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post #71 of 96 (permalink) Old 04-01-2009, 05:43 PM
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That's all rosy, but SS is exactly the ponzi scheme that GS described. It isn't a savings acccount, the payers cover the payees. That's how it began, and seemed a good idea when the ratio of payers to payees was favorable, even building an alleged "trust fund" off of the excess. Then the ratio changed. Were you entitled to your input, there'd be an end to your withdrawals, or, if you died prior to getting yours, they'd send a check. All other pyramid schemes like this are generally illegal.

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post #72 of 96 (permalink) Old 04-01-2009, 06:53 PM
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That's all rosy, but SS is exactly the ponzi scheme that GS described. It isn't a savings acccount, the payers cover the payees. That's how it began, and seemed a good idea when the ratio of payers to payees was favorable, even building an alleged "trust fund" off of the excess. Then the ratio changed. Were you entitled to your input, there'd be an end to your withdrawals, or, if you died prior to getting yours, they'd send a check. All other pyramid schemes like this are generally illegal.
The key is, it was never intended as a system for the individual. Look at the name. It was intended all along as a system to protect society [Social] from having a hundred or so million people destitute at the end of their working lives. It provided a payout to each contributor as the safety [Security] element of that.

When designed, they didn't want the National consequences that folks are NOW talking about when it is expected that the system becomes insolvent around 2040.

How much do you think the drain on the National and state systems would have been over the past 75 years if the body of retirees had NOT been getting that check monthly as a result of their contributions?

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post #73 of 96 (permalink) Old 04-01-2009, 08:08 PM
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The key is, when it began, there were payees who were not payers. The math, the ratio, looked good back then. Now, it isn't so favorable. You keep trying to morph it into a savings account, and it isn't.

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post #74 of 96 (permalink) Old 04-01-2009, 08:18 PM
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Exactly, it all boils down to demographics. This situation was easily foreseen by anyone who may have given a rat's ass at the time.... Well, that explains it then, doesn't it?

"If spending money you don't have is the height of stupidity, borrowing money to give it away is the height of insanity." -- anon
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post #75 of 96 (permalink) Old 04-01-2009, 09:08 PM
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I think SS reformers could have an easier time of dissolving it in light of Madoff by casting it in the Ponzi scheme light than ever. People never think of Social Security in these terms, actually boiling down what it does to very simple terms.

It's success was originally (maybe?) based on an assumption that America's population would always grow. Perhaps where it fell down was in failing to adequately predict the baby boom. Our population hasn't grown in a linear manner, and if that's the case, it all falls down rather quickly. Kind of like a bubble.
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post #76 of 96 (permalink) Old 04-01-2009, 09:13 PM
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The key is, when it began, there were payees who were not payers. The math, the ratio, looked good back then. Now, it isn't so favorable. You keep trying to morph it into a savings account, and it isn't.
Actually I think of it as opposite of a savings account. I think of the 1940s bond program as a savings account type program.

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post #77 of 96 (permalink) Old 04-01-2009, 09:19 PM
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True SS is going to bust if we don't develop an infrastructure to not only promote human growth but to promote a highly educated and productive population. At this point we have too many people with fat as brains and it ain't getting any better unless we start promoting a new agenda and strategy for our country.
We have got to go back at being innovators, manufacturers and farmers at a scale that would redefine us as a new breed of Americans. Of course, there is always the option of globalization and turn the house into a bed and breakfast.
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post #78 of 96 (permalink) Old 04-01-2009, 09:19 PM
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I think SS reformers could have an easier time of dissolving it in light of Madoff by casting it in the Ponzi scheme light than ever. People never think of Social Security in these terms, actually boiling down what it does to very simple terms.

It's success was originally (maybe?) based on an assumption that America's population would always grow. Perhaps where it fell down was in failing to adequately predict the baby boom. Our population hasn't grown in a linear manner, and if that's the case, it all falls down rather quickly. Kind of like a bubble.
It fell down because the fund was removed from an isolated, discreet account and brought into the General Fund in the early 1980s in an effort to make the budget numbers look better. All those billions just setting there were too much for politicians to resist and finally the Kemp/Gramm kids hooked onto them.

Had it stayed independent it would have benefited greatly by the growth in the 1990s [dot.com boom] and the strong growth of the population.

The tripcords are high unemployment which cuts into reserve contributions and the baby boom generation which is hitting the roles now. Good news with that is that the biggest generation in history [boomers] also contributed more to the fund]. It would have been better news if it had been an independent fund.

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post #79 of 96 (permalink) Old 04-01-2009, 09:50 PM
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It fell down because the fund was removed from an isolated, discreet account and brought into the General Fund in the early 1980s in an effort to make the budget numbers look better. All those billions just setting there were too much for politicians to resist and finally the Kemp/Gramm kids hooked onto them.

