Perry and Romney trade jabs on Social Security

The top contenders for the Republican nomination for president came out of the gate swinging at each other Monday over the future of Social Security in a televised debate sponsored by the Tea Party Express.

Texas Governor Rick Perry softened his comments from a week earlier in California when he called the retirement program established in the wake of the Great Depression "a monstrous lie" to young people.

On Monday at the Florida debate, Perry called the Social Security system broken, but he said emphatically that anyone now receiving benefits or nearing retirement age would not have those checks curtailed.

"Slam dunk guarantee," Perry said, "that program is going to be there in place" for current retirees, adding it would be in place for "those individuals who are moving towards being on Social Security, that program's going to be there for them when they arrive there."

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Asked by moderator Wolf Blitzer about Perry's position and how it might play in the general election against President Obama, former Massachusetts Gov. Mitt Romney reminded viewers that Perry had called the Social Security program unconstitutional.

"The real question is does Governor Perry continue to believe that Social Security should not be a federal program, that it's unconstitutional and it should be returned to the states or is he going to retreat from that view?" Romney said.

Perry said the United States needs to "have a conversation" about changing the way Social Security is financed for the future.

"We're having that right now, governor. We're running for president," Romney shot back.

Florida has the nation's largest proportion of elderly voters and is a critical state in the nominating process.

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[markshean]

USA TODAY on PERRY and Social Security
Author: Mark Shean
In the September 12th edition of USA TODAY, the editors 'view' on Rick Perry's stance on Social Security was, in my view, comical. They begin by saying that since its inception in 1935 that it has been very popular with both parties. Of course it has been popular, both parties have been stealing from it since 1935, whats not to like about putting in worthless I.O.U.'s with no thought of ever returning the money? If Social Security was established correctly it would have been OFF limits to everything else except people retiring, if that had been done from the very start a huge surplus would be in place right now.

USA TODAY says that Perry's "harsh rhetoric misstates the reality". His view that it is a "Ponzi scheme" and "monstrous lie" is way over the top so the paper says. USA TODAY then goes on to define a Ponzi scheme, as being "an undertaking designed to swindle people out of their money by using income revenue to produce bogus investment returns to attract more money". "Ponzi schemes have two salient features USA TODAY says. First, they are criminal enterprises, second, they work only until people get wind of what is going on, at which point they inevitably collapse". BINGO! I agree with USA TODAY completely, they hit the nail right on the head!

Social Security/the government has been swindling people for years out of a portion of their income promising a bogus return on their investment in the form of a retirement stipend in old age. A majority of people put in far more than they ever live to get back, what happens to the money they did not live long enough to collect back? It is rolled back into the SS fund so politicians can then steal it for other things, it should go to the persons family, that sounds very criminal to me that it should be rolled back in.... The second point made by USA TODAY, that once a Ponzi scheme is uncovered it collapses.... well SS is/has been collapsing, and the people are now very aware of it. It is not an 'entitlement' as the politicians, including Obama would sorely like you to believe, it is YOUR money that YOU have put into SS, you SHOULD get it back., you earned it!

Politicians think that by raising the retirement age more people will die before they can collect anywhere near what they put into SS, this is the political 'fix' for years of political theft of the SS fund. Is it a "monstrous lie" as Perry indicates? It most certainly is. It is a lie to continue garnishing young peoples wages for the failing SS fund knowing full well these young people will never get any return on their investment due to politicians direct theft of the SS funds. So I guess that makes it a government run Ponzi scheme after all, run by government criminals. Bernard Madoff was a boyscout compared to Congress all these years.

USA TODAY says Perry has not made clear his 'fix' for SS, everyone except USA TODAY already knows what the 'fix' is, pass legislation that makes it a federal crime and life imprisonment for any politician that puts his dirty money grubbing paws into the SS fund for anything other than what it was intended, RETIREMENT! Fixed.

