IS the US Economy a Ponzi Scheme?

[Billy T]

Consumer electronics comprise only a small portion of the CPI goods basket. The main factor driving down the CPI in the last couple of years is the collapse in energy prices.
Actually, I'm given to believe that the energy component is the only one that has decreased: prices on DVDs, camera, computers, etc. are flat or even up.

I think you are correct, but overlooking the "quality adjustment” factor in the CPI index.

For example, suppose that the 1.6 meg pixel digital camera of four years ago cost $150 and today's 5 meg pixel camera cost $175. For the CPI, that is a drop in price after the quality adjust factor is applied. Automobile tires now hardly ever go flat and despite higher price, a lower cost enters into the CPI than 10 years ago, again due to the quality adjust factor. Same is true of cars, etc. for many other things that perform better or last longer etc.

It is via this "judgmental factor" that I think gives the government the greatest opportunity to play around with the CPI index - not increase it as much as they should to save on Social Security and TIP corrections costs.

 

[John99]

IS the US Economy a Ponzi Scheme?

everything is a 'Ponzi Scheme'. If people are making money there is no ponzi, if people are NOT making money THEN suddenly it becomes a ponzi scheme.

 

[iceaura]

Ah, but the pyramid arrangement is as much a part of SS as a Ponzi scheme. The allocation of benefits assumes an exponentially expanding base of workers to fund it.

No, it doesn't.

It doesn't even assume an expanding productivity base.

It assumes that rich people will be taxed to pay off the boomer fund loans, which may be just as unrealistic, but hell - - -

IS the US Economy a Ponzi Scheme?

everything is a 'Ponzi Scheme'.

That's the problem with abusing terms like that - you lose the ability to distinguish what used to be distinguishable, and you can no longer discuss issues sensibly.

How are the necessary reforms in SS going to be made, for example, if people keep thinking about it as a fraudulent investment instead of a regressive welfare payment?

 

[quadraphonics]

No, it doesn't.

It doesn't even assume an expanding productivity base.

It assumes that rich people will be taxed to pay off the boomer fund loans, which may be just as unrealistic, but hell - - -

What are you talking about? It's a payroll tax, and a capped one at that. Which is an explicit refusal to tax the rich in order to fund its obligations.

 

[iceaura]

What are you talking about? It's a payroll tax, and a capped one at that. Which is an explicit refusal to tax the rich in order to fund its obligations.

I'm talking about the money borrowed from the SS boomer fund, the money that was supposed to cover the deficit that is somebody's idea of a fatal flaw in SS.

That money is to be paid back through ordinary federal taxation - hence the sudden panic among the monied as they contemplate the near future.

 

[quadraphonics]

I'm talking about the money borrowed from the SS boomer fund, the money that was supposed to cover the deficit that is somebody's idea of a fatal flaw in SS.

That money is to be paid back through ordinary federal taxation - hence the sudden panic among the monied as they contemplate the near future.

Oh, gotcha.

But there's two "deficits" here: there's a big baby-boomer bulge, which requires substantial, but transient, funding to cover. Sufficient money has already been collected by SS to cover most of that (since, like all population bulges, they were more than covering the costs during their working years). As you note, that money has since been loaned to the Treasury, and so now gets re-expressed as general taxation. But whoever considers that a flaw in Social Security is being clearly dishonest in conflating Treasury obligations to service loans from SS with actual structural entitlement issues.

More importantly, there's the ongoing aging of the US population, with the ratio of retirees to workers projected to increase indefinitely. This is the structural flaw with Social Security, in that it assumes the opposite demographic trend (this is what I referred to in my previous post). Absent some dramatic change in demographic trends, the only way to make the system solvent in the long run is to cut benefits, adopt a more progressive funding structure, or increase the productivity of medium- and low-wage earners more quickly than the growth in the ratio of retirees to workers. SS was developed in an age of expanding workforces and short retirements, and its funding assumptions reflect this.

 

[Billy T]

"... Even using the very optimistic forecasts of the Congressional Budget Office, which anticipate growth of around 4% over the next few years, the net debt burden will rise from 40% of GDP to 80%--that's an increase in the debt stock of about $9 trillion.

