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The Ponzi Scheme of Social Security

Lordknukle
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3/1/2012 1:10:24 PM
Posted: 4 years ago
The Ponzi Scheme of Social Security

A Ponzi scheme is by definition, a fraudulent investment operation in which money is transferred from one party to another party by a third party outsider while no profit is made. The money received from the new investor(s) is used to cover the supposed gains on investments from the previous investors. A Ponzi scheme will eventually fail because the supposed earnings will be less than the money promised to the investors. A key point of a Ponzi scheme is that there is no profit gained during the transaction, simply distribution money from a new investor to an existing one.

"The basic idea of social security is a simple one: During working years employees, their employers, and self-employed people pay social security contributions which are pooled into special trust funds. When earnings stop or are reduced because the worker retires, becomes disabled, or dies, monthly cash benefits are paid to replace part of the earnings the family has lost," states the United States Department of Health and Human Services social security booklet titled Your Social Security.

The very notion of these trusts fund is false. According to Milton Friedman, the OASI trust funds that supposedly contain all the social security depositors from taxpayers only contained about 50% of all the outlays in 1978, and the trend is repeating to present day.

The money that the government receives from the taxes is not necessarily deposited into the trust fund, but used often for various government expenditures. The government does not put the money in a fund to gain interest, but instead uses it for its own personal gain. In Orwellian double speak, "Your money is not your money."

The crux of a Ponzi scheme is its eventual failure. Eventually, the total number of depositors will not be able to cover the superficial earnings of the previous investors.

Recent predictions show that the money from social security will eventually run out. This is mostly due to a changing societal viewpoint and demographics.

According to the left-leaning Women's Policy Institute, the number of seniors aged 65 years between the years of 1999 to 2009 that rely on the government program of social security has grown to 48% for men and 26% for women.

The Congressional Budget Office predicts that social security will run dry 2037 because of the retiring population of baby boomers and the demographic changes. The increase in benefits to these people will not be offset by the new generation of workers, similarly to a Ponzi scheme.

The Congressional Budget Office estimates that social security outlays in the year 2021 will be a whopping 5% of the GDP, the highest for any single program in the history of the United States.

Scenario:

Typical Ponzi Scheme


Scammer dupes Investor 1 into giving him $1 000 000, promising him a 20% return.

Scammer dupes Investor 2 into giving him $1 000 000, promising him a 20% return.

The scammer then takes $200 000 from Investor 2 and gives it to Investor 1 as the supposed return.

This process then repeats until the scam eventually fails when the new amount of investors cannot recoup the "gains" on the previous investments.

No money is made in the process.

The scam eventually fails.

Social Security

The government forces Investor 1 into giving him $1 000 per X amount of time, promising him returns on his investment during retirement.

The government forces Investor 2 into giving him $1 000 per X amount of time, promising him returns on his investment during retirement.

The money from Investor 2 is given to Investor 1 during his time of retirement.

Like the scammer, the government spends some of the money received for their own personal use.

The money that a person invests into the system that is given back to him later on is not in fact his money, but the money of another investor.

No money is made in the process.

The scam eventually fails.

Difference

What is the difference between a traditional Ponzi scheme and social security? The mechanics of each of these are the same, but instead, the Ponzi scheme is focused on voluntarily gaining the money, while the government forces its citizens into giving the money. Each of these criteria is not enough to differentiate a Ponzi scheme from a lack thereof, but a forced investment into the Ponzi scheme is worse than voluntary cooperation.

Fiscal Times Staff. (2011, August 12). Social Security Fund Could Run Out By 2017 - Business Insider. Featured Articles From The Business Insider. Retrieved March 1, 2012, from http://articles.businessinsider.com...

Ponzi scheme - Wikipedia, the free encyclopedia. (n.d.). Wikipedia, the free encyclopedia. Retrieved March 1, 2012, from http://en.wikipedia.org...

Friedman, M., & Friedman, R. D. (1980). Free to choose: a personal statement. New York: Harcourt Brace Jovanovich.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
Contra
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3/1/2012 1:19:06 PM
Posted: 4 years ago
You complain of a Ponzi scheme in Social Security which vastly improves the economic wellbeing of our country, and taking millions out of poverty, while being fully paid for?

