OK

While the system eventually will collapse under its own weight, the example of Bernard Madoff's investment scandal demonstrates the ability of a Ponzi scheme to delude both individual and institutional investors as well as securities authorities for long periods: knowingly entering the scheme even at the last round of the scheme, can be rational economically if there is a reasonable expectation that government or other deep pockets will bail out those participating in the Ponzi scheme..........


yup....:uhuh:

Madoff didn't invest, he just banked the money, falsified returns and paid investors largely from their own money.

If SS is a ponzi scheme than so is any government backed security.
Posted from my iPhone/Mobile device

I agree w/ Bryan as well, these programs should only serve those with demonstrated need and the limits need to be changed drastically...unfortunately, to politicians.... demonstrated need, is the need to pile bodies into these programs to create greater dependence to ensure their own or their party's viability down the road....government measures the success of their social programs strictly by the size of their budgets and the number of people..legal or illegal that are dependent on them....

you appear to be catching on....:uhuh:

the government has not "invested" the money(unless you consider the cash transfers by a large beaureaucracy from one individual to another= investment), they spent it and are now paying their "investors" from current contributions by new "investors"(dupes)....exactly the same(except the "their own money" part)

if Madoff could have convinced the Fed to buy his debt and "create" some money for him...he might still be in business...

It depends on if you lump it all in one bucket, and thats why i started this post, its very misleading.
If this was a business and you had a few different product lines, your overall financial picture would include the revenue and expense from all products. However if you wanted to fix the problems you focus on the products that are not selling or too expensive to produce. Looking at the US financial picture, its SS and Medicare. The data doenst show this but I bet if you took all the income (payroll taxes) we pay for SS and Medicare away and the programs. We could lower our fed taxes and still pay all of the other pieces of the pie. The problem is not govt expense and income tax (which is what 99% of the bitching is), the problem is that those 2 programs are not sustaiinable - the income is not covering the expense.

scott is 100% correct.

it's really not too complicated, the problem is that "some" would like to tell you that it is, blather on about complexities and then tell you that you aren't smart enough to comprehend their blather when all that they've really succeeded in doing is to defend the indefensible while hypnotizing themselves with their own rhetoric.....which reminds me...have you seen/heard O'baby's new press guy.....HAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAAA AAAAAAAAAAAAAA!!!!!!!!!!!!!!!

I do not understand the big deal about social security at this time. Social is solvent to 2017 and still taking in more monies then it is paying out. The last incease to employers and employees to the payroll tax was in the early 80's of which has kept social solvent for the last 25 years or so. I would think that if the payroll tax was raised about 1.5% for employer & employee social will be good for another 40 years beyond 2017. Are your elected officials using social as a scape-goat? Social only takes up about 6% of the GDP As they take money from the reserve of social security, they are putting in IOU's. If elected officials would pay some of the IOU's it would make social even more solvent, but I am sure that the government has no intention of paying back, just keep taking. They are thieves and should not be taking monies to put into the general fund. Just because the country is broke does not give them the right.

When Rosservelt passed social in the 1930's it was a ploy for re-election since the average life span then was about 58 years old the government figured that 1 out of 10 would collect, then in the late forty's- fifties vacines were dicovered that increased the life span.

The young people of today should be paying more, their life span is much greater today with today's medicine and vaccines.

No..They pay into it for longer and won't be able to collect, if they are lucky, until they are 70.

I guess it's probably not a big concern...but remember, all of these projections are based on rosy scenarios...of course the world is quite stable right now :rotf2: oh, and remember that SS recipients haven't been getting COLA increases because the admin. claims there's no increase in the cost of living...the number should be higher


Jan 27, 2011 The Congressional Budget Office said Wednesday that Social Security will pay out $45 billion more in benefits this year than it will collect in payroll taxes, further straining the nation’s finances. The deficits will continue until the Social Security trust funds are eventually drained, in about 2037.

Previously, CBO said Social Security would start running permanent deficits in 2016. In the short term, Social Security is suffering from a weak economy that has payroll taxes lagging and applications for benefits rising. In the long term, Social Security will be strained by the growing number of baby boomers retiring and applying for benefits.
.............................
August 18, 2010: 6:49 PM ET


NEW YORK (CNNMoney.com) -- It's official: Social Security will reach its tipping point this year.

For the first time in nearly 30 years, the system will pay out more benefits than it receives in payroll taxes both this year and next, the government officials who oversee Social Security said on Thursday.

And while Social Security cash flow will likely head back into the black for a few years after that, starting in 2015 it looks to stay in the red for the long haul, the trustees said in their annual report.

