Reformation
Social Security IS a Ponzi Scheme. Here’s Why and the Way Out
Texas governor and presidential candidate Rick Perry is rattling the political world by maintaining that Social Security is a Ponzi scheme. Social Security (SS) is supposed to be the “third rail” of politics–a popular program that you criticize or alter at your own peril.
The pundits are drooling that Perry and the Republicans are in deep trouble if they continue to speak about changing the system that FDR gave us in the 30s to help elderly retirees.
I don’t believe it. I have come to this conclusion about Social Security:
What’s good for me is not good for America.
And if I and many others are not willing to put country before self over this and other vital national interests, then we’re probably finished as a just and prosperous nation.
Here’s why…
I am a Baby Boomer who could start taking Social Security in five years and expect to live another twenty or thirty. I’m also in the lowest tier of income earners in America (due to my choice to be a Christian missionary) who could greatly benefit by the monthly check from the government.
I also know many people who are currently on SS who would like to keep getting their monthly checks from the government. So would I. But I also realize that SS and other large entitlement programs will bankrupt this nation if we bury our heads in the sand, selfishly demand our checks, and don’t have the guts to do something about it.
Gov. Rick Perry has told us the hard truth.
Social Security is a sham–a fraud–and if left unchecked, will fail for everybody.
I don’t know the motivations of those who gave us Social Security. For argument sake, let’s say that the those who launched this social experiment many years ago were well meaning and thought that it would be a good idea to collect money from working Americans during their productive years to give back during retirement.
Fine. People were suffering greatly during the Great Depression and our leaders thought it might be helpful to especially protect the vulnerable elderly.
But good motives can have terrible consequences if ill-designed and delivered. Some of the worst financial consequences come from Ponzi schemes. Think Bernie Madoff–and the thousands who lost their life savings through his mischief.
And Social Security is nothing less than Ponzi-like. Erick Erickson explains:
“Social Security is, for all intents and purposes, a Ponzi scheme. Don’t believe me? Try out the Securities and Exchange Commission definition: ‘A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk.’
“Or how about from Wikipedia? ‘A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going.'”
Note the clear definitions. Ponzi schemes are never good investments. They promise great returns in the future, but they spend more money in the present than what they save for the future, and only survive for a time by having new suckers come into the system to pay for the current obligations.
But the operation is a house of cards that over the long-run cannot be sustained and ultimately collapses–especially hurting the last investors to enter the charade.
In terms of SS, think of our children and grandchildren.
There is really only one difference between a Ponzi scheme and Social Security. In a Ponzi scheme fraud, the game always collapses when the criminal runs out of money. In American, the criminals (i.e. the government), don’t run out of money because they can always tax more and print more.
But alas! Those days are over. The American nation can no longer bear increased taxes or more fiat money.
The “game” is essentially over.
Here’s the truth about Social Security:
1. It was begun during a time in which most Americans lived to be about seventy. It was designed to help them with the last five-to-ten years of life. Today, many Americans live into their eighties and nineties and can collect SS for thirty years or more. Thus retiring Americans today will receive three to five times more money than they ever put in! That’s not a great return. It’s robbing future generations.
2. The monies that were collected since the 1930s were never invested or “held.” They were spent every year in the general federal budget. Social Security was never a fund or investment. It is a data-entry IOU. In the early years of the programs, there were plenty of younger workers to pay for retirees. But no longer. Social Security expenditures exceeded the program’s non-interest income in 2010. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are just the beginning of a half a trillion dollar short-fall by 2021 (CBO estimate). The retirement of the Baby Boom generation creates a desperate situation that will overwhelm the system. Not in the future. Now.
3. We can’t raise taxes to fix the broken system. There are simply not enough younger workers to pay for the older generations–unless they start giving 50-100% of their income to the federal government. This is not an answer. It is slavery and tyranny of the young.