The interest charge alone on that increased debt will be in the region of $300 billion to $400 billion a year, which in turn may mean more borrowing to pay the interest if primary deficits are not reduced. When governments reach the point where they are borrowing to pay the interest on their borrowing they are coming dangerously close to running a sovereign Ponzi scheme.

To get out of the Ponzi trap, governments will have to raise taxes, or cut spending, or monetize the debt--or most likely do some combination of all three. Monetization is already happening. ..." *

FROM: http://www.forbes.com/2009/08/26/st...nouriel-roubini.html?partner=daily_newsletter

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*I doubt there will be much use of higher taxes or decreased government spending as these action require a recorded vote by congress - I believe such new legislation must start in the House of Representatives, 1/3 of whom are up for re-election in less than two years; 2/3 in less than four years. Having the FED /Treasury combo, just print more money ("monetize the debt") is what will (and is) happening. It is relatively easy to pay 9 trillion if dollar's purchasing power of the repayment made is only 9 billion. (I.e. killing the dollar so it is worth only 0.1 cents in current purchasing power would easily pay off the debt.)

Yes, everyone will be angry, even if dollar only loses 90% of it buying power, but not one Congressman will have voted for that disaster. It just "happened." – Let’s all get together and blame China for lending the US so much that we spent, mainly under GWB and now continue to spend under Obama, who does not want the depression to come NOW. Blaming your lender is what irresponsible derelicts usually do.

 

[Billy T]

Social Security is not the only Ponzi Plan* of government:

“… Ready for another government bailout? Taxpayers could be on the hook within the decade if current state pension system isn't reformed. Promised benefit payments are so astronomical that raising taxes would still fall short. The only solution would be to call on the federal government for a bailout, according to the study.

"This is a problem of monumental proportion," said Rauh, an assistant professor of finance at the Kellogg School of Management.
"Given that we see the same issue in many states, the total size of a federal rescue plan could exceed the seriousness of the recent economic crisis and potentially cost more than $1 trillion total." …”

From: http://money.cnn.com/2010/05/20/news/economy/state_pension_fund_crisis/index.htm

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* I define a plan as "Ponzi" when many people are currently collecting more than they paid in and that payout comes only from the people currently paying in. I.e. there is no real productive investment being made with the money paid in. The Social Security system is such a plan. Personally, I have already collected about 5 times what I paid in. Unfortunately the young payers today will not even get their money back, I confidently predict and certainly what they do collect, if anything, will have only a tiny fraction of the purchasing power. It doesn't get more "Ponzi" than that. SS is the world's largest Ponzi scheme in history. Sadly it is not illegal - it is the law - workers MUST pay in.

 

[iceaura]

* I define a plan as "Ponzi" when many people are currently collecting more than they paid in and that payout comes only from the people currently paying in. I.e. there is no real productive investment being made with the money paid in. The Social Security system is such a plan.

Look, welfare is not a Ponzi scheme. No one is "paying in" at all. There is nothing but "paying out", with the US government as middleman. No investment, productive or otherwise, is involved in normal operations. It's not an investment plan.

There is no investment, express or implied. It's welfare, OK? Transfer. Transfer payments are not Ponzi schemes. They might be some other kind of scam (taxing the poor to hand to the rich is not how welfare is supposed to work), but "Ponzi scheme" is dangerously misleading misdescription.

 

[Billy T]

... It's welfare, OK? Transfer. Transfer payments are not Ponzi schemes. They might be some other kind of scam (taxing the poor to hand to the rich is not how welfare is supposed to work), but "Ponzi scheme" is dangerously misleading misdescription.

No Ponzi scheme is a 100% accurate description of SS. If you disagree tell where it deviates from the definition of Ponzi scheme I gave in footnote to prior post.

Further more it is very easy to distinguish taxing for support of welfare (or wealth transfer for social purposes) from the social security tax. In the first case the person being tax is NOT told / promised he will get future payments from the fund the taxes go into. Ponzi schemes tell that. Welfare is supported by general taxation and the taxes do NOT go into a separate fund which promises to pay the contributor back later. Ponzi schemes have the funds separated into the fund that promises to pay back later.

