Friday, September 23, 2011

Social Security: Not A Ponzi Scheme

I wasn't going to mention this because it's so absurd, but our nation's idiots (and the people trying to get their votes) have been pushing this claim into the forfront. Dean Baker's response to Paul Ryan is pretty brilliant:
During a recent interview on The Laura Ingraham Show, you made a number of remarks about Social Security, among them, characterizing Social Security as a "Ponzi scheme," that would yield a negative rate of return, and saying, “…[Social Security] is not working, it is going bankrupt, and that current seniors will be jeopardized the most by the status quo.” None of these statements are accurate.

Almost no one will get a negative real return on their Social Security taxes. This issue has been researched extensively and assuming a 2 percent real discount rate, even as late as 2030, most new retirees will receive more in benefits than they paid in taxes. There is simply no basis for the claim that beneficiaries will receive negative returns on their taxes as the value of scheduled benefits actually rises in later years since life expectancy, and therefore the expected period of retirement, will continue to increase. The only way we would see negative returns would be if Congress voted to cut benefits.

In fact, if Congress makes no changes at all to the program, the latest CBO projections show that Social Security will remain fully solvent through 2038 and would pay about 80 percent of full scheduled benefits from then on, indefinitely. It is quite difficult to make the case that a system that pays full benefits for the next 27 years is not working or is going bankrupt, let alone claim that it jeopardizes the retirement security of current seniors.
So one last time things that arn't Ponzi schemes: Social Security

Things that are Ponzi schemes: What Charles Ponzi, Bernie Madoff and that Miami booster did.

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