4. The enactment of Social Security had two other negative consequences. First, it astronomically grew the size of government and created dependency for millions of Americans. This was never the American way. Secondly, it began to divide and diminish the American family. For hundreds of years, American families took care of their own–not just the nuclear family, but relatives of all types. If you read the literature of the 18th and 19th centuries, you hear of families being responsible for grandparents, aunts, uncles, cousins–everybody related to them. This was a good thing that placed the family at the center of society. Government has now taken its place–and no wonder the American family is dying. When you don’t need each other, meaningful relationships cease to exist.
Rick Perry is right. Social Security as it currently exists is a fraudulent program that is a financial cancer on the American economy. We must talk about it and we must makes some changes. I have a few recommendations:
1. Raise the age threshold as people are living longer lives. Continuing to work and be productive is a good thing. Retirement–for twenty or thirty years–is not a right. It’s a privilege and fruit of a well-lived life. Just raising the age to 67 or 70 would save billions of dollars per year.
2. Make Social Security a true savings instrument where the money is “lock-boxed” and invested in financial markets to multiply a return. This is the way that it always should have operated. The government must collect SS money, not spend it on other things, and invest it for future payments. And older folks should receive at retirement only what they’ve contributed and the interest it has earned–not five times what they put in.
3. If younger generations don’t want to invest in the government system, they can take their SS monies and invest them personally in other private instruments. If government cannot be competitive, then it shouldn’t be allowed to be in the retirement business at all. More choices will mean better returns.
4. Americans should be encouraged once again to be the primary providers for their own families. I am personally arranging my future finances around taking care of my own. There’s nothing wrong with children caring for their parents and grandparents in their later years–and even living together as a result of that commitment. This would strengthen and renew the American family. God knows this is one of our greatest needs as a society.
To make these ideas and other good reforms come to pass, we need to be dirt honest about the giant Ponzi scheme called Social Security and be willing to do the right thing–even at our own expense. Here’s the principle to which we must commit:
What’s good for me isn’t necessarily good for America.
Translation: The Ponzi-like Social Security check that I’d love to receive from age 65 to 90 is bad policy for my nation. I won’t take it. It’s better to “ask not what my country can do for me, but rather ask what I can do for my country” (John F. Kennedy.)
That means I need to work a little harder and longer, give up the money I don’t deserve, take responsibility for my extended family, and work to reform the system for future generations.
If we do, they will rise up in the future and praise us.
Rick Perry—GameChanger–and a Fascinating Flashback
Texas Governor Rick Perry’s Saturday announcement to seek the Republican nomination for president of the United States had been expected for some time–but is still a game changer in the 2012 race.
It came on a politically loaded day that saw Minnesota Congresswoman Michelle Bachmann win the Iowa Straw Poll 29% to 28% over Rep. Ron Paul. Former Minnesota Governor Tim Pawlenty came in fourth and had the “class” and wisdom to withdraw from the race a day later.
With Perry’s announcement, Bachmann’s win, and Mitt Romney’s top tier status, I’m having an unusual flashback to a previous era.
Perry is the key to it–but the other comparisons are very interesting…
First of all, Rick Perry.
His entrance into the race is truly a game changer because he is the clearest alternative to Barack Obama for a number of reasons:
Executive experience
He’s the longest serving governor in America at eleven years and counting. Barack Obama entered the White House with zero years of executive experience under his belt–and it has showed in a very inept presidency including his lack of leadership in the recent debt-ceiling debate. If it weren’t for what Sean Hannity calls the “Obamamania Media,” Barack Obama would be compared to Jimmy Carter–one of the most ineffective presidents in history.
Not Perry. He’s a skilled leader and manager whose administrative team has been together a long time and brings rave reviews everywhere they go.
Job-creating expertise
Though jobs can be counted in a variety of ways, a clear consensus says that the state of Texas, under Rick Perry’s leadership, has created 30-50 percent of all the jobs created in the United States in the past ten years. That amounts to nearly one million jobs in just one of the fifty states. Very impressive. This stands in stark contrast to the abysmal loss of jobs and rising unemployment under the Obama administration.
The simple truth is that Governor Rick Perry and the state of Texas understand that balanced budgets, lower debt and taxes, less government regulations, greater freedoms for entrepreneurs–i.e. smaller government–is the engine of job growth.