On the other hand, you Conservatives usually approve of bribery when it comes to Campaign Finance, which threatens our Democracy.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Lordknukle
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3/1/2012 1:20:03 PM
Posted: 4 years ago
At 3/1/2012 1:19:06 PM, Contra wrote:
You complain of a Ponzi scheme in Social Security which vastly improves the economic wellbeing of our country, and taking millions out of poverty, while being fully paid for?

Fully paid for? Oh yes... Except for the fact that it is going to run out because it is not being fully paid for.

On the other hand, you Conservatives usually approve of bribery when it comes to Campaign Finance, which threatens our Democracy.

Care to provide an example? Conservatives are not pro bribery.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
Freemarketer
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3/1/2012 1:20:40 PM
Posted: 4 years ago
The way to fix social security is to replace the current system with forced personal accounts.

This is an approach that will fix social security.
Lordknukle
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3/1/2012 1:22:23 PM
Posted: 4 years ago
At 3/1/2012 1:20:40 PM, Freemarketer wrote:
The way to fix social security is to replace the current system with forced personal accounts.

This is an approach that will fix social security.

Yes, an account where people can voluntary put in money until their retirement, not be mandated by the government in turn of a large scam.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
JaxsonRaine
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3/1/2012 1:36:30 PM
Posted: 4 years ago
At 3/1/2012 1:19:06 PM, Contra wrote:
You complain of a Ponzi scheme in Social Security which vastly improves the economic wellbeing of our country, and taking millions out of poverty, while being fully paid for?

On the other hand, you Conservatives usually approve of bribery when it comes to Campaign Finance, which threatens our Democracy.

Fully paid for, as long as we keep increasing the percentage that we take out of people's checks.
twocupcakes: 15 = 13
johnnyboy54
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3/1/2012 1:43:27 PM
Posted: 4 years ago
I find it immoral for the government to force me to save for retirement when I need money now. Its backwards thinking.
I didn't order assholes with my whiskey.
Contra
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3/1/2012 1:44:57 PM
Posted: 4 years ago
You can fully pay for S.S. by raising the cap to much higher levels for wealthy employees and for employers. This will increase S.S. solvency for many, many years, especially if you put a lockbox on S.S. too. It is fair to the rich too, because the rich will have a stronger elderly population to buy their products and services (assuming they actually sell something instead of moving money around).

Here is an example of Bribery: Goldman Sachs donates $20 million to Romney in 2012 (the company - NOT its employees), then of course if Romney WAS elected, Romney would at least do something to help the banks so that they donate to Romney again in 2016 - for example his large tax cut proposal.

Bribe: something that serves to induce or influence

And if you guys counter that "Romney isn't FORCED to help Goldman Sachs in return for the campaign contributions", it is pretty naive to think that Romney wouldn't do something in return.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Freemarketer
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3/1/2012 1:45:34 PM
Posted: 4 years ago
At 3/1/2012 1:22:23 PM, Lordknukle wrote:
At 3/1/2012 1:20:40 PM, Freemarketer wrote:
The way to fix social security is to replace the current system with forced personal accounts.

This is an approach that will fix social security.

Yes, an account where people can voluntary put in money until their retirement, not be mandated by the government in turn of a large scam.

I think they call that a free market.
Contra
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3/1/2012 1:46:14 PM
Posted: 4 years ago
At 3/1/2012 1:20:40 PM, Freemarketer wrote:
The way to fix social security is to replace the current system with forced personal accounts.

This is an approach that will fix social security.

So the poor workers that earn about $13 an hour their whole lives - and cannot afford healthcare that Medicare doesn't cover - are they supposed to work to their deaths?
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Lordknukle
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3/1/2012 1:48:00 PM
Posted: 4 years ago
At 3/1/2012 1:46:14 PM, Contra wrote:
At 3/1/2012 1:20:40 PM, Freemarketer wrote:
The way to fix social security is to replace the current system with forced personal accounts.

This is an approach that will fix social security.