Had it stayed independent it would have benefited greatly by the growth in the 1990s [dot.com boom] and the strong growth of the population.

The tripcords are high unemployment which cuts into reserve contributions and the baby boom generation which is hitting the roles now. Good news with that is that the biggest generation in history [boomers] also contributed more to the fund]. It would have been better news if it had been an independent fund.
Sorry more from wiki

1977 Amendments
To combat the declining financial outlook, in 1977 Congress passed and Carter signed legislation fixing the double-indexing mistake. This amendment also altered the tax formulas to raise more money,[54] increasing withholding from 2% to 6.15%.[55] With these changes, President Carter remarked, "Now this legislation will guarantee that from 1980 to the year 2030, the Social Security funds will be sound."[56] This turned out not to be the case. The financial picture declined almost immediately and by the early 1980s, the system was again in crisis.

[edit] Amendments of the 1980s

After the 1977 amendments, the economic assumptions surrounding Social Security projections continued to be overly optimistic as the program moved toward a crisis. For example, COLAs were attached to increases in the CPI. This meant that they changed with prices, instead of wages. Before the 1970s, wage measurements exceeded changes in price. In the 1970s, however, this reversed and real wages decreased. This meant that FICA revenues could not keep up with the increasing benefits that were being given out. Continued high unemployment levels also lowered the amount of Social Security tax that could be collected. These two developments were decreasing the Social Security Trust Fund reserves.[57] In 1982, projections indicated that the Social Security Trust Fund would run out of money by 1983, and there was talk of the system being unable to pay benefits.[58] The National Commission on Social Security Reform, chaired by Alan Greenspan was created to address the crisis.

The 1983 Amendments
The National Commission on Social Security Reform (NCSSR), chaired by Alan Greenspan, was empaneled to investigate the long-run solvency of Social Security. The 1983 Amendments to the SSA were based on the NCSSR's Final Report."Report of the National Commission on Social Security Reform". Social Security Greenspan Commission. Retrieved on 2008-03-15. The NCSSR recommended enacting a six-month delay in the COLA and changing the tax-rate schedules for the years between 1984 and 1990.[59] It also proposed an income tax on the Social Security benefits of higher-income individuals. This meant that benefits in excess of a household income threshold, generally $25,000 for singles and $32,000 for couples (the precise formula computes and compares three different measures) became taxable. These changes were important for generating revenue in the short term.

Also of concern was the long-term prospect for Social Security because of demographic considerations. Of particular concern was the issue of what would happen when people born during the post-World War II baby boom retired. The NCSSR made several recommendations for addressing the issue. [60] Under the 1983 amendments to Social Security, signed into law by President Ronald Reagan, a previously-enacted increase in the payroll tax rate was accelerated, additional employees were added to the system, the full-benefit retirement age was slowly increased, and up to one-half of the value of the Social Security benefit was made potentially taxable income. [61][62]

The 1983 Amendments and the Social Security Trust Fund
The 1983 Amendments also included a provision to exclude the Social Security Trust Fund from the unified budget (In political jargon, it was proposed to be taken “off-budget.” Yet today Social Security is treated like all the other trust funds of the Unified Budget. It is a political way of using a cash budget instead of the more appropriate accrual budget, for all the budgets in the U.S. government. It is a way of disguising total debt.(Source: Webb, Roy, (1991).
“The Stealth Budget: Unfunded Liabilities of the Federal Government,” Economic Review (Federal Reserve Bank of Richmond), 77,2 May/June.) This provision also provided for the exemption of Social Security and portions of the Medicare trust funds from any general budget cuts beginning in 1993.[50] This change was one way of trying to protect Social Security funds for the future.

As a result of these changes, particularly the tax increases, the Social Security system began to generate a large short-term surplus of funds, intended to cover the added retirement costs of the "baby boomers." Congress invested these surpluses into special series, non-marketable U.S. Treasury securities held by the Social Security Trust Fund. Under the law, the government bonds held by Social Security are backed by the full faith and credit of the U.S. government. Because the government had adopted the unified budget during the Johnson administration, this surplus offsets the total fiscal debt, making it look much smaller. There has been significant disagreement over whether the Social Security Trust Fund has been saved, or has been used to finance other government programs and other tax cuts.

Social Security (United States) - Wikipedia, the free encyclopedia)

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post #80 of 96 (permalink) Old 04-01-2009, 10:22 PM
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It's success was originally (maybe?) based on an assumption that America's population would always grow. Perhaps where it fell down was in failing to adequately predict the baby boom. Our population hasn't grown in a linear manner, and if that's the case, it all falls down rather quickly. Kind of like a bubble.


In concert with the lengthening of the average lifespan. My recently passed grandmother retired in 1976. She was retired for 32 years.
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