Video: Social Security a Ponzi Scheme?! You Betcha!

Another Steve Crowder video production:

Best answer of GOP debate: Newt Gingrich on Social Security Ponzi scheme: "why should young people have to live in a system where politicians have the power for the rest of their life to threaten to take away their social security"

Don't get me wrong, Gingrich is toast. No chance. But this was the best response of the night on a tough issue. Romney is wrong. Social security IS a Ponzi scheme. Perry should have stuck to his guns in his book that social security belongs with the states and not the federal government (I wrote specifically to that effect last August: What we need right now - the "Entitlement Sustainability and Constitutionality Act"). Huntsman is toast. Paul is partly right. But Gingrich hit a home run at the 9:30 mark of this video when he said of scaring seniors with social security "Obama scares seniors every day" and "why should young people have to live in a system where politicians have the power for the rest of their life to threaten to take away their social security." DARNED STRAIGHT! The video:

Santorum got in a good crack in there too. Related to social security: Labor Dept. Data: Only 1.75 Full-Time Private Sector Workers Per Social Security Recipient

There were only 1.75 full-time private-sector workers in the United States last year for each person receiving benefits from Social Security, according to data from the Bureau of Labor Statistics and the Social Security board of trustees.

That means that for each husband and wife who worked full-time in the private sector last year there was a Social Security recipient somewhere in the country taking benefits from the federal government.

Most state and local workers are part of the Social Security system and pay Social Security taxes; and, since 1984, all federal workers have been part of the system and pay Social Security taxes. However, unlike private sector workers who pay Social Security taxes with private-sector dollars, government workers pay their payroll taxes out of wages government pays them with tax dollars or with money that was borrowed by government and taxpayers must eventually repay.

In its latest annual report, the Social Security board of trustees reported that the federal government’s total revenue from Social Security taxes in 2010—$544.8 billion—was not enough to cover Social Security’s total benefit payments—$577.4 billion.

The board of trustees also reported that there were 156.725 million “covered workers” in the United States who paid some Social Security taxes during 2010. But these 156.725 million “covered workers” included all workers—including government workers—who were “paid at some time during the year for employment” on which Social Security taxes were due. People who worked full-time for 52 weeks during the year were included with people who worked only part-time for a month.

How is that not a Ponzi scheme again? Plus this: Rush Limbaugh Reads The History Of Social Security Being Called A Ponzi Scheme 

Bernie Madoff went to a federal pound-you-in-the-ass prison for far less than what liberals are being hailed for doing.

Just so you all know where we're at in this day and age: Pic of the Day: The Only Chart You Need To See To Understand Why The US Is Screwed, for the first time in our history just entitlement spending by itself is greater than all federal tax revenues combined:

UPDATE: From National Review via memeorandum: Romney: Social Security Is Like a Criminal Fraud

Mitt Romney’s demagoguing of Rick Perry for calling Social Security a Ponzi scheme is just mind-boggling. Let’s put aside for a moment Stanley’s invaluable column on the home-page today, demonstrating that, for nearly half a century, reputable commentators across the ideological spectrum have referred to Social Security as a Ponzi scheme due to the undeniable fact that its structure is — and has always been — unsustainable. The fact is that, just last year, Romney himself compared social security to a fraudulent criminal enterprise.

As John McCormack recounts at TWS:

[I]n his book “No Apology: The Case For American Greatness”, which was published just last year, Romney compared those managing Social Security to criminals, saying:



“Let’s look at what would happen if someone in the private sector did a similar thing. Suppose two grandparents created a trust fund, appointed a bank as trustee, and instructed the bank to invest the proceeds of the trust fund so as to provide for their grandchildren’s education. Suppose further that the bank used the proceeds for its own purposes, so that when the grandchildren turned eighteen, there was no money for them to go to college. What would happen to the bankers responsible for misusing the money? They would go to jail. But what has happened to the people responsible for the looming bankruptcy of Social Security? They keep returning to Congress every two years.” [Emphasis in McCormack's post.]

UPDATE #2: More Newt on fire: Newt Hammers GE, Obama

In one fell swoop, Newt Gingrich blisters President Obama and his favorite corporation, General Electric.

Video: The Obama-GM 2012 Campaign Ad - 'Just Fix It.'

This was a great catch over at SharpElbows. Love the slight modification in pointing out the blank check to fix an utterly broken system actually not worth fixing. It's not an Obama campaign ad, it's a metaphor for liberalism, social security, Medicare, and pretty much everything Obama:

And Adam made the mods over football yesterday. Thumbs up to that!

UPDATE: Speaking of metaphors, what's up with this?: McCotter promises a free lunch on Social Security

Leave it to U.S. Rep. Thaddeus McCotter to promise a free lunch on Social Security.

The Republican from Livonia who's running for president has scheduled a Monday noon session at the Heritage Foundation in Washington, D.C., where he will reveal how he would stabilize or save Social Security without raising taxes or cutting benefits -- a promise that sounds like a free lunch for taxpayers.

In this case, McCotter is offering a free lunch for people who show up to hear his plan, which is endorsed by Social Security expert Peter Ferrera as "the largest single reduction in government spending in the history of mankind," according to a McCotter press release.