That Rick Perry is the ONLY candidate with the courage to say what needs to be said about SS in these GOP debates tells me he is the right man, (so far) to lead this country out of the mess Obama has only helped to worsen since he took office. So by USA TODAY's own definition they unwittingly show precisely why Social Security is a Ponzi scheme, and a monstrous lie. Good job USA TODAY!

NOTE: In the 9-15-2011 edition of USA TODAY they ran a political cartoon stating that there are 462 million Americans in poverty....even counting all illegal aliens there are not that many people in the entire country, not even close......I hate to confuse the issues with the facts, obviously USA TODAY would rather slant then use facts.

PERRY for PRESIDENT in 2012!

Mark Shean,

[tsigili]

SS and Medicare need to be fixed, no doubt about it. The worst of all, though, is Medicaid.......as far too many young people are on that, and on SS disability, and much of that, is nothing but obesity.

[William_Larsen]

Question - What is a pyramid Scheme?

The definition I have heard and use goes something like this:

A person, whom I will call the seller, asks another person, whom I call the investor, to invest in a scheme. The seller of the scheme asks for a lump sum or a periodic payment into an investment proposal from the investor. In return the seller promises a return to the investor. Normally the return is far greater than can be obtained by the seller. It is not based on any actuarial basis and the risks have not been fully disclosed nor identified.

The seller normally provides a statement showing how well the fund is doing. This statement shows the buyers investment is paying off as stated. This can be in dark contrast to a reality. The seller will show new prospective investors the statement as proof the investment is sound.

What normally happens is the first investors are being paid their promised returns from two sources. One source is real returns and the other is from the contributions of later investors. The seller was unable to earn the stated return on the original investors money. The seller is forced to use some of the money received, for investment, from new investors, and show it as a return on the original investors money. It is a game of moving money around to show investors good returns, keep them happy and unaware there is a problem.

When the seller can no longer enroll new investors, they have a problem. They can not indefinitely continue to pay unreasonable returns. Without new investors, the sellers cash flow is insufficient to pay promised returns to all the investors. When this happens, the investors tend to become angry with the seller. Those who were the last ones enrolled normally loose the most.

Old Age Survivors Insurance began with a low tax rate of 2% and promised to pay a return in the form of a benefit equal to 42% of ones average wage. Was this sound? Based on the investment vehicle (US Treasury notes), United States Wage Growth and Inflation at the time, the tax rate was over five times too low. It should have been 11.83% and this does not count the original unfunded liability based on some paying only a few years before benefits were paid.

Just as a pyramid scheme requires ever more participants to keep its current participants happy, Social Security ran into the same problem in the early 1950's. OASI ran into difficulty when the benefit expense began to grow faster than revenues. The US Treasuries were being redeemed thirty years before they should have been. This Trust fund should not have been tapped until well after all the original participants had retired. To keep the system afloat, they redeemed the treasuries masking the real problem. But some smart people finally realized the trust fund would be exhausted in a few years and the game would be up.

To keep the original participants happy (continue the payments of benefits) and make it appear Social Security was a great idea, they increased the OASI tax by 50% to 3% and then increased the Base by 50%. At the same time they enrolled more non covered workers into Social Security. This is exactly what a pyramid scheme needs to do in order to continue to survive. It needs new investors. The new participants contributed revenue but by and large would not retire for decades.

In the 1960's the problem became acute when once again Social Security began to run deficits and the trust fund was being redeemed much earlier than it should have. They then increased taxes, the base and enrolled all those workers who were not covered by Social Security. Again social security increased its revenues to pay current participants and keep them happy (buy votes and PR) while also increasing the tax and base.

By the 1970's the problem was really becoming acute. Almost every worker was covered. There were no more non-covered participants (suckers). The seller could not admit benefits would have to be cut to continue Social Security. The seller would loose the senior vote for sure. The only thing left to do was raise the tax and base even more. But even raising the tax and base proved insufficient and now the seller had to raise the retirement age.

Social Security is the "standard" for what a pyramid scheme is. I do not think there is any other pyramid scheme which has existed as long as Social Security, which has suckered as many people and which will destitute more families in the history of the world.