So the poor workers that earn about $13 an hour their whole lives - and cannot afford healthcare that Medicare doesn't cover - are they supposed to work to their deaths?

The poor people can set of parts of their earnings per X amount of time and therefore save up large amount of money for retirement.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
jimtimmy
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3/1/2012 1:48:07 PM
Posted: 4 years ago
At 3/1/2012 1:44:57 PM, Contra wrote:
You can fully pay for S.S. by raising the cap to much higher levels for wealthy employees and for employers. This will increase S.S. solvency for many, many years, especially if you put a lockbox on S.S. too. It is fair to the rich too, because the rich will have a stronger elderly population to buy their products and services (assuming they actually sell something instead of moving money around).

Here is an example of Bribery: Goldman Sachs donates $20 million to Romney in 2012 (the company - NOT its employees), then of course if Romney WAS elected, Romney would at least do something to help the banks so that they donate to Romney again in 2016 - for example his large tax cut proposal.

Bribe: something that serves to induce or influence

And if you guys counter that "Romney isn't FORCED to help Goldman Sachs in return for the campaign contributions", it is pretty naive to think that Romney wouldn't do something in return.

The issue with raising the FICA cap is that it would mean substantially higher marginal taxes on businesses, investors, and high skilled workers. This would mean a large amount of economic damage and deadweight loss.

I agree with the folks that say we should abolish SS. However, forced private accounts would be the next best option.
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Lordknukle
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3/1/2012 1:54:11 PM
Posted: 4 years ago
At 3/1/2012 1:44:57 PM, Contra wrote:
You can fully pay for S.S. by raising the cap to much higher levels for wealthy employees and for employers. This will increase S.S. solvency for many, many years, especially if you put a lockbox on S.S. too. It is fair to the rich too, because the rich will have a stronger elderly population to buy their products and services (assuming they actually sell something instead of moving money around).

You do realize that taxing those who actually create jobs and economic growth in society is not going to solve the problem. What this forced tax increase will do is stagnate growth as investments will falter and fewer number of jobs will be created.

Here is an example of Bribery: Goldman Sachs donates $20 million to Romney in 2012 (the company - NOT its employees), then of course if Romney WAS elected, Romney would at least do something to help the banks so that they donate to Romney again in 2016 - for example his large tax cut proposal.

Bribe: something that serves to induce or influence

And if you guys counter that "Romney isn't FORCED to help Goldman Sachs in return for the campaign contributions", it is pretty naive to think that Romney wouldn't do something in return.

I'm not going to get into a long argument with you on the semantics of bribery, but a bribe is by definition, money that tries to persuade somebody of their own personal view point.

The banks giving money to Romney is an example of the rights in the Constitution, practicing your right to free speech and voicing your opinions on who you think should win.

Following your own logic, any donations to campaigns are bribes.

However, that obviously doesn't apply to Obama.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
jimtimmy
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3/1/2012 1:59:56 PM
Posted: 4 years ago
This whole "tax the rich" thing really makes me question whether or not liberals understand basic logic at all.

By taxing the rich more, you are taking from successful entrepeuners, investors, and businesses who can reinvest their profits into building their enterprise and giving to a central bureacracy that is very innefficient and has no price system to gage what consumers want.
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Contra
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3/1/2012 5:12:20 PM
Posted: 4 years ago
The issue with raising the FICA cap is that it would mean substantially higher marginal taxes on businesses, investors, and high skilled workers. This would mean a large amount of economic damage and deadweight loss.

By taxing the rich more, you are taking from successful entrepeuners, investors, and businesses who can reinvest their profits into building their enterprise and giving to a central bureaucracy that is very innefficient and has no price system to gage what consumers want.

Giving to a central bureaucracy is not necessarily inefficient. In fact, only about 2% of total costs of Federal Gov't end up as waste.

Basic economics says that in a competitive economy, the contribution any individual (or for that matter any factor of production) makes to the economy at the margin is what that individual earns — period. This in turn means that the effect on everyone else's income if a worker chooses to work one hour less is precisely zero.

Forced personal accounts:

I don't know enough about this. Although I am skeptical on how it would help the poor. Maybe a good choice, I don't know. I support S.S. more though.

