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Liberals are very similar to the old-time snake-oil salesmen. They talk fast and use words you don’t understand to get you to trust and believe them. Case in point, .
In 2 minutes and 30 seconds, Reich fast talks his way through seven “economic lies.” What he gives you are actually non-substantive soundbite talking points that don’t inform you, they just give you words to parrot. Because they are soundbites given to you that you haven’t actually read or researched about them, you can’t back up the talking points when someone asks you a question that requires more information or thought than the initial talking point. This is why I think the Left resorts to yelling, name calling, personal destruction and their favorite card, violence or the threat of violence. They have to shut down anyone who challenges the talking point because there is nothing behind it. Most of their positions are indefensible in the face of actual scrutiny.
I would have loved it if he had spent an hour on each one, giving reasoned and verified data on what he says. Of course he won’t because once you actually see the data, it will be obvious to anybody with a modicum of reasoning that he’s selling you snake-oil (i.e. empty promises).
Case in point: #6, Social Security is a Ponzi scheme.
Transcript: Wrong. It’s solid for 26 years (until 2037) and would be for the next century if we lifted the ceiling on income subject to Social Security Payroll taxes.
Now, if you did not know who Mr. Ponzi (the caricature he drew at triple speed) was, or what a Ponzi scheme is before you watched this clip, do you now know what a Ponzi scheme is or why Social Security is not a Ponzi scheme? I didn’t think so.
If you already know what a Ponzi scheme is, did Mr. Reich explain anything about it at all, or did he just let us know that Social Security is solvent for a while (as I wrote this, that 2037 point has drifted down to 2033 according to Social Security themselves) and we can push the “solid date” to 2111 if the rich pay more taxes.
To explain and give context, a Ponzi scheme is named after Charles Ponzi who used this technique in 1920. The scheme entails taking money from investors on a continuous basis, paying the early investors with the money “invested” by later investors.
Let’s say Mr. Smith is convinced by Mr. Ponzi’s salesmanship about “guaranteed income” and in January Smith gives Ponzi $1,000 on Ponzi’s promise that the “guaranteed income” will net Mr. Smith a return of his investment of $250 by June. In May, Mr. Ponzi convinces Mr. Jones to invest similarity as Mr. Smith. Mr. Ponzi then takes $250 of the $1,000 Mr. Jones gave him and gives it to Mr. Smith. This convinces Mr. Smith to invest $10,000 with Mr. Ponzi, hoping to reap a benefit of $2,750 (he is still earning that “$250 profit” on the first $1,000) just in time for Christmas. Now Mr. Ponzi has to come up with four new investors, to pay out the $3,000 to his “investors” ($2,750 for Smith and $250 for Jones). Why four investors? Because Mr. Ponzi has expenses, you know...
Eventually, this all comes apart because Mr. Ponzi cannot continue to recruit the number of investors necessary to continue paying the “profits” out to earlier investors indefinitely. This is called a geometric progression. If Mr. Ponzi needed two new investors for every current investor, the progression would go something on the order of 1, 3, 9, 27, 81, 243, 729, 2,187, 6,561 and so on until he can’t recruit enough people or he figures his bank account is big enough and he flees the country.
When my parents started working as adults around 1935, they paid into Social Security and their SS taxes helped pay the benefits of Ida May Fuller (the first recipient). Back then, there were seven people paying SS taxes to a single recipient receiving benefits. Also, it was kind of a rare thing for people to make it very far past 65, so those that did receive benefits were on the rolls for only a couple of years.
When I joined the Navy, my SS taxes were part of the checks my parents received. My dad retired in 1979 after having paid into the system for 45 years, my mother for about 15 years, being a stay-at-home mom and occasionally working part-time after they got married. They collected SS benefits for 22 years until they passed in 2001. Today, there are only 2-3 wage earners paying to the system for every recipient.
In the 80’s Congress began “raiding the Social Security Lockbox.” What that actually means is the Social Security Administration began purchasing government bonds as an investment. Today, there are Billions of dollars’ worth of these bonds in the SS account, instead of actual liquid cash. These are the “IOUs” that everyone is screaming about.
Remember, it is these government bonds that allow the government to overspend, creating the annual deficit. For the large entities (Social Security, foreign governments, investors, etc.) that purchase large amounts (Millions and Billions worth) of government bonds , they purchase a bond for a fixed term. In order to keep the fiscal juggling act going, when that bond matures, many use that money to immediately buy a new bond. Depending on circumstances, the interest on the bond may go into the purchasers pocket or be used to buy more bonds.
Social Security has been buying bonds, as well as additional new bonds as the old ones mature. In 2033, Social security will have to start “cashing in” those bonds without purchasing new ones because there won’t be enough people paying taxes to support the payments to retirees. This is when they (and we) might find out that the Government can’t pay the full amount on those bonds, if at all. That’s when the juggling act falls apart. That’s when we have more people asking for a return on their investment than SS can take in from new “investors.”
And that is why Social Security IS a Ponzi scheme. Anyone who tells you differently is bullshitting you.