"The improving economy is expected(always count on the opposite of what this bunch says is "expected") to result in rough balance between Social Security taxes and expenditures for several years before the retirement of the baby boom generation swells the beneficiary population and causes deficits to grow rapidly," Treasury Secretary Tim Geithner said.

As for this year's dip into the red, Geithner said the recession is to blame.

Again, you don't seem to know what you're talking about. By law the SS trust must be invested in interest bearing securities.

Posted from my iPhone/Mobile device

Someone that is in their 40's should be waiting until they are 70.

I have been paying in since 1964 and now I have to wait till I'm 66 not 65 to collect.

but I do, I posted this earlier, the govenment has issued IOU's to itself for any SS overage and promises to pay it back sometime and lumped the amount onto the National Debt...don't know about you...but if a guy running trillion dollar deficits gives me an IOU promising that the money will just materialize at a later date even though the account that the IOU is written on is overdrawn and will be so for as far as the eye can see....welll???

Paid-in contributions that exceed the amount required to fully fund current payments to beneficiaries are invested in securities issued by the federal government. The securities issued under this scheme constitute the assets of the Social Security Trust Fund. Because under current federal law these securities represent future obligations that must be repaid, the federal government includes these securities within the overall national debt.[1] The portion of the national debt that is not considered "publicly held" represents the obligations incurred by the government to itself, the bulk of which consists of the government's obligations to the Social Security Trust Fund. now that's funny...and you wonder where Wall Street get's all of their crazy ideas

you should start you own Ponzi scheme Spence :uhuh:

I'm 49 and not thrilled with 70:fury: Just keep bending over and taking it like a good American or be a public employee .

49! You will live to you are 100 ,in your case it should be 80, they will have the miracle drug by the time your 60 :) :)

just an update :)

Sacred Cows: Why Lawmakers Are Stuck on Medicare, Medicaid, Social Security
ABC News Feb. 17, 2011

With all the finger-pointing in Washington this week over the need to reform Medicare, Medicaid and Social Security, one thing is clear: it might just be Americans' very sense of entitlement to those programs that's the biggest barrier to getting something done.


The three programs have ballooned to 57 percent of the government budget this year and are widely cited as the most significant contributors to the federal deficit, something nearly all Americans want to see aggressively brought under control.

It hurts to get out of bed now. Obama care has other plans for me:hang:

"Americans' very sense of entitlement to those programs that's the biggest barrier to getting something done"
Imagine the nerve of feeling you should get something you paid for your whole working life.

Bingo.
I think it is fair to add a year to your age group and a few years to mine, but we have been paying into it.

The Social Security system is primarily a pay-as-you-go system, meaning that payments to current retirees come from current payments into the system. In the early 1980s, however, the financial projections of the Social Security Administration indicated near-term revenue from payroll taxes would not be sufficient to fully fund near-term benefits (thus raising the possibility of benefit cuts).



Government will have to borrow to pay Social Security IOUs
March 14, 2010 3:33 PM
The Associated Press

PARKERSBURG, W.Va. • The retirement nest egg of an entire generation is stashed away in this small town along the Ohio River: $2.5 trillion in IOUs from the federal government, payable to the Social Security Administration.

It's time to start cashing them in.

For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.

Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.

Sounds like a good time to start tapping the nest egg. Too bad the federal government already spent that money over the years on other programs, preferring to borrow from Social Security rather than foreign creditors. In return, the Treasury Department issued a stack of IOUs — in the form of Treasury bonds — which are kept in a nondescript office building just down the street from Parkersburg's municipal offices.

Now the government will have to borrow even more money, much of it abroad, to start paying back the IOUs, and the timing couldn't be worse. The government is projected to post a record $1.5 trillion budget deficit this year, followed by trillion dollar deficits for years to come.

Social Security's shortfall will not affect current benefits. As long as the IOUs last, benefits will keep flowing. But experts say it is a warning sign that the program's finances are deteriorating. Social Security is projected to drain its trust funds by 2037 unless Congress acts, and there's concern that the looming crisis will lead to reduced benefits.

For more than two decades, regardless of which political party was in power, Congress has been accused of raiding the Social Security trust funds to pay for other programs, masking the size of the budget deficit.

But to illustrate the government's commitment to repaying Social Security, the Treasury Department has been issuing special bonds that earn interest for the retirement program. The bonds are unique because they are actually printed on paper, while other government bonds exist only in electronic form.

They are stored in a three-ring binder, locked in the bottom drawer of a white metal filing cabinet in the Parkersburg offices of Bureau of Public Debt. The agency, which is part of the Treasury Department, opened offices in Parkersburg in the 1950s as part of a plan to locate important government functions away from Washington, D.C., in case of an attack during the Cold War.