Rick Santelli to Tom Friedman: 'You're idiotic'

That was in direct response: NYT’s Friedman Lashes Out at Santelli: ‘Your Question is Idiotic’

New York Times columnist Thomas Friedman rarely appears in a media setting where he is challenged by a conservative. Yesterday on CNBC, Rick Santelli asked him to explain why Social Security is not a "Ponzi Scheme". When he had trouble answering the challenge he resorted to name-calling.

The video:

The transcript from The Daily Caller via memeorandum: Rick Santelli to Tom Friedman: 'You're idiotic'

FRIEDMAN: No, I don’t think it’s a Ponzi scheme.
SANTELLI: Earlier in the show you said that we’re putting a burden on our kids that’s unsustainable. What’s the definition of a Ponzi scheme?
FRIEDMAN: It’s a program that made promises that it cannot keep in full and it needs to be fixed and reformed.
SANTELLI: Isn’t that exactly what a Ponzi pyramid is?
FRIEDMAN: I don’t think it is a Ponzi scheme as a criminal endeavor.
SANTELLI: No, no — forget the criminal side. You need more people to perpetuate a myth because if the people stop the myth is known to all. That’s my definition of a Ponzi scheme. Let’s call at it chain letter, a pyramid scheme. Isn’t that by definition what Social Security is? Take the legalities and fraud out.
STEVE LIESMAN: Why is it a Ponzi scheme, Rick?
FRIEDMAN: It is pay as we go. Ronald Reagan fixed it. Why can’t we fix it?
SANTELLI: What does Ronald Reagan have to do with my question?
FRIEDMAN: What does your question have to do with reality?
MICHELLE CARUSO CABRERA: We brought it up.
SANTELLI: You can’t decide that more people is the only thing made Social Security work. We have a real issue because many people in government seem to like to read your work.
FRIEDMAN: What makes Social Security work is fixing Social Security in terms of the population demands.
SANTELLI: I didn’t ask if we should fix it or not. I asked if it’s a pyramid scheme.
FRIEDMAN: Your question is idiotic. That’s what you asked.
SANTELLI: You’re idiotic. I’m done. I feel good.
FRIEDMAN: So do I.

There's a logical response to a fair question! More from Hot Air, Pajamas Media, Freedom's Lighthouse, National Review and Verum Serum. And by the way: Video of Chris Matthews: Rick Perry's Right About Social Security "Ponzi Scheme"

Video of Chris Matthews: Rick Perry's Right About Social Security "Ponzi Scheme"

In fairness, it's so obviously a Ponzi scheme that it's hard to argue otherwise. From The Daily Caller via memeorandum: Chris Matthews' Social Security admission: ‘It is a Ponzi scheme’

On MSNBC’s Thursday broadcast of “Hardball,” host Chris Matthews committed the mortal sin — he nearly parroted the theory that mortified so many of the network’s hosts and guests throughout the day. Matthews called Social Security “a Ponzi scheme” the day after Republican Texas Gov. Rick Perry doubled down on his previous statements echoing that sentiment in the Republican debate  (h/t Matt Lewis)

Matthews first put forth what he thought Social Security was originally intended to be: “You pay for it while you work. When you retired and have no other form of income, this will help you out. In fact, a lot were impoverished in the old days without Social Security. It’s a great anti-poverty program. But then people started to live past 65. Even the great Franklin Roosevelt didn’t make it to 65. In those days, if you made it to 65, you were lucky. You got a few bucks on Social Security.” (RELATED: Has Chris Matthews lost his mind?)

Then he put forth what it has become: “Today, lots of people fortunately make it past 65,” he said. “They live into their 80s and 90s. They’re still getting checks. The system doesn’t work that way anymore. It’s not as healthy as it once was. So, how does a Republican deal with the fact it is a Ponzi scheme in the sense that the money that’s paid out every day is coming from people who have paid in that day. It’s not being made somewhere.”

The video:

Actually, I agree with this piece by Michael Graham: No, Social Security Is Not A Ponzi Scheme. It’s WORSE. The problem with one graphic:

The link to this piece over at The CATO Institute:

Texas governor Rick Perry is being criticized for calling Social Security a "Ponzi scheme." Even Mitt Romney is reportedly preparing to attack him for holding such a radical view. But if anything, Perry was being too kind.

The original Ponzi scheme was the brainchild of Charles Ponzi. Starting in 1916, the poor but enterprising Italian immigrant convinced people to allow him to invest their money. However, Ponzi never actually made any investments. He simply took the money he was given by later investors and gave it to his early investors, providing those early investors with a handsome profit. He then used these satisfied early investors as advertisements to get more investors. Unfortunately, in order to keep paying previous investors, Ponzi had to continue finding more and more new investors. Eventually, he couldn't expand the number of new investors fast enough, and the scheme collapsed. Ponzi was convicted of fraud and sent to prison.

Everyone might recall more recently Bernie Madoff who was sent to prison for the same thing but at a much larger scale into the billions.

Social Security, on the other hand, forces people to invest in it through a mandatory payroll tax.