On the other hand the Obama Administration is stuck in the failed philosophy of Keynesian economic ideas–that government stimulus and controls are the key to economic prosperity.
It didn’t work in FDR’s New Deal and it’s not working now.
The experts keep saying that Obama has “run out of options.” Really? No, he’s just run out of the wrong options of government interventionism that are cursing our economic recovery. He could easily pivot to many of the right actions of shrinking deficits, modifying entitlements, getting rid of onerous federal regulations, and reforming the tax code.
But Barack Obama is deeply committed to the European socialist model of wealth re-distribution. He doesn’t appear willing to change.
Commitment to constitutional, limited government.
Perry is known for his commitment to smaller, leaner, Constitution-based government. Texas is famous for this equation and it shows in their robust economy. This is really the choice being offered to Americans in 2012: Do you want the Big Government policies of Barack Obama to guide into the 21st century, or are you willing to return to the time-tested formula of the US Constitution and its principles which brought America into greatness?
All of the Republican candidates believe in cutting the size or growth of government–but Rick Perry has actually done it in America’s second largest state. He is a clear alternative to Barack Obama’s faith in the ever-growing nannny state and its immense restraints on freedom.
Evangelical faith
A number of the Republican candidates are strong evangelicals (such as Rick Santorum, Michelle Bachmann and Tim Pawlenty), but Rick Perry’s faith also produces action. He was the recent visionary for The Response which drew scores of thousands of people to Texans Stadium for a day of fasting and prayer for America. Many others joined them from around the nation.
Rick Perry understands the fundamental equation for liberty: Faith in God in individual lives and familes–producing morality and stability in society–creating freedom, opportunity, inventiveness and prosperity.
Governor Perry had the guts to call the nation–and its 49 other governors–to a 2 Chronicles 7:14 day of repentance before God on August 6. He personally led the gathering in prayer. He understand that economic tweaks or reforms won’t get us anywhere if we are not right with God as a people. Talk about inspiring hope and change!
That leads me to my first flashback: Rick Perry reminds me an awful lot of Ronald Reagan–who, in my book, was the greatest president of the 20th century. Perry has Reagan’s faith, worldview, executive experience in a large state, charisma, humility, and potential.
Rick Perry is a game-changer for the 2012 elections.
Then there is the rising star of Michelle Bachmann. She is one of the most principled voices of the current GOP candidates. She is also a strong evangelical, a mother who has raised 26 foster children, an attorney, an effective legislator–and in her words–a woman with a “titanium spine” who will stop the disease of runaway spending and over dependence on government.
She’s not only articulate on the stump–but she’s fearless in her positions and the causes that she believes in. This is the reason that America appears to be falling in love with her: They know that she is an uncompromising leader who could also bring us some true hope for the future.
Michelle Bachmann reminds me of another flashback–Margaret Thatcher, the former Prime Minister of Great Britain. Mrs. Thatcher was known for her strong faith and conservative principles. During her tenure as English PM from 1979-1990, she earned the nickname of “The Iron Lady.”
Michelle Bachmann fits the same bill. And God knows we need some leaders with spine to take us through the difficult days ahead.
Then there is Mitt Mitt Romney, a leading contender for the Republican nomination. Mitt is a Mormon with good principles and strong executive experience as governor of Massachusetts. Probably his greatest asset is his business acumen and experience which is definitely needed in the government sphere.
Mitt Romney brings me a flashback of businessman Ross Perot. He also ran for president to bring good business sense back into the public domain.
Watch for the “Impalinization” for all three of these candidates in the coming months. That’s a made-up word. It’s a combination of “impale” which means to: a. To pierce with a sharp stake or point.b. To torture or kill by impaling.” And it refers to the unfair but successful media destruction of former Alaska governor Sarah Palin during the 2008 presidential campaign and years following.
The secular press, which wants the United States to continue heading in a secular/socialist direction, will use every tactic of “Impalinization” to destroy these three leaders between now and November 2012.