One bond is worth a little more than $15.1 billion and another is valued at just under $10.7 billion. In all, the agency has about $2.5 trillion in bonds, all backed by the full faith and credit of the U.S. government. But don't bother trying to steal them; they're nonnegotiable, which means they are worthless on the open market.

More than 52 million people receive old age or disability benefits from Social Security. The average benefit for retirees is a little under $1,200 a month. Disabled workers get an average of $1,100 a month.

Social Security is financed by payroll taxes — employers and employees must each pay a 6.2 percent tax on workers' earnings up to $106,800. Retirees can start getting early, reduced benefits at age 62. They get full benefits if they wait until they turn 66. Those born after 1960 will have to wait until they turn 67.

Social Security's financial problems have been looming for years as the nation's 78 million baby boomers approached retirement age. The oldest are already there. As that huge group of people starts collecting benefits — and stops paying payroll taxes — Social Security's trust funds will shrink, running out of money by 2037, according to the latest projection from the trustees who oversee the program.

The recession is making things worse, at least in the short term. Tax receipts are down from the loss of more than 8 million jobs, and applications for early retirement benefits have spiked from older workers who were laid off and forced to retire.

Stephen C. Goss, chief actuary for the Social Security Administration, says the crisis has been years in the making. "If this helps get people to look more seriously at that in the nearer term, that's probably a good thing. But it's only really a punctuation mark on the fact that we have longer-term financial issues that need to be addressed."

In the short term, the nonpartisan Congressional Budget Office projects that Social Security will continue to pay out more in benefits than it collects in taxes for the next three years. It is projected to post small surpluses of $6 billion each in 2014 and 2015, before returning to indefinite deficits in 2016.

For the budget year that ends in September, Social Security is projected to collect $677 billion in taxes and spend $706 billion on benefits and expenses.

Social Security will also collect about $120 billion in interest on the trust funds, according to the CBO projections, meaning its overall balance sheet will continue to grow. The interest, however, is paid by the government, adding even more to the budget deficit.

While Congress must shore up the program, action is unlikely this year, said Rep. Earl Pomeroy, D-N.D., who just took over last week as chairman of the House subcommittee that oversees Social Security.

"The issues required to address the long-term solvency needs of Social Security can be done in a careful, thoughtful and orderly way and they don't need to be done in the next few months," Pomeroy said.

The national debt — the amount of money the government owes its creditors — is about $12.5 trillion( I think we just passed 14 trillion), or nearly $42,000 for every man, woman and child in the country. About $8 trillion has been borrowed in public debt markets, much of it from foreign creditors. The rest came from various government trust funds, including retirement funds for civil servants and the military. About $2.5 trillion is owed to Social Security.

Good luck to the politician who reneges on that debt, said Barbara Kennelly, a former Democratic congresswoman from Connecticut who is now president of the National Committee to Preserve Social Security and Medicare.

"Those bonds are protected by the full faith and credit of the United States of America," Kennelly said. "They're as solid as what we owe China and Japan.":rotf2:

CNN Money
Useless: The Social Security trust fund
August 10, 2010: 11:24 AM ET


FORTUNE -- There's real money in the world, then there's funny money -- stuff that looks real, but isn't.

Today, let's talk about one of the world's biggest piles of funny money -- the $2.54 trillion Social Security trust fund. The trust fund matters now, because Social Security revealed last week that it plans to tap it for $41 billion this year, and will begin tapping it on a regular basis in less than five years.

This year's cash deficit, the first since the early 1980s and the biggest ever, means the Treasury will have to borrow money to redeem some of the trust fund's Treasury securities. Even at a time when Uncle Sam is borrowing $1.5 trillion a year to keep his checks from bouncing, $41 billion is real money.

Here's why the trust fund has no economic value. Let's say I begin taking Social Security when I hit the full retirement age of 66 later this year. Because its tax revenues are below its expenses, Social Security would have to cash in about $3,400 of its trust fund Treasury securities each month to get the money to pay my wife and me. The Treasury, in turn, would have to borrow $3,400 from investors to get the money to pay Social Security. The bottom line is that the government has to borrow from investors to pay me, regardless of how big the trust fund is.



Why the Social Security trust fund is useless - Aug. 10, 2010

No Brian,
See I have a problem paying for others who don't do there jobs right. I didn't screw up SS.
SS was not set up to cover every person who claims a disability. Medacare was not set up to make scooter and stair elevator companies rich. You could cut the cost by 25% (open your eyes) of all these programs just in by stopping abuse and waste alone.
Being passive and allowing this BS to continue WILL NOT fix anything.

The Coalition for Insurance Fraud reported $23.7 Billion in improper
billing in Medicare and Medicaide in 2007 alone.

WTH, who's watching the hen house. :huh: