
1) Longer life expectancy.
2) The continued urbanization and industrialization of America which has resulted in a lower birth rate and thus, over time, has meant fewer taxpayers supporting recipients who are living longer.
"CONSUMED DEMOCRACY RETURNS A SOCIALIST REGIME" - Slayer, "Fictional Reality", from Divine Intervention (1994)
IOUs Can't Save Social Security
Submitted by Par for the Course on Sat, 09/17/2011 - 9:35pm.
From IOUs Can't Save Social Security
I don't think I follow what your saying here:
Can you elaborate on this statement? Why would a company's pension plan have to replace funds, which have been spent (normally benefit payments), with debt instruments? Private companies that have defined benefit pension plans are required to make contributions to that plan (a separate entity). The contribution is based on an actuarial formula. The plan then invests the employers contributions in stocks, bonds, etc. and uses these assets to pay out (defined) benefits to qualified recipients.
If you said something like, a certain company's pension plan is underfunded because the company didn't make a large enough contribution to the plan, I think I would get your point. In that case however, I think the PBGC and the IRS would probably be asking questions why the company wasn't making the legally required minimum contribution.
SURE COULD USE
Submitted by donabernathy on Sun, 09/18/2011 - 12:32pm.
those 50 million contributors (not to mention their off spring) that we snuffed out thanks to Roe v Wade ....huh
roflmao
Charles Krauthammer nails it
Submitted by amyshulk on Sun, 09/18/2011 - 6:25pm.
Charles Krauthammer nails it as usual!
Ronald Reagan