You can define pyramid scheme in two words "Social Security."

[William_Larsen]

Social Security is simple math 2+2=4, not big math, but a lot of summations of all cohorts. Educate yourself about Social Security OASI before it is too late.

http://www.justsayno.50megs.com/ss.html

A. J. Altmeyer, Chairman
Social Security Board Before the House Ways and Means Committee November 27, 1944

"There is no question that the benefits promised under the present Federal old-age and survivors insurance system will cost far more than the 2 percent of payrolls now being collected. As I pointed out in my testimony of last year, none of the actuarial estimates which have been made on the basis of present economic conditions and other factors now clearly discernible result in a level annual cost of this insurance system of less than 4 percent of payroll."

"Indeed, under certain assumptions the level annual cost has been estimated to be as much as 7 percent of payrolls. On the basis of a 4-percent-level annual cost it may be said that the reserve fund of this system already has a deficit of $6,600 million. On the basis of 7-percent-level annual cost it may be said that the reserve fund already has a deficit of about $16,500 million."

http://www.ssa.gov/history/aja1144a.html

Robert Ball
Commissioner of Social Security
1962 and 1973,Wrote June 2005

"When Social Security began, benefits for those nearing retirement age were much higher than could have been paid for by the contributions of those workers and their employers. This was done so that the program could begin paying meaningful benefits even though workers nearing retirement would have only a short time to contribute."

"Instead, the impression is left that the program was sound only when 16 paid in for every one taking out. Thus, of course, when the ratio changed to 3.3 to 1, the program became "unsustainable."

"They ignore the fact that in 1950 only about 15 percent of the elderly were eligible for benefits and that it was expected by all who were acquainted with the program that the ratio would, of course, change dramatically as a greater proportion of the elderly became beneficiaries."

"What in fact happened is that when just about all the elderly first became eligible for Social Security benefits, about 1975, the ratio was 3.3 contributors to each beneficiary and the ratio has stayed that way for the past 30 years. As the baby boom reaches retirement age, as the administration says, the ratio is expected to drop for the long run to 2.0 or 1.9 workers to each retiree. But that is the size of the problem - a drop from 3.3 to 2 workers per retiree."

http://www.tcf.org/Publications/RetirementSecurity/ballplan.pdf

Simple math;
the tax rate = (target SS benefit) divided by (number of workers per benefiary)

http://justsayno.50megs.com/old_age_tax.html

What was and is projected to be the worker to beneficiary ratio?
http://justsayno.50megs.com/wr_ratio.html

[2happy2ride]

All your name calling and character assassinations doesn't alter the facts. At one time, 140 paid into SS for 1 retiree, it's been dropping exponentially. In a short few years it will be 1.2 people, THAT is UNSUSTAINABLE.
While I don't agree with Perry's rhetoric, he is theoretically correct calling it a ponzi scheme. I would like to see some of the liberal brain trusts here try spending more than you take in. You can write me from prison of your local mission and let me know how it's going.

[William_Larsen]

You need to educate yourself on how social security began. Only those who paid into SS-OASI could collect.

You need to look at the difference between worker to retiree and worker to beneficiary ratios.

http://justsayno.50megs.com/wr_ratio.html

In 1937 most of those over age 65 were retired. The first benefits were paid in 1940 to about 1/4 million beneficiaries even though there were nearly 9 million over age 65. In 1937 only those with "meaningful" wages were covered. Those with low or non steady work (1/2 the work force) were not covered. The reason was low wage earners would be a drain on SS-OASI.

Robert Ball
Commissioner of Social Security
1962 and 1973,Wrote June 2005

"When Social Security began, benefits for those nearing retirement age were much higher than could have been paid for by the contributions of those workers and their employers. This was done so that the program could begin paying meaningful benefits even though workers nearing retirement would have only a short time to contribute."

"Instead, the impression is left that the program was sound only when 16 paid in for every one taking out. Thus, of course, when the ratio changed to 3.3 to 1, the program became "unsustainable."