You do realize that taxing those who actually create jobs and economic growth in society is not going to solve the problem. What this forced tax increase will do is stagnate growth as investments will falter and fewer number of jobs will be created.

Social Security has been beneficial to the country and the economy. Getting back a few percentage points of income would be less significant in helping the economy than getting millions of seniors their dignity and out of poverty.

Following your own logic, any donations to campaigns are bribes.
However, that obviously doesn't apply to Obama.


Donations that are huge in size compared to the pool of donations are bribes. And also Obama's major contributors were mainly grassroots - like by the employees of Goldman Sachs.

This whole "tax the rich" thing really makes me question whether or not liberals understand basic logic at all.

http://www.debate.org...
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
Lordknukle
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3/1/2012 5:35:56 PM
Posted: 4 years ago
At 3/1/2012 5:12:20 PM, Contra wrote:
The issue with raising the FICA cap is that it would mean substantially higher marginal taxes on businesses, investors, and high skilled workers. This would mean a large amount of economic damage and deadweight loss.

By taxing the rich more, you are taking from successful entrepeuners, investors, and businesses who can reinvest their profits into building their enterprise and giving to a central bureaucracy that is very innefficient and has no price system to gage what consumers want.

Giving to a central bureaucracy is not necessarily inefficient. In fact, only about 2% of total costs of Federal Gov't end up as waste.

Read if you want: (http://mises.org...)

The main points are:

1. every service can be supplied privately on the market;

2. private ownership will be more efficient in providing better quality of service at lower cost;

3. allocation of resources in a private enterprise will better satisfy consumer demands, while government enterprise will distort allocations and introduce islands of calculational chaos;

4. government ownership will repress private activity in noncompeting as well as competing firms;

5. private ownership insures the harmonious and co-operative satisfaction of desires, while government ownership creates caste conflict.

So yes, a government is inherently inefficient.

Basic economics says that in a competitive economy, the contribution any individual (or for that matter any factor of production) makes to the economy at the margin is what that individual earns — period. This in turn means that the effect on everyone else's income if a worker chooses to work one hour less is precisely zero.

This is false. Everybody's wages and therefore the signalling of price signals is directly interdependent between one another. I'm not exactly sure what you are trying to say here, but this is the kind of thinking that leads to the failure of the free market system.

Forced personal accounts:

I don't know enough about this. Although I am skeptical on how it would help the poor. Maybe a good choice, I don't know. I support S.S. more though.

It would help them by letting them deposit money into personal accounts not run by the government and its horrid inefficiencies.

You do realize that taxing those who actually create jobs and economic growth in society is not going to solve the problem. What this forced tax increase will do is stagnate growth as investments will falter and fewer number of jobs will be created.

Social Security has been beneficial to the country and the economy. Getting back a few percentage points of income would be less significant in helping the economy than getting millions of seniors their dignity and out of poverty.

You are making the assumption that without social security, seniors would be poor. This is absolutely false. The money that is forcefully taken from the workers via the payroll tax can be implemented into a individual account which lets the individual manage their own finances on the free market without a large government bureaucracy "managing" their money via a Ponzi scheme.

Following your own logic, any donations to campaigns are bribes.
However, that obviously doesn't apply to Obama.


Donations that are huge in size compared to the pool of donations are bribes. And also Obama's major contributors were mainly grassroots - like by the employees of Goldman Sachs.

This whole "tax the rich" thing really makes me question whether or not liberals understand basic logic at all.

http://www.debate.org...

That graph shows absolutely no consistent correlation with either of our points.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
16kadams
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3/1/2012 5:55:54 PM
Posted: 4 years ago
At 3/1/2012 1:19:06 PM, Contra wrote:
You complain of a Ponzi scheme in Social Security which vastly improves the economic wellbeing of our country, and taking millions out of poverty, while being fully paid for?

On the other hand, you Conservatives usually approve of bribery when it comes to Campaign Finance, which threatens our Democracy.

Increased goverment spending helps the economy? The seniors generally do not have a job therefore have no economic out put except when buying merchandise. SO increased government spending here generally means less spending in other forms in the market, so it is depriving the market of air. People claim if we cut SS the economy would tank, this is false as it wold either lead to more productive goverment spending, or go to the market increasing the money flow in the markets increasing job growth. Cutting SS would have no economic detriment. Also privatization woudl be good for the economy! It would add another industry that would create more money in the market = more jobs. The only problem is how to do it... We could also reform the system in attempt to make a more productive spending.

You claim that we re for bribery, this is false. If you have money, and want to donate, why not? If you look at it the democrats woudl always get more as walstreet supports their party as we bail them out, making them more wealthy! So if anything we are against it for right to liberty, not for political gain. Also it doesn't threaten a democracy, rather a representative democracy. And it doesn't threaten anything. I recommend you read the book: Struck Dumb: The History and Consequences of Campaign Finance Reform By Allison Hayward
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"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
jimtimmy
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3/1/2012 6:03:13 PM
Posted: 4 years ago
At 3/1/2012 5:12:20 PM, Contra wrote:
The issue with raising the FICA cap is that it would mean substantially higher marginal taxes on businesses, investors, and high skilled workers. This would mean a large amount of economic damage and deadweight loss.

By taxing the rich more, you are taking from successful entrepeuners, investors, and businesses who can reinvest their profits into building their enterprise and giving to a central bureaucracy that is very innefficient and has no price system to gage what consumers want.

Giving to a central bureaucracy is not necessarily inefficient. In fact, only about 2% of total costs of Federal Gov't end up as waste.

Basic economics says that in a competitive economy, the contribution any individual (or for that matter any factor of production) makes to the economy at the margin is what that individual earns — period. This in turn means that the effect on everyone else's income if a worker chooses to work one hour less is precisely zero.

Really?

So, if Bill Gates had decided not to start Microsoft it would only have affected him. I have trouble believing that.

If a person decides to invest less, that means less new businesses can start. We could miss out on the next big thing.

I think you are misunderstanding "basic economics". What a person earns reflects the demand for the good or service that that person is offering. That does not mean that them not working affects nobody else.

If CEO's, for instance, were less fit for their jobs, it would affect entire corporations by making them less efficient.

The fact is that, in order for an economy to move forward, businesses and investors have to have capital to invest. If we tax them at high rates, they have no capital to reinvest and grow their enterprises, that consumers happen to favor. Instead, the resources go to the government bureacracy.

Also, a bar chart showing the top tax rate and growth rate does not prove anything.
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Contra
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3/1/2012 6:09:54 PM
Posted: 4 years ago
At 3/1/2012 6:03:13 PM, jimtimmy wrote:
At 3/1/2012 5:12:20 PM, Contra wrote:
The issue with raising the FICA cap is that it would mean substantially higher marginal taxes on businesses, investors, and high skilled workers. This would mean a large amount of economic damage and deadweight loss.

By taxing the rich more, you are taking from successful entrepeuners, investors, and businesses who can reinvest their profits into building their enterprise and giving to a central bureaucracy that is very innefficient and has no price system to gage what consumers want.

Giving to a central bureaucracy is not necessarily inefficient. In fact, only about 2% of total costs of Federal Gov't end up as waste.

Basic economics says that in a competitive economy, the contribution any individual (or for that matter any factor of production) makes to the economy at the margin is what that individual earns — period. This in turn means that the effect on everyone else's income if a worker chooses to work one hour less is precisely zero.


Really?

So, if Bill Gates had decided not to start Microsoft it would only have affected him. I have trouble believing that.

If a person decides to invest less, that means less new businesses can start. We could miss out on the next big thing.

I think you are misunderstanding "basic economics". What a person earns reflects the demand for the good or service that that person is offering. That does not mean that them not working affects nobody else.

If CEO's, for instance, were less fit for their jobs, it would affect entire corporations by making them less efficient.

The fact is that, in order for an economy to move forward, businesses and investors have to have capital to invest. If we tax them at high rates, they have no capital to reinvest and grow their enterprises, that consumers happen to favor. Instead, the resources go to the government bureacracy.

Also, a bar chart showing the top tax rate and growth rate does not prove anything.