That is the central idea of all ponzi schemes: The person putting money into the fund expects (and is promised this by Mr. Ponzi. For example, the SS literature calls it "your social security" and will gladly calculate for you what your monthly return payments will be, etc.) that he will get his money back with profit (get back more than he put in on average.) Admittedly many will die before they do so, but few expect to be among those that die early*

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* Few have read Adam Smith's Wealth of Nations as much of it is boring but one part was very interesting to me: The British government issues bonds to a group of wealthy men that paid much lower interest rate than other bonds (Great deal for the crown). They sold well as the entire sum collectred would be paid out to the last man of the group still living when all others were dead. It is human nature to think that you are going to live many years, probably longer than most, so all participants greatly overestimated their chance of being the one who collected the entire sum.

There was some way that men of slightly different ages could participate fairly. I don't recall the details so will make some up to illustrate: If life expectancy was 70 a 50 year old (20 years to go) would pay into the fund less than a 45 year old (25 years to go) in the ratio of 4 pounds from the 50 year vs. the 45 year old's 5 pounds, etc.

Because all, now in good health, do think they will live longer than the average, this is a cheap way for the government to fund its expenses.

 

[Billy T]

More evidence for the "yes answer" with billy T inserts in these brackets {...} and or blue :

“… In the United States, on the other hand, {following completed discussion of PIIG belt tightening} there is still no serious effort to tackle the deficit. Healthcare reform added about $1 trillion to it over the next 10 years, or about $200 billion annually from 2015-2019. Not only has the $800 billion "stimulus" bill not been cut back as the deficit problem has become more apparent, Washington is currently attempting to pass another $200 billion of pork-filled rubbish spending. …

Nor is the long-term picture any brighter. While the U.S. Social Security actuarial deficit may be manageable, its Medicare almost certainly is not. The Social Security system's cash flow, which was supposed to remain positive until 2017, has turned unexpectedly negative this year because of the recession. Then there's inflation. The {CPI} numbers are currently benefiting from a downtrend in "owners' equivalent rent" which accounts very imperfectly for housing costs and is worth one third of the index. …
{Take this out of the CPI then inflation, not disinflation, is the current truth. CPI should reflect current expenses, not your long term loses on the value of your owned home. Anyone who buys food etc. knows we have inflation. Food is inflating at highest rate since separate, accurate, records began 26 years ago! In part because of the silly corn to alcohol program.}

Only the strong dollar will counteract this trend, but {that will worsen} the growing U.S. balance-of-payments deficit means that strength will be short-lived. Naturally, if inflation reappears prominently, interest rates will rise, and long-term U.S. Treasury bond prices will fall. Thus, long-term U.S. Treasury bonds, far from being a safe haven, are today one of the world's most dangerous investments - imbued, as they are, with both credit- and interest-rate risks. Indeed, given their performance, Treasuries are almost certainly in a "bubble" of their own. …”
{But by buying them the FED can delay the obvious for many months at expense of making the ultimate collapse much worse. Sort of like Ponzi borrowing when his cash inflow dropped below his promised outflow to delay disaster a few months longer. That borrowing also just made the collapse worse.}

From: http://moneymorning.com/2010/05/26/u.s.-treasury-bonds/

 

[iceaura]

If you disagree tell where it deviates from the definition of Ponzi scheme I gave in footnote to prior post.

It doesn't assume an expanding base of investment - it doesn't assume an investment base at all.

It doesn't promise a return on invested money.

It doesn't pay off in proportion to investment - there is no investment.

And so forth.

That is the central idea of all ponzi schemes: The person putting money into the fund expects (and is promised this by Mr. Ponzi. For example, the SS literature calls it "your social security" and will gladly calculate for you what your monthly return payments will be, etc.) that he will get his money back with profit

There is no fund, and no one gets their money back, with profit or without. The fate of the money put in is not concealed from anyone.