"They ignore the fact that in 1950 only about 15 percent of the elderly were eligible for benefits and that it was expected by all who were acquainted with the program that the ratio would, of course, change dramatically as a greater proportion of the elderly became beneficiaries."

"What in fact happened is that when just about all the elderly first became eligible for Social Security benefits, about 1975, the ratio was 3.3 contributors to each beneficiary and the ratio has stayed that way for the past 30 years. As the baby boom reaches retirement age, as the administration says, the ratio is expected to drop for the long run to 2.0 or 1.9 workers to each retiree. But that is the size of the problem - a drop from 3.3 to 2 workers per retiree."

http://www.tcf.org/Publications/RetirementSecurity/ballplan.pdf

[Jhihmoac]

Yeah, right..."experts" - SHEESH!

[sandy e.2710]

Rick Perry treats Social Security, like other federal programs or agencies, with contempt. His idea, as a compromise, of having a state-based Social Security system , just isn't feasible.Although it may need minor adjustments in the long-run to sure it up, Social Security is here to stay.

[thechooch1]

What no one is talking about is that those who are going to get their Social Security have to be 66 or older to receive full Social Security. The expected life span of these "boomers" is about 79. So we have a big bubble of older retirees, but it won't last forever on average, around 13 years.

[William_Larsen]

When a person says "We Earned it!" what exactly do they mean?

To me, this phrase is a righteous euphemism for making the more truthful statement: "We were snookered by this Social Security Ponzi scheme, and now we are going to snooker the next generation!"

If Social Security benefits have been "earned" who is obligated to pay benefits to those who "earned" them? Workers? On a regressive tax basis? Why? Why perpetuate a fraud upon the innocent? Who is responsible for bearing the burden of a fraud? The person defrauded? Or an innocent or unborn child?

So what is your solution? I for one at age 55 with five children believe I have a fiduciary responsibility to make sure I do not sell my children into indentured servitude. Why should those born after 1985 receive 29 cents in benefits for each dollar in SS-OASI taxes and credited interest at the US treasury in the years they paid the taxes while those born prior to 1938 get from $1 to $21 per dollar.

Increasing the payroll tax does not increase the promised benefit. It just pays the promised benefit. In simple terms you pay more for the same poor benefit. Increasing the retirement age means you pay more, delay benefits and reduce payable benefits to get the promised benefit. Doing nothing means those in 2036 can expect to get 75% of promised benefits under current law (No COLAS due to not meeting the 1984 legislation that cuts benefits across the board to meet dedicated tax revenues and to maintain the trust fund at 20% of that years projected expenses).

In simple terms there is no way to make an unfair program fair.

Social Security benefits have no relationship or input on the SS benefit. If the tax were 0% the benefit promised would be the same. If the tax were 100%, the benefit promised would be the same. The only affect of taxes is the payable benefit.

Social Security is a PONZI SCHEME! It is time to kick our addiction and JUST SAY NO TO SOCIAL SECURITY!

http://www.justsayno.50megs.com/ss.html

[Birdman04]

No clear winners. Plenty of losers. Same ole rhetoric. Same ole lies.
Go figure!

[venusvegasvada]

Changing the way it was financed? The only change we needed to make was to make it illegal for Washington to steal all the money out of it. IT WAS FUNDED. WE PUT OUR MONEY INTO IT AND YOU STOLE IT. YOU NEED TO PUT IT BACK.

[imnotimportant]

RICK PERRY IS ROBBING THE POOR.

Rick Perry takes money set aside by Texans to help pay poor people's utilities, and uses it to cover tax cuts, this is a good thing? A Christian thing?

Every Texan is required to pay an extra dollar from their power bill. It funds the Low Income Utility Assistance Program.

Of 146 million collected, only 66 million will be used for this purpose. 80 million collected for poor people is going to pay for previously approved tax breaks.

By 2013 over 900 million dollars collected by utilities will for poor people be turned over to help fill tax shortfalls.

[konr22]

I love how they are "telling the truth". What a joke.