Let’s pray against the bias, and ask God for his truth to prevail.
I’m having a flashback of Ronald Reagan, Margaret Thatcher, and Ross Perot in Rick Perry, Michelle Bachmann, and Mitt Romney–all in one party and election. Call it a Dream Team.
I don’t know if the comparisons fit, but time will tell. The other conservative candidates are also very attractive and deserve a chance to compete.
May God guide us in our choice of leaders, forgive us as a people for turning from Him and His ways, and bring blessing and renewal to these United States of America.
The Compromise: The Tea Party Erects a Speed Bump
The battle over increasing the debt ceiling for the United States government ended today when Congress approved and the president signed a bill that would raise the current debt limit by 400 billion dollars. The House vote was 269-161 and Senate approved the measure 74-26. It was a hard fought battle that kept the nation and world on edge for days.
I’m greatly disappointed in the compromise–though pleased with some details–and have been thinking about a phrase that describes the ordeal we have just experienced:
You can’t see the forest for the trees.
Here are a few of the trees: The mainstream media is calling the debt ceiling compromise a huge victory for the Tea Party movement. They say that Barack Obama’s showed strong leadership, politics as usual was demonstrated by both parties, and that the “compromise” was a good thing in the end.
They are wrong.
These are just trees–not the bigger picture.
What’s really happened is that the Tea Party managed to erect a temporary speed bump in front of runaway government spending and begin to re-frame the debate. The “forest” of financial disaster still looms in front of us–dark and foreboding.
We must continue to fight to save our Republic.
Before we discuss the bigger war and battles that lie ahead, let’s look at the “speed bump” that was erected this week.
Here’s how the Family Research Council saw it:
“The framework…would raise the debt limit by at least $2.4 trillion and get Obama and congressional Democrats past their target date: Election Day 2012. In return for this generous political cover, Democrats would agree to a modest $1 trillion in supposed cuts spread out over 10 years; $350 billion of those “upfront” savings come from gutting national security resources.”
“A trillion dollars over 10 years is not sufficient to impress credit rating agencies, which have threatened to downgrade America’s credit status. In fact, Moody’s announced that: “Reductions of the magnitude now being proposed, if adopted, would likely lead Moody’s to adopt a negative outlook on the AAA rating.” The current plan does not improve upon either of those earlier plans.”
“In addition to the $1 trillion, the framework sets up a ‘special’ congressional committee that would seek $1.4 trillion in ‘deficit reduction’ by the end of 2011. Of course, for liberals, ‘deficit reduction’ is synonymous with ‘higher taxes.'”
“If the commission’s recommendations are not enacted, across-the-board spending cuts would be triggered, half of which (nearly $500 billion) would come from national security spending. Every honest observer knows the problem is entitlement spending, not the defense budget or a lack of revenue. Defense spending has been on the decline for decades, as a percentage of GDP. It is currently below its historical average of 5.2 percent of GDP. Meanwhile, entitlements (Social Security, Medicare, and Medicaid) grew from 2.5 percent of GDP in 1965 to over 10 percent today and represent 60 percent of the total federal budget.”
The Heritage Foundation saw the debt ceiling compromise in these terms:
“Unfortunately for taxpayers, most of these cuts are to what the country would have spent, not what we are spending. In other words, the government will keep growing, just at a slower rate. The Left will have the satisfaction of raising our credit limit for six months but spreading the pain of cuts over 10 years. Obviously, we have no way to estimate what inflation will be in 2021, but we can look back on the cost of living over the last 10 years and see that the value of the dollar diminished by about 24% since 2001. If the next decade is similar to the last, then $1 trillion in cuts today will be more like $800 million in cuts tomorrow. “
“To help hold Congress’s feet to the fire on deficit reduction, the deal does asks for a second wave of spending cuts this year. The only hitch is, those cuts would be determined by a select number of congressmen. It’s been dubbed the Super Committee, and judging by the description, there’s a lot to dislike. Twelve members (six from each chamber and six from each party) will have to find ways to slash the deficit by another $1.6 trillion before the end of the year. If they don’t, a surge of cuts to the defense and Medicare budgets would automatically go into effect.”