It proves that low taxes =/= high economic growth. I am feeling kinda lazy right now, but people don't consider working at a job based on their tax rate, since taxes on the rich are relatively low. Now we are talking about a 39.6% tax on the wealthy, not a 94% tax rate on the wealthy.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
16kadams
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3/1/2012 6:10:50 PM
Posted: 4 years ago
At 3/1/2012 5:12:20 PM, Contra wrote:

By taxing the rich more, you are taking from successful entrepeuners, investors, and businesses who can reinvest their profits into building their enterprise and giving to a central bureaucracy that is very innefficient and has no price system to gage what consumers want.

Funny, the rich are the ones who own major companies like Microsoft and taxing them 70% would mean their business would not grow meaning no job growth. Also in a progressive tax system 200,000$ is considered rich. Also 105,000 is considered rich too. Over 10 years 105,000$ is their average salary. [1] This means tax increases hurt these people too. Another estimate says they get 230,000$ on average. [2] Tax increases would suck money out of the private sector hinder job growth. The CBO says extending the tax cuts would be better for the economy then ending them. [3] VOTE CON! JK

http://smallbusiness.chron.com... [1]
http://www.zdnet.com... [2]
http://www.cbo.gov... [3]
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https://rekonomics.wordpress.com...
"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
imabench
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3/1/2012 6:13:55 PM
Posted: 4 years ago
a ponzi scheme is wehere funds all go to one or a few people, social security goes to millions of millions of people.

Social security is an entitlement meaning that if there isnt enough money, the government has to pay the difference out of other regular tax dollars since social security is funded differently than income tax

its not a ponzi scheme
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Lordknukle
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3/1/2012 6:13:59 PM
Posted: 4 years ago
At 3/1/2012 6:09:54 PM, Contra wrote:
At 3/1/2012 6:03:13 PM, jimtimmy wrote:
At 3/1/2012 5:12:20 PM, Contra wrote:
The issue with raising the FICA cap is that it would mean substantially higher marginal taxes on businesses, investors, and high skilled workers. This would mean a large amount of economic damage and deadweight loss.

By taxing the rich more, you are taking from successful entrepeuners, investors, and businesses who can reinvest their profits into building their enterprise and giving to a central bureaucracy that is very innefficient and has no price system to gage what consumers want.

Giving to a central bureaucracy is not necessarily inefficient. In fact, only about 2% of total costs of Federal Gov't end up as waste.

Basic economics says that in a competitive economy, the contribution any individual (or for that matter any factor of production) makes to the economy at the margin is what that individual earns — period. This in turn means that the effect on everyone else's income if a worker chooses to work one hour less is precisely zero.


Really?

So, if Bill Gates had decided not to start Microsoft it would only have affected him. I have trouble believing that.

If a person decides to invest less, that means less new businesses can start. We could miss out on the next big thing.

I think you are misunderstanding "basic economics". What a person earns reflects the demand for the good or service that that person is offering. That does not mean that them not working affects nobody else.

If CEO's, for instance, were less fit for their jobs, it would affect entire corporations by making them less efficient.

The fact is that, in order for an economy to move forward, businesses and investors have to have capital to invest. If we tax them at high rates, they have no capital to reinvest and grow their enterprises, that consumers happen to favor. Instead, the resources go to the government bureacracy.

Also, a bar chart showing the top tax rate and growth rate does not prove anything.

It proves that low taxes =/= high economic growth. I am feeling kinda lazy right now, but people don't consider working at a job based on their tax rate, since taxes on the rich are relatively low. Now we are talking about a 39.6% tax on the wealthy, not a 94% tax rate on the wealthy.

Tax rates don't influence the jobs people want because they will still want the highest paying job. However, higher tax rates means that the worker has less money to spend in the free market system. He cannot invest in businesses and contribute to free market growth. Instead, he must give the money to inefficient bureaucracy which cannot effectively allocate the money because:

1. They have virtually unlimited resources.

2. They are not in a private market and cannot meet the demands of the consumers because they have no price signals to respond to.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
16kadams
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3/1/2012 6:17:22 PM
Posted: 4 years ago
At 3/1/2012 6:13:55 PM, imabench wrote:
a ponzi scheme is wehere funds all go to one or a few people, social security goes to millions of millions of people.