Laughably, that is one of the defenses from liberals that I have heard - it's not a Ponzi scheme because it's not voluntary and you can't leave the system. Really? Can we then call it a forced Ponzi scheme? Or a universal Ponzi scheme being that libs love that collectivist adjective?

A small portion of that money is used to buy special-issue Treasury bonds that the government will eventually have to repay, but the vast majority of the money you pay in Social Security taxes is not invested in anything. Instead, the money you pay into the system is used to pay benefits to those "early investors" who are retired today. When you retire, you will have to rely on the next generation of workers behind you to pay the taxes that will finance your benefits.

Just like the Ponzi scheme. Except it's being run by the US government, which makes it OK or something.

As with Ponzi's scheme, this turns out to be a very good deal for those who got in early. The very first Social Security recipient, Ida Mae Fuller of Vermont, paid just $44 in Social Security taxes, but the long-lived Mrs. Fuller collected $20,993 in benefits. Such high returns were possible because there were many workers paying into the system and only a few retirees taking benefits out of it. In 1950, for instance, there were 16 workers supporting every retiree. Today, there are just over three. By around 2030, we will be down to just two.

As with Ponzi's scheme, when the number of new contributors dries up, it will become impossible to continue to pay the promised benefits. Those early windfall returns are long gone. When today's young workers retire, they will receive returns far below what private investments could provide. Many will be lucky to break even.

Eventually the pyramid crumbles.

So that's the social security = Ponzi scheme in a nutshell, but here's where it gets worse:

Of course, Social Security and Ponzi schemes are not perfectly analogous. Ponzi, after all, had to rely on what people were willing to voluntarily invest with him. Once he couldn't convince enough new investors to join his scheme, it collapsed. Social Security, on the other hand, can rely on the power of the government to tax. As the shrinking number of workers paying into the system makes it harder to continue to sustain benefits, the government can just force young people to pay even more into the system.

In fact, Social Security taxes have been raised some 40 times since the program began. The initial Social Security tax was 2 percent (split between the employer and employee), capped at $3,000 of earnings. That made for a maximum tax of $60. Today, the tax is 12.4 percent, capped at $106,800, for a maximum tax of $13,234. Even adjusting for inflation, that represents more than an 800 percent increase.

The one thing that I would point out is that the tax is not split between the employer and employee. The employee pay the 6.2% and the employer pays the 6.2% by paying the employee a wage that is 6.2% below what they would be earning if said employer didn't have to pay into the system. The employee indeed pays it in full. More:

In addition, at least until the final collapse of his scheme, Ponzi was more or less obligated to pay his early investors what he promised them. With Social Security, on the other hand, Congress is always able to change or cut those benefits in order to keep the scheme going.

Social Security is facing more than $20 trillion in unfunded future liabilities. Raising taxes and cutting benefits enough to keep the program limping along will obviously mean an ever-worsening deal for younger workers. They will be forced to pay more and get less.

More from  Pajamas Media, Outside the Beltway, Power Line, Reason Hit & Run and Freedom's Lighthouse

UPDATE: Another Matthews vid on YouTube:

UPDATE #2: Put ‘Country Before Party’ and Admit Social Security Is a Ponzi Scheme. Kind of like asking people to admit the sky is blue, and yet liberals still seem incapable of doing so.

UPDATE #3: Remember when liberals used to call Social Security a Ponzi scheme?

In a U.S. News & World Report cover story excerpting The Birth Dearth, Wattenberg sums up his argument by saying: “In short, Social Security is a Ponzi game, a pyramid scheme, a chain letter.” In a December 1995 column, Wattenberg makes the point again, calling both Social Security and Medicare “chain letter games.” Implicitly echoing Samuelson, Wattenberg adds, “There’s nothing inherently wrong with a Ponzi game. Life itself is such a game.” The problem, Wattenberg continues, is that the success of the Ponzi game called life hinges on higher birth rates than we’ve been able to produce…

In January of 1996, just a few months after Shapiro’s article appeared, Pulitzer Prize–winning Washington Post columnist William Raspberry published a piece on Social Security titled, “Numbers That Won’t Go Away.” Although he’s no conservative, Raspberry argues that “[Social Security] is, in important ways, like a massive Ponzi scheme in which early participants are paid off with money put up by later ones.” Raspberry then asks if Social Security will collapse, “as Ponzi schemes inevitably do.” The piece makes it clear that Raspberry fears just such a collapse. He ends his column by asking: “Why aren’t the White House and congressional negotiators talking about these things?”

A bit later that year, in May of 1996, liberal columnist Jonathan Alter published a piece in Newsweek suggesting that former Democratic Colorado governor and erstwhile Clinton supporter Richard Lamm might run for president as the candidate of Ross Perot’s Reform party. Cynics might suspect that Alter’s glowing treatment of Lamm was motivated by an interest in damaging Republicans by puffing up a third-party bid. In any case, Alter lauds Lamm for his “straight talk” on Social Security. Lamm is praised as a “truthteller” by Alter for being willing to say, among other things, that Social Security is a “well-meaning Ponzi scheme.” Today, of course, the very liberal Alter is a sympathetic biographer of Obama and one of the president’s most supportive media cheerleaders.

Heh.