First, the words "ponzi scheme" don't mean "anything where you put X in and get X - n out."
Second, Social Security isn't an investment program. The goal of Social Security is to provide each generation of retirees with a baseline level of income. It has succeeded at this task.
Third, we're not facing massive shortfalls. We raised taxes on the baby boomers in the early '80s to build up the social security trust fund to pay for their retirement. As it stands, social security is a small part of the entitlements problem moving forward --- Medicare has more than 7 times its liabilities in the projected future.
Fourth, this "small payments" thing is a myth. 2/3rds of Social Security beneficiaries derive more than half their income from Social Security; more than 1/3rd of them derive the overwhelming majority of their income from it.
There is no such thing as a social security trust fund. The government uses that money to fund other programs and puts IOUs in there; that means when more are receiving than contributing there will be a massive tax burden on those contributing they get hit with both their normal SS tax, plus the taxes to cover the shortfall.
If there's no such thing as a social security trust fund --- in which case, Reagan and Greenspan's baby boomer FICA tax hike was a huge scam --- then there's no social security crisis. There's just a general budget issue. But in the general budget, Social Security is dwarfed both by other entitlement programs and by a host of other programs.
If you don't believe in the Social Security trust fund, then we should be discussing Medicare. Or out-of-control defense spending. Social Security is irrelevant.
Defense spending is a lot, but it is actually one of the few things that the federal government is supposed to do and it's only 20% of the federal budget whereas medicare and ss are at 60%
That's not true. The OMB's own figures put Social Security at 20%, and Social Security is funded by a dedicated tax. Medicare is a much bigger problem.
Budget comparisons are also subject to both chicanery (playing around with what you consider a defense expenditure) and bias (Social Security is the largest monolithic expenditure in the budget, just like MadMenSeries2.mp4s.zip is the biggest single file on my filesystem, but a small fraction of what I'm spending my disk on).
I will admit that the numbers can be juggled around quite a bit; but from most charts SS is 20% & medicare/medicate/etc are about 40% dod is about 20..
the fact that SS is funded by a dedicated tax doesn't have any relevance.
On the second point, that baseline is going to drop much, much lower unless they drastically raise taxes. We have what, 8 years until we start taking out more than is going in.
On the third note, agreed. Medicare/Medicaid have massive problems. That doesn't mean that SS doesn't have problems too. They do have issues with workers taking more out than putting in. The birth rate continues to decline.
On the small payments thing, that maximum SS benefit is what, $1,000 monthly? That is NOT enough to live on. Especially not when you consider the cost of nursing homes, medicine, and all the other costs of living when you are partially or wholly unable to take care of yourself.
I don't know about you but I burn $1,000 just on rent, utilities, transportation and food a month. The fact that so many people put so much of their income in it just shows how misled they've been. That's a scary prospect.
If you make $50k annually averaged out from 15-65 you've put in $300,000 into SS. That's a fairly average income, well within middle-class. If you live until 90 you have pulled out everything you've taken in. If you die sooner, that money is just gone. Most people don't live until 90. Now, combine that with the fact that right now it's 3.5 people supporting one person and it starts to look like a Ponzi scheme.
On your first point, the "we have until 2018 before the trust fund runs out" factoid is apocryphal. Present estimates put that date into the 2040s. And that's simply the point at which Social Security starts being funded out the general budget, assuming the retirement age isn't adjusted.
On your second point, there's "birth rate" and there's "productivity", and those are two hugely different things.
On your third point: again, 1/3rd of Social Security recipients derive almost their entire income from it, and fully 2/3rds of recipients derive more than half their income for it. Your anecdote isn't particularly convincing.
Point one: Right, but, depending upon whose numbers you use in 2018 we stop putting money into the trust fund and start pulling from it. Also, it's not really a trust fund. Excess funding does go into a trust fund but it is then lent to the Treasury and spent. Instead of using the power of time to get a decent rate of return it's basically sitting.
Two, I agree, mostly. Since SS depends upon multiple workers for every payee, as the birth rate grows taxes increase or benefits decrease. As either happens it stops being perceived as a retirement plan (which the general public currently does) and starts being perceived as welfare.
On the third point, I don't disagree at all on how many people live off of it. Our generation expects a much, much higher quality of living than our parents and grandparents. $1,000 a month is barely enough to pay for the cost of very basic living. Think no vacations, meager meals, no cable TV, no going out for movies, etc.
The terrible thing is, if that money had been invested instead of sitting like it has, those people could easily be living on man, many times that.
I think far less people would have issues with parking a mandatory 12% of their income into investments than letting the government handle it.
Again on your first point --- the only one I'll engage here --- the trust fund is:
* a fiction only if you believe that the government will default on its own bonds;
* projected solid into the '40s; and
* a red herring, because without it, we're discussing the general federal budget, and any predicted shortfall in Social Security is going to be dwarfed by Medicare-related programs and defense.
Second, Social Security isn't an investment program. The goal of Social Security is to provide each generation of retirees with a baseline level of income. It has succeeded at this task.
Third, we're not facing massive shortfalls. We raised taxes on the baby boomers in the early '80s to build up the social security trust fund to pay for their retirement. As it stands, social security is a small part of the entitlements problem moving forward --- Medicare has more than 7 times its liabilities in the projected future.
Fourth, this "small payments" thing is a myth. 2/3rds of Social Security beneficiaries derive more than half their income from Social Security; more than 1/3rd of them derive the overwhelming majority of their income from it.