Social security is an entitlement meaning that if there isnt enough money, the government has to pay the difference out of other regular tax dollars since social security is funded differently than income tax

its not a ponzi scheme

Historically it was as the age is 65 and the average age of death was 65, so historically he is correct.
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"A trend is a trend, but the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?" -- Alec Cairncross
Lordknukle
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3/1/2012 6:18:01 PM
Posted: 4 years ago
At 3/1/2012 6:13:55 PM, imabench wrote:
a ponzi scheme is wehere funds all go to one or a few people, social security goes to millions of millions of people.

The number of parties that receive the money from the Ponzi Scheme does not relate to its designation of being a Ponzi Scheme. If the scenario was one of a traditional Ponzi Scheme but instead of one scammer, there were a variety of them working in an organization, would that still not classify as a Ponzi Scheme? Of course it would. This distinction is meaningless.

Social security is an entitlement meaning that if there isnt enough money, the government has to pay the difference out of other regular tax dollars since social security is funded differently than income tax

Again, this does not necessarily make something not a Ponzi Scheme. If the scammer was not able to meet investments returns, he would pay out of his own pocket. However, the entire system is still operating and therefore functioning like a Ponzi Scheme.

Not to mention that if you read the post, Social Security will eventually deplete its so called "trust funds" because of the lack of new "investors" coming into the market.

its not a ponzi scheme

Yes, it is.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
Lordknukle
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3/1/2012 6:18:50 PM
Posted: 4 years ago
At 3/1/2012 6:17:22 PM, 16kadams wrote:
At 3/1/2012 6:13:55 PM, imabench wrote:
a ponzi scheme is wehere funds all go to one or a few people, social security goes to millions of millions of people.

Social security is an entitlement meaning that if there isnt enough money, the government has to pay the difference out of other regular tax dollars since social security is funded differently than income tax

its not a ponzi scheme

Historically it was as the age is 65 and the average age of death was 65, so historically he is correct.

?. I fail to see how if the average age of death rises, it does not become a Ponzi Scheme.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
Starcraftzzz
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3/1/2012 6:32:33 PM
Posted: 4 years ago
At 3/1/2012 1:20:40 PM, Freemarketer wrote:
The way to fix social security is to replace the current system with forced personal accounts.

This is an approach that will fix social security.

If by fix you mean make it so everyone gets 25% less retirement money then you would be correct.
SS is around 25% more efficient then private market coutnerparts

At 3/1/2012 1:54:11 PM, Lordknukle wrote:
You do realize that taxing those who actually create jobs and economic growth in society is not going to solve the problem. What this forced tax increase will do is stagnate growth as investments will falter and fewer number of jobs will be created.
History proves you wrong.

At 3/1/2012 1:59:56 PM, jimtimmy wrote:
This whole "tax the rich" thing really makes me question whether or not liberals understand basic logic at all.

By taxing the rich more, you are taking from successful entrepeuners, investors, and businesses who can reinvest their profits into building their enterprise and giving to a central bureacracy that is very innefficient and has no price system to gage what consumers want.
Increased taxes on income does not mean increased taxes on business or investments. Also SS is 25% more efficient then the private market, so like always you are wrong.

At 3/1/2012 5:35:56 PM, Lordknukle wrote:
1. every service can be supplied privately on the market;
Of which the private market supplies it less efficiently
At 3/1/2012 5:35:56 PM, Lordknukle wrote:
2. private ownership will be more efficient in providing better quality of service at lower cost;
Is that why before all these social programs tens of millions of people where in extreme poverty and dint have health care?
At 3/1/2012 5:35:56 PM, Lordknukle wrote:
You are making the assumption that without social security, seniors would be poor. This is absolutely false.
Seniors were poor before SS, after SS they weren't. You can try to discount all of histoy but it only makes you look stupid

At 3/1/2012 6:10:50 PM, 16kadams wrote:
At 3/1/2012 5:12:20 PM, Contra wrote:

By taxing the rich more, you are taking from successful entrepeuners, investors, and businesses who can reinvest their profits into building their enterprise and giving to a central bureaucracy that is very innefficient and has no price system to gage what consumers want.