“On the bright side, the agreement does make a vote on the Balanced Budget Amendment a condition of the final deal. Any victories the GOP can claim in this debate are owed to hard-core conservatives like Reps. Jim Jordan (Ohio), Michele Bachmann (Minn.), Steve King (Iowa), and Louie Gohmert (Texas), who held firm in the face of enormous political pressure. Without their resolve, there would have been little to negotiate.”
So here’s what it all means–to get back to the “forest” analogy. I want to lay this out in stark terms so that you don’t miss the big picture:
Today, the United States government is 14.5 trillion dollars in debt. In less than two years we will be over 17 trillion dollars in debt–and gobbling up 25% of our Gross Domestic Product (GDP). Our historic average is 18%. We are currently running deficits of over 1.5 trillion dollars a year–for as far as the eye can see. We borrow forty- three cents of every dollar that we spend. Next year, the so-called “cuts” will be a measly 22 billion dollars.
That’s six days of federal spending.
A dirty little secret–the true “Satan Sandwich”of our current deficit binge–is that none of the “cuts” that are mentioned above are actual reductions in spending. Federal entitlement programs–currently 60% of the US Budget–increase 7-8% each year. All so-called “cuts” are really cuts in the growth rate of Big Government–nothing more.
Imagine your family bringing in $60,000 a year in income, but spending $100,000. You are $1,000,000 in debt and it’s begun to grow exponentially. To stop the bleeding, you decide to spend $107,000 next year instead of $108,000. And on and on.
If you did that in the real world, you would crash and burn.
Sound crazy?
Well, that’s the Federal Government “dealing with the problem.” There’s no real reckoning with reality–just a slight retarding of a nasty habit that will have devastating consequences in this nation and the world economy if we allow it to continue.
Yes, we do need to give the Tea Party legislators credit. Without 120 courageous members in the House of Representatives, the debt ceiling would have been raised with a yawn–and there would be no discussion of “cuts” of any type. During the first two years of the Obama administration, when the liberals controlled all branches of government, we spent four trillion dollars inflating our National-Debt-and-Government Monster.
Thanks to the Tea Party, a speed bump has been erected. It doesn’t stop the runaway car–it just slows it slightly. It’s a small victory in a big war, but unless we win the war, the United States is finished as a nation.
A black, ugly, destructive forest of financial disaster still looms in front of us. The liberal elements still control the White House and half of Congress. If we do not stop them, the United States as we know it will be added to the ash heap of history.
We will be Greece–times one thousand–and fade into obscurity.
As people of faith and courage, our marching orders remain clear.
1. We must decisively win back control of the United States Senate in the 2012 elections to stop the progressive spending insanity. We must increase our majority in the House of Representatives.
2. We must defeat Barack Obama in 2012 with a conservative candidate with spine and vision to make the hard choices to pare down entitlements.
3. We must pass a responsible balanced budget amendment and have it ratified by the states. Our leaders in Washington will never have the guts to do it.
4. We must change our current tax code from a job-squelching progressive income tax to a fair tax or a flat tax. This would make the United States the investment haven on the world.
5. Over time we need to pay-off our 14.5 trillion dollar debt.
To accomplish the above legislative goals, we need to change ourselves first. As individuals and families, we need to reject irresponsible debt and live within our means. We need give up our entitlement mentality and take more responsibility for our own lives.
The government does not owe us a certain standard of living. It owes us an “honest money–just society” that gives equal opportunity to all people and protects us from our enemies.
And to accomplish that, we need more of God in our hearts and practices.
This coming Saturday, August 6, “The Response” is taking place in Houston, Texas, and many cities around our nation. I encourage you to participate. It’s a national call, led by Texas Governor Rick Perry, for America to return to its God-fearing roots.
The Tea Party erected a speed bump–a warning.
But only a prayerful, repentant response to God can get us completely turned around and moving in the right direction as a nation.