The Social Security Ponzi scheme is running out of steam

You can’t say we didn’t warn you.

While most news accounts said Social Security will dip into its trust fund this year for the first time since 1982, The Hill’s Merrill Matthews points out that there is no trust fund, because the federal government has borrowed that money and spent it.

Matthews writes:

Historically, workers have paid in more than was needed to cover benefits, allowing the trust fund to grow to $2.9 trillion — at least on paper.  However, the federal government has borrowed the trust fund surplus to cover other government expenses, depositing interest-bearing IOUs in its place.

If Social Security must pay out more than it receives, which the trustees say will happen this year for the first time since 1982, the government cannot draw from other assets because it doesn’t have any.  Indeed, the federal government has to borrow hundreds of billions of dollars every year just to cover its current expenses.

Thus the government must borrow the money — or raise taxes — to redeem its IOUs so Social Security can pay benefits.

A certain prescient politician warned us in 1990 while standing in from of a sign reading “embezzlement”:

“It is time for Congress, I think, to take its hands — and I add the president in on that — off the Social Security surpluses. Stop hiding the horrible truth of the fiscal irresponsibility that we have talked about here the past two weeks. It is time to return those dollars to the hands of those who earned them — the Social Security beneficiaries and future beneficiaries. … I think that is a very good illustration of what I was talking about, embezzlement, thievery.”

That was Harry Reid. The same Nevada senator who years later said, “Unfortunately, despite decades of success, many Republicans continue to threaten the future of Social Security. Republican leaders routinely exaggerate the financial challenges facing the program in an effort to create a false sense of crisis. … I have spent my career fending off attacks against Social Security.”

Actually, Social Security is and always has been a Ponzi scheme, depending on future “investors” to pay off the original “investors.” That worked so long as there were 40 workers for every retiree, but does not work so well when the ratio of workers to retirees nears two-to-one.

Embezzlement?

 

 

 

6 comments on “The Social Security Ponzi scheme is running out of steam

  1. Rincon says:

    The answer was obvious years ago and was avoided by both Republicans and Democrats. The reasonably sound system that began paying benefits at age 65 to generations whose average age of death was perhaps 66, cannot work when the retirement age is still 65-67, but the average age at death is closer to 80. The age needed to receive benefits should have been raised decades ago. I notice that the Republicans, with a lock on all three branches of government, are still avoiding this problem today. Too busy creating tax breaks for billionaires and indebting the country still further even in good times. Aren’t these the same ones that were screaming bloody murder when Obama ran large deficits during the Great Recession?

  2. Deleted says:

    Rincon:

    Don’t you worry none; now that the republicans have got their billionaires more money to throw on their piles, and their defense contractors what’s left, all intended to insure that the debt increases dramatically, AFTER the mid terms, you will hear WAILING and moaning about the “out of control” entitlement programs.

    Bet your bottom dollar on it.

  3. Rincon says:

    We’re already hearing about it, aren’t we?

  4. Anonymous says:

    To an extent we are. But of course they sure aren’t going to risk actually going public with this intention BEFORE the election like by actually introducing any legislation. Or even seeking hearings on the matter.

    Can’t let people know what their plans are right because they’re not dumb enough to believe people would actually support them.

    They got a lot more fear and crisis sowing to do first.

  5. Bill says:

    There is enough blame both Parties to share. Trying to fix the blame on one party or another does not exonerate either one. It is the nature of government conceived and administered “retirement” programs to over promise and under deliver. Does anyone want to take a hard look at Nevada’s PERS or just about any State or local “retirement” program?

    It would be difficult to find any that would not qualify as Ponzi schemes.

  6. Rincon says:

    I have to agree. Unfortunately, many of us voters are loathe to criticize those in our tribe, so the leaders can all ignore their responsibilities with impunity, knowing that the members of each tribe will blame only those of the other.

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