Funny, the rich are the ones who own major companies like Microsoft and taxing them 70% would mean their business would not grow meaning no job growth.
Taxing rich peoples income is not the same as taxing businesses of investments, the fact that you can;'t differentiate the two is very telling of your poor intellectual skills
lewis20
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3/1/2012 6:33:39 PM
Posted: 4 years ago
At 3/1/2012 1:19:06 PM, Contra wrote:
You complain of a Ponzi scheme in Social Security which vastly improves the economic wellbeing of our country, and taking millions out of poverty, while being fully paid for?

On the other hand, you Conservatives usually approve of bribery when it comes to Campaign Finance, which threatens our Democracy.

Democracy threatens our Republic.
"If you are a racist I will attack you with the north"- Abraham Lincoln

"Do not wear clothing woven of two kinds of material" - Leviticus 19 19

"War is a racket" - Smedley Butler
RoyLatham
Posts: 4,488
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3/1/2012 6:38:21 PM
Posted: 4 years ago
At 3/1/2012 1:44:57 PM, Contra wrote:
You can fully pay for S.S. by raising the cap to much higher levels for wealthy employees and for employers. This will increase S.S. solvency for many, many years, especially if you put a lockbox on S.S. too. It is fair to the rich too, because the rich will have a stronger elderly population to buy their products and services (assuming they actually sell something instead of moving money around).

Here is an example of Bribery: Goldman Sachs donates $20 million to Romney in 2012 (the company - NOT its employees), then of course if Romney WAS elected, Romney would at least do something to help the banks so that they donate to Romney again in 2016 - for example his large tax cut proposal.

Bribe: something that serves to induce or influence

And if you guys counter that "Romney isn't FORCED to help Goldman Sachs in return for the campaign contributions", it is pretty naive to think that Romney wouldn't do something in return.

It's illegal for Goldman Sachs to donate more than $1500 to any candidate. The computations of support from industry to a candidate are done by adding up what heir employees donated. President Obama's biggest supporters were trial lawyers and government employees, followed by unions, although he received considerably more from Wall Street than did McCain.

A company or individual can give unlimited amounts to a Political Action Committee, which in turn can advocate a candidate. However, the PAC cannot talk to the candidates campaign or in any way coordinate strategy.

The Supreme Court has ruled decisively, including most of the Court liberals, that free speech requires that advocacy not be restricted by government. The first amendment would have to be substantially modified.

Every candidate has to take positions. He will favor A, B, and C. It follows that someone who believes in A, B, or C is more likely to give to that candidate that one who opposes. Most of time the position brings the money, rather than the other way around. Where there is right to be suspicious is when a major donor wants so really oddball pierce of legislation and the candidate later supports it. It's fair to ask why. The biggest payoff is government employees donating to Democrats who then grant huge wages and benefits paid by taxpayers. Still, both the Democrats and the government employees sincerely believe in ever-expanding government.

Wall Street supported Obama last time, but this time they are so far supporting Republicans.
Lordknukle
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3/1/2012 6:39:22 PM
Posted: 4 years ago
Starcraft, get out of this thread. You will surely hijack it and arguing against you is like playing chess with a pigeon. No matter how good you are, he will still sh!t on you, break all the chess pieces, and proclaim himself winner.

In short,

GTFO.
"Easy is the descent to Avernus, for the door to the Underworld lies upon both day and night. But to retrace your steps and return to the breezes above- that's the task, that's the toil."
Starcraftzzz
Posts: 487
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3/1/2012 6:47:24 PM
Posted: 4 years ago
At 3/1/2012 6:39:22 PM, Lordknukle wrote:
Starcraft, get out of this thread. You will surely hijack it and arguing against you is like playing chess with a pigeon. No matter how good you are, he will still sh!t on you, break all the chess pieces, and proclaim himself winner.

In short,

GTFO.

Oha re you upset because your stupid ideas are defeated by reality?Here is a hint if you dont want to cry because your stupidly is pointed out then stop being so stupid