The idea of SS as an investment of money, rather than a creation and maintenance of social infrastructure, is dangerously misleading. People who have been led to believe that some kind of investment of money is the basis of SS are easily led to believe the money has been foolishly lost, that SS is "bankrupt", that they have been scammed, taht their government has betrayed them.

Hence the rightwinger beating on that drum, in the US. It 's disappointing to see the sane and sensible adopting this rightyrant framing of SS, a framing designed to destroy it by justifying responses such as "privatization".

 

[Billy T]

It doesn't assume an expanding base of investment - it doesn't assume an investment base at all.
It doesn't promise a return on invested money.
It doesn't pay off in proportion to investment - there is no investment.
And so forth.
There is no fund, and no one gets their money back, with profit or without. The fate of the money put in is not concealed from anyone.

We agree that there is no fund making investments in either SS or Ponzi's schemes so none of your above is a difference between SS and a Ponzi scheme.

To be completely fair to Ponzi, he did start out as a real fund investing the contributor's money. He bought German postage stamps, which were forever valid, and resold them a few months later when the cost of new stamps had increased for less than the current stamp cost and for a profit. That has never been true of the US social security systems so in some sense, SS is more of a pure Ponzi scheme than Ponzi made. Ponzi at least started out investing the contributor's money in a profit making plan.

One could argue that SS also invests as it gets interest on the contributor's money it gives to the government to spend now; however, (and especially now with low interest rates on US bonds) the real rate of return is negative. I.e. the SS tax payer is being financially screwed and does not even have a choice to not to be.

The idea of SS as an investment of money, rather than a creation and maintenance of social infrastructure, is dangerously misleading.

I agree. The SS administartion should not be allowed to call your SS tax "Your SS contribution to your Social Security." We both agree it is really a social welfare system and also I note a very useful means of transfer from the rich to the poor (on average) -Probably why a target for right winger attacks. See how effectively it transfers funds in bar chart below:

Note also that for any given wage level it also transfers money from men to women.

I favor the progressive income tax and also this aspect of SS. Some means of such transfer is essential for social stability to prevent the concentration of wealth in to the hands of only a few. (Compound interest make the rich gain more money more rapidly than the poor who must spend most of their income on food etc. Or as the saying goes: "It takes money to make money.") I just don't like the government presenting SS to the public in such a way that most think of its tax as part of their investment for their old age. ("YOUR social security") Your SS taxes are being spent, not invested for your old age. Probably as populations age especially if many in the working age can not find jobs, the SS system will be modified so that almost everyone now contributing (on average) get a very negative net return - not just the people with greater income as now - shown in above bar chart taken from:http://en.wikipedia.org/wiki/Social...s)#Claim_that_it_is_a_pyramid_or_Ponzi_scheme

People who have been led to believe that some kind of investment of money is the basis of SS are easily led to believe the money has been foolishly lost, that SS is "bankrupt", that they have been scammed, that their government has betrayed them. Hence the right winger beating on that drum, in the US. It 's disappointing to see the sane and sensible adopting this rightyrant framing of SS, a framing designed to destroy it by justifying responses such as "privatization".

I agree here too. The right wingers would not be able to do this IF the government were honest and ceased to call SS "your social security."

The government should more clearly explain that we are taxing you via SS to help support the currently old people (and widows etc.). We hope and expect that when you are in need that we will be able to help you too by collecting from those working then, but your benefits will not be as great (in purchasing power) or start as young as those you are currently giving to the retired because the US population is aging. (more collecting every year for each paying into the SS system.) Honesty is always the best policy, for governments too but dishonesty has immediate advantage for the congress men etc. so is very common. Fortunately the rich and powerful tend to be ignorant of how effective a wealth transfer system SS is. If they understood, SS would soon be abolished.

 

[iceaura]

We agree that there is no fund making investments in either SS or Ponzi's schemes so none of your above is a difference between SS and a Ponzi scheme.

There is an alleged investment, and a claimed return on one's money, central to a Ponzi scheme. It is the central aspect of its nature as a fraud. There is none with SS - the setup is not concealed, and no investment is claimed.

