Southern Man

Monday, September 12, 2011

Is Social Security A Ponzi Scheme?

Well, let's hear from the "experts," shall we? Here's a quote from this source (Wikipedia links not in original source):
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).
But a bit later that same person wrote:
Social Security’s attackers claim that they’re concerned about the program’s financial future. But their math doesn’t add up, and their hostility isn’t really about dollars and cents. Instead, it’s about ideology and posturing. And underneath it all is ignorance of or indifference to the realities of life for many Americans...The program won’t have to turn to Congress for help or cut benefits until or unless the trust fund is exhausted, which the program’s actuaries don’t expect to happen until 2037 — and there’s a significant chance, according to their estimates, that that day will never come.
Wow, that's kind of a 180-degree turn there, isn't it? Wonder who it was? Can you guess, without peeking? Southern Man loves multiple-choice questions, so here are your choices (for the non-peekers):
Just so you know, Social Security now runs at a deficit. The much-discussed "trust fund" is a stack of IOUs at the Treasury Department. Yes, those IOUs are as good as money - but the money they're good for has already been spent as part of general revenue and must be raised anew. That's going to be a tough sell given that the people from whom it must be raised have paid it once already. And if I owe you $20,000 but don't have the means to pay you, what good is your note?

Social Security is a demographic disaster. It's also the retirement plan for many Americans. We can fix it now - which will be quite painful - or we can continue to pretend that everything is all right (as Dr. Krugman does above in his post-Ponzi apologetics) and reap an even more bitter harvest later. In past years this has been a taboo subject. At least we're talking about it now. and that's a start. In the meantime Southern Man will continue to prepare for his golden years as though SS won't be around. He rather suspects that those who had the foresight to prepare for their own needs will be the first cut from the rolls anyway. Or have their private retirement assets seized...

[added later] And now the Good Doctor is complaining that his earlier quote was taken out of context by those evil conservatives and writes this rebuttal in which he re-posts the exact same paragraph as Southern Man and then explains that it actually doesn't mean at all what it says. Read his post and the comments that follow; it's actually rather educational.


At Wednesday, September 14, 2011, Anonymous Anonymous said...

I agree with you 100%


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