Rick Perry is wrong – SS is not a ponzi scheme
Posted by 5etester on September 12, 2011
The headline statement may come as a surprise to any who have read posts here at Spellchek previously. However, I disagree with Rick Perry’s statement for a different reason than his opponents who will utilize the stale Republicans want to kill old people line. SS isn’t a ponzi scheme because it is merely a tax scheme. That’s not an opinion, that’s fact. The Supreme Court has ruled on it and the White House legal counsel has clarified it.
Your run of the mill ponzi scheme takes new investor money to pay out to old investors on occasion allowing the scheme operators to skim off money for as long as they can keep the illusion above water. Social security is completely misunderstood. It is not an entitlement program. It is not a social insurance program. It is not a retirement program. It is nothing but a revenue raising scheme for the Federal Government. Merely a tax. A tax in which the receipts go into the general fund free for Congress to reallocate in any manner they see fit.
The trust fund and the well advertised IOU’s are nothing more than accounting gimmicks. The facts are that you have absolutely no ”right” to a return of your “contributions” that have been confiscated from your paycheck over the years. You can read the Supreme Court ruling on this issue in Flemming v. Nestor. Furthermore, you can read the case of Helvering v. Davis to understand the fact that social security is nothing more than a tax.
This is why administrations past and present don’t act on social security “reform”. It is used as a political football when it appears advantageous to each party, thus the title of this post. But neither party has any concern to “reform” it because they understand what the program really represents – a continuous revenue source for the federal government spending machine. Sure they pay out “benefits” to retirees. But it is done as a redistributive tax. And at some point in the future we will undoubtedly see the retirement age raised. This will be promoted as necessary to keep the program solvent.
In fact it’s worse than it appears. You’ve been paying in your 6.2% deduction from your salary all along while your employer has had to match it as well. That means you’ve had a 6.2% pay cut. Employers don’t eat these costs, they are passed along. In this case, an employer has “X” number of dollars to allocate to employee compensation. Out of that comes your salary and your benefits. Any taxes imposed on the employer on your “behalf” are subtracted from this pool. They could pay you a higher salary were it not for taxes such as these.
So the discourse will continue to be how do we save social security? Raise the retirement age? Reduce benefit payouts? A means test? Will the program even be around in 2050? Of course it will, it’s a money-maker. Do you really think Congress would voluntarily discard a revenue raiser? They will no doubt enact “reforms” in order to balance the books as it were. But the fact remains that this is nothing more a tax scheme, not a ponzi scheme.
Just like Obamacare, the White House had to declare that this was nothing more than a tax to keep it Constitutional. With Obamacare, they can’t force people to purchase an insurance policy involuntarily. So in the court of law they declare it a tax. Not in the court of public opinion. The media will still report it as healthcare. SS was the same scenario. In 1937, they had to declare it a tax in court. Yet, all these decades we’ve been led to believe we really had our own shoebox in the Treasury vault holding our contributions over the years.
Sorry, but the shoebox doesn’t exist. The trust fund and the “IOU’s” do exist, but they are nothing more than a paper tiger. You have no “right”, no entitlement, no insurance policy, nothing waiting for you. That’s a fact. Still not convinced? Perhaps you’ll believe a distinguished columnist and economics professor named Walter Williams.
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