We hope and expect that when you are in need that we will be able to help you too by collecting from those working then, but your benefits will not be as great (in purchasing power) or start as young as those you are currently giving to the retired because the US population is aging. (more collecting every year for each paying into the SS system.)

That isn't true. The boomer fund covers that, by taxing the rich (who are essentially untaxed, by the regular SS, and thus can be tapped for their share of the cost).

The current level of SS taxation is both regressive and excessive - the excessive part covers your objection above.

If you don't want to tax the rich, the same coverage is possible by not paying SS to the well off.

The government should more clearly explain that we are taxing you via SS to help support the currently old people (and widows etc.).

The government vaguely in some way apparently obscuring the nature of SS is no reason for others to join in the confusion - by calling it a Ponzi scheme, for example.

That interferes with the necessary reforms.

 

[quadraphonics]

We agree that there is no fund making investments in either SS or Ponzi's schemes so none of your above is a difference between SS and a Ponzi scheme.

The difference is that SS doesn't gain its contributions by decieving people about where the money is going. Nor do its administrators take a profit out of the incomes.

One could argue that SS also invests as it gets interest on the contributor's money it gives to the government to spend now; however, (and especially now with low interest rates on US bonds) the real rate of return is negative.

That's not true. In the first place, the current rate on the bonds doesn't matter because SS isn't currently producing a surplus to invest in such things. In the second place, at no time has the bond yield been below inflation - the returns have always been positive in real terms.

The SS administartion should not be allowed to call your SS tax "Your SS contribution to your Social Security."

It is a contribution to "your social security." Keeping all of those retirees housed and fed makes your society more secure. Most of us have retired parents that we'd be housing and feeding if not for SS - that makes my social position more secure, right now, because of my current payments.

We both agree it is really a social welfare system and also I note a very useful means of transfer from the rich to the poor (on average)

No, Social Security is a flat, capped payroll tax. It is among the most regressive portions of the tax code. People with very high incomes pay a much lower rate than those with low incomes, and people with incomes derived primarily from sources other than a payroll (which includes a big chunk of the very wealthy) pay very little towards SS at all.

It's been credibly suggested that payroll taxes are so regressive in structure that they cancel out the progressive structure of the income tax.

-Probably why a target for right winger attacks. See how effectively it transfers funds in bar chart below:

That chart is almost meaningless. The one you want to look at is the one for benefits to married couples, which are uniformly positive. Since almost everyone gets married, that's the relevant one, not the one showing what would happen to hypothetical individuals who never married. If you want to view it in those terms, SS is a scheme to transfer funds from single people to married couples.

Also note that your chart tops out at the 95k income range, which is right where the cap starts. I.e., it excludes the regressive effects on those with high incomes entirely.

I just don't like the government presenting SS to the public in such a way that most think of its tax as part of their investment for their old age. ("YOUR social security")

I don't see where the government does that, absent some very selective reading on your part. In the first place, paying for current retirees does increase one's social security, essentially by definition. And in the second place, supporting the social security system, both financially and politically, means that such a system will be available when you retire (if not your actual contributions from years ago). And so, again, it increases your personal social security.

the SS system will be modified so that almost everyone now contributing (on average) get a very negative net return

If you object to viewing Social Security as an investment fund, then why do you keep treating Social Security as if it were an investment fund? I.e., calculating "net return on investment" in terms of monetary pay-outs, and insisting that this is the salient feature of the system.

The return on your investment is that you live in a society where people don't have to worry about housing and feeding their retired parents, in addition to their own kids. And that return is strongly positive, regardless of precisely how much you personally get paid during your retirement.

I agree here too. The right wingers would not be able to do this IF the government were honest and ceased to call SS "your social security."

Is the presence of the word "your" the only basis for your insistence that the government is misleading the public? Because that's pretty weak - from where I sit, it's the insistence on your (and others') part on viewing Social Security in terms of an investment fund, while totally neglecting the actual purpose and benefits of the program from your accounting, that looks like the misleading stuff.

because the US population is aging.

It has to be aging faster than productivity is growing for that to imply a structural shortfall in SS. And I see no prospect of, nor grounds for, the government to throw up its arms and declare that our productivity will never keep up with our aging, for decades into the future. We could change the immigration policy tomorrow and basically halt the aging of the workforce, for one thing. The policies that affect these factors in the long run are not etched in stone, to be extended arbitrarily far into the future, and the government should not use Social Security literature to pretend otherwise.

Fortunately the rich and powerful tend to be ignorant of how effective a wealth transfer system SS is. If they understood, SS would soon be abolished.

The rich and powerful don't care - they don't get much income from payrolls in the first place, and it's a flat, capped tax anyway, so it's not their money being "transferred," mostly. Again, they don't even appear on your charts.

 

[Billy T]

To Quadraphonics & iceaura:

Both of you are much better inform about the true nature of SS than is the average contributor. Who IMHO does think his contributions to SS are paying for his future collections from it later. Some are aware that it is currently providing disability and spouse protection also. This because of the way the government presents it. You may hold a different POV; I.e. that the government is not intentionally generating support for SS by misrepresentation of its basic nature, but that does not make yours correct.

The government will project for you your return, calls it your Social Security, etc. I agree with Quad that it does contribute to your social security (Note both “s” are not capitals here.) just as taxes for the fire department etc. do. It is portrayed as a right you earn by contributing into the system for 40 quarters. That is why even the very rich collect form SS. If it were honestly portrayed as a one of several social security programs, even including things like free (tax supported) education, medical services to those who cannot pay, food distribution centers, etc. then the rich would not be eligible to collect form SS. I do not see how you can say SS is fairly presented when all of the government effort is directed to disguising its true nature – presenting it as your earned right, rich or poor, instead of honestly presenting it as essential aid to the old who did not provide for their later years.

Yes, before you ask, I do not think I should be collecting from SS. I do, in fact I have gotten all my contributions back quite a few years ago. I can collect from SS only because it has forever been misrepresented by the government as an “earned right”, not as a “moral duty” to currently help the less fortunate (or perhaps the foolish who gave no thought to their later years when they were young and earning).

I agree it is regressive in that it is capped so takes higher percentage of the low wage earners salary. Thus it it were openly recognized as a social security law, it should not be capped either. Those who can and who benefit most from stable society (have the most to lose if anarchy, riots etc. were to prevail) should at least pay the same fraction of their income as the poor workers do. IMHO they should pay a progressively INCREASING percentage as they benefit the most from the social security that Social Security promotes.

As far as Quad’s point that married do get a net benefit, that is in nominal dollars, not purchasing power. Also it is (I am almost sure) a declining benefit as the years pass. Like all Ponzi schemes, the early participants do get a good deal and the last to participate get screwed. The First collector from SS never even paid a dime into the system. Now, at least in nominal dollars the married are net collectors but the single people are already in the “last collectors” group, but of course those that begin to collect in 2022 etc. will be more badly screwed, probably then not even the married will get their money back. I admit that this is just my projection of what is likely and you may disagree. My projection does reflect my POV that the US is headed for some very hard times (a collapsed dollar etc.) Note here in this paragraph I do speak of financial return (even though we all agree SS is a social security program) BECAUSE THAT IS THE WAY THE GOVERNMENT DOES PRESENT IT. – You are earning your later returns, not contributing to society’s social security (so the govern says) when you pay your Social Security tax.

 

[Syzygys]

I am not surprised Iceaura doesn't get it, he expressed similar dullness in other thread.

Plain and simple: Every country's SS operates as a Ponzi system, and it is based on ever widening employer base. Once the population starts to contract, the system is going to fail.

Extra fun with the US system that the money doesn't even exists anymore, although the government accountants still carry it on the books. SS has been raided over and over by other government agencies and it has already been spent. Since the government can print money, it isn't such a big problem except the huge inflationary effect, because that money will be replaced with worthless, fresh printed money...

 

[quadraphonics]

This because of the way the government presents it. You may hold a different POV; I.e. that the government is not intentionally generating support for SS by misrepresentation of its basic nature, but that does not make yours correct.

You haven't really presented much in the way of support for your contention that the government is notably misportraying Social Security (intentionally or otherwise). So far it's been a lot of assertions from you that such is the case, and a lot of pointing at a few isolated phrases that appear in some SS literature.

The government will project for you your return, calls it your Social Security, etc.

My literature refers to it as "your (projected) benefits" not "your return," which distinction I find pretty important here. They're telling you that they're obligated to pay you a certain amount of benefits, based on your contributions, and that is perfectly correct. It doesn't imply that they used your contributions to generate those payments. I don't recall ever seeing the word "returns" used on any official SS documents - the term used is "benefits."

It is portrayed as a right you earn by contributing into the system for 40 quarters.

And correctly: that is exactly what it is, and nowhere in that portrayal is there any implication that you contributed to an investment fund that generated your future benefits. Although, in point of fact, that's exactly what's been done with much of the Social Security income in the past decades, while it was running a surplus.

then the rich would not be eligible to collect form SS.

Personally, I think that a reduction in SS benefits for those with lots of non-payroll income is among the most likely changes that will occur in the future as structural issues with its funding are dealt with.

I do not see how you can say SS is fairly presented when all of the government effort is directed to disguising its true nature – presenting it as your earned right, rich or poor, instead of honestly presenting it as essential aid to the old who did not provide for their later years.

It is exactly an "earned right, rich or poor," in the sense that your benefits depend on your contributions. And there is no contradiction between it being such and it being an essential aid to the elderly, and so no "effort to disguise" in evidence.

Yes, before you ask, I do not think I should be collecting from SS.

Then stop doing so, or spend the money you collect on things that will help out US retirees.

I can collect from SS only because it has forever been misrepresented by the government as an “earned right”, not as a “moral duty” to currently help the less fortunate (or perhaps the foolish who gave no thought to their later years when they were young and earning).

There's no misrepresentation required in adjusting the level of support extended to match up with the level of earning and contributions that came before it. SS can do that and still be a moral duty - and without considering "the less fortunate" or "foolish." It is not "foolish" or "thoughtless" to factor government promise of a pension into your retirement plans, and the moral aspect is as much about helping one's self and even the wealthier, as it is about helping the less fortunate. It is beneficial to me, in a purely selfish, material sense, to live in a society where people don't have to work till they're dead, or worry too much about supporting aging relatives. That's true regardless of how much money I personally ultimately get paid by the system - I would accept a fairly considerable hit in my working and retirement income in order to live in such a society.

Thus it it were openly recognized as a social security law, it should not be capped either. Those who can and who benefit most from stable society (have the most to lose if anarchy, riots etc. were to prevail) should at least pay the same fraction of their income as the poor workers do. IMHO they should pay a progressively INCREASING percentage as they benefit the most from the social security that Social Security promotes.

Sure. And that's where the questions of interpretations come in. The justification for the structure of the tax is that people should save a certain fixed percentage of their income for retirement, independent of what exactly the income is (in order to maintain a constant standard of living in retirement), and that those making more than a certain threshold don't need to be forced to save that much. That argument does reduce the system to an individual savings account, and so obscure many of the systemic issues that are ultimately salient. But that's an ancillary part of the package - it's rhetoric to justify the particular tax structure, not the basic impetus behind Social Security in the first place.

As far as Quad’s point that married do get a net benefit, that is in nominal dollars, not purchasing power.

No, that's from your Wiki link, which study claims to have adjusted for the relevant factors (inflation in particular). It is in real 2004 dollars.

Note here in this paragraph I do speak of financial return (even though we all agree SS is a social security program) BECAUSE THAT IS THE WAY THE GOVERNMENT DOES PRESENT IT. – You are earning your later returns, not contributing to society’s social security (so the govern says) when you pay your Social Security tax.

Please provide a reference to an official government Social Security document that backs this assertion - in particular, one that uses language about "returns" on "contributions." I have never seen such.

Now if you want to talk about the press, or various political campaigns, misrepresenting Social Security, that would be a different matter.

 

[Billy T]

... My literature refers to it as "your (projected) benefits" not "your return," which distinction I find pretty important here. They're telling you that they're obligated to pay you a certain amount of benefits, based on your contributions, and that is perfectly correct. ... I don't recall ever seeing the word "returns" used on any official SS documents - the term used is "benefits."

as you admit the benefit is computed from my contributions, that is a semantic difference only, not a distinction. Replace my "return" with "benefit" everywhere and my point is not changed.

Also you are not guaranteed any specific benefit by their projection of a dollar "benefit." For example I and many born later than me were originally promised our full benefits would start at age 65 (mine did) but for many younger than me, those promises were not kept. Likewise, if I am correct about the collapsing dollar etc. then essentially ALL of the SS benefits promised to those now 40 or under will be paid in nearly worthless dollars. The depression economy can not do otherwise. You seem to agree that the "promise" are not likely to be keep in the future (does that remind you of Ponzi or not?) I.e. you said:
" Personally, I think that a reduction in SS benefits for those with lots of non-payroll income is among the most likely changes that will occur in the future as structural issues with its funding are dealt with. "

... And there is no contradiction between it being such {an earned right} and it being an essential aid to the elderly, and so no "effort to disguise" in evidence.

When SS literature honestly states:
"We at taxing you to pay others collecting now, both the rich and the needed, and any benefits you think you are earning as a right to collect later are subject to the laws then prevailing."
I will accept that they are not trying to disguise the fact - not until them as they are clearly misrepresenting what SS is.

Then stop doing so, or spend the money you collect on things that will help out US retirees.

I try to change the system (with post like this etc.)even though I will financially suffer, but so long as SS is as it is, I will take my share as doing otherwise will not make any difference, except to me.

There's no misrepresentation required in adjusting the level of support extended to match up with the level of earning and contributions that came before it. SS can do that and still be a moral duty - and without considering "the less fortunate" or "foolish." It is not "foolish" or "thoughtless" to factor government promise of a pension into your retirement plans, and the moral aspect is as much about helping one's self and even the wealthier, as it is about helping the less fortunate. It is beneficial to me, in a purely selfish, material sense, to live in a society where people don't have to work till they're dead, or worry too much about supporting aging relatives. That's true regardless of how much money I personally ultimately get paid by the system - I would accept a fairly considerable hit in my working and retirement income in order to live in such a society.

I too think SS helps make society better, but because SS is misrepresented some reasonable and necessary changes will be very hard to achieve. For example few well off will support the termination of their own collections, as I do. They will argue it is their promised right - they paid in - SS even computed what they would receive in return for these payments (wooops what they would "benefit") etc.

I think you see my point so I will stop. I am not wanting to kill SS. - I just want honest government.

 

[quadraphonics]

as you admit the benefit is computed from my contributions, that is a semantic difference only, not a distinction.

Given that your point is exactly about purely semantic issues, that difference is highly salient.

Replace my "return" with "benefit" everywhere and my point is not changed.

Sure it is. "Return" implies "return on investment," which implies some kind of investment fund that generates revenue. At the minimum, it implies some sort of savings account where your contributions are stored, to be "returned" later. "Benefit," on the other hand, implies that you are participating in a welfare system that will pay you benefits in the future, presumably from tax revenues. Which also implies that your current tax payments are being used to fund current benefit payments, and not saved or invested. Substitute "benefit" into your statements, and they no longer carry any implication of an investment fund (the presence of such implications being the entirety of your point).

Again, there is no shortage of misportrayal of the type you describe amongst various press, finance and accounting entities. And much of the political rhetoric used for justifying the particular tax structure relies on misconstruing SS as a government-mandated personal savings account. And there is the complicating factor of the trust fund set up for the surpluses, which does indeed work like an investment scheme. It also doesn't help that Bush's proposals for SS reform (which were the last time the issue was high up on the national radar) conceived of it as an individual investment account.

But I don't see where SS as such is being systematically misportrayed by the actual government - none of the language on the benefits letters squares with that, nor any of the other official SS publications that I can think of. You should be aiming your criticism elsewhere. At worst, the government seems insufficiently motivated to correct wrong impressions of Social Security, and some of that stems from political utility.