[javert]

Are you aware that the US social security system will become insolvent in the future?

It is literally the case that the later taxpayers are paying for earlier taxpayers' social security.

It's not formally a Ponzi scheme, because it's not entered to involuntarily, it is forced.

[djur]

Social Security is a pay-as-you-go social insurance program, not a Ponzi scheme. A Ponzi scheme is fraudulent because it promises to pay back a greater return than is invested. Social Security is designed to pay back about the same as was invested on average. The reason this works is that the economy and the population are growing over time, so you have more people paying for the current SS generation's retirement than are in the current SS generation.

Social Security is a defined-benefit entitlement, so its spending requirements are fairly predictable. The rate of growth of the economy and the population, on the other hand, is not so easily predictable. This is why the Social Security trust fund was established in the 80s -- to patch the gaps that would result from the smallish Generation X paying SS for the Baby Boomers.

Depending on how long the Baby Boomers live and how the economy performs over the next few decades, the trust fund may run out in the next few decades. This will require either a cut in benefits or additional revenue for the system. Adjusting the inputs and outputs for a program to keep it in equilibrium in a chaotic, unpredictable world isn't fraudulent or a sign of a broken program.

So no, I'm not aware that Social Security will become insolvent in the future. Any of a number of fairly simple adjustments between now and then would prevent the projected benefit cuts. Even in the absence of a fix, Social Security will still pay out the lion's share of its promised benefits.

[javert]

Thanks for the explanation, though it basically confirms the same picture I already had in my mind.

What you call "additional revenue for the system" is actually a government bailout by tax increase (plus inflating the money supply).

It is absolutely fraudulent. It is fraudulent to force me to invest in a fund when I want to invest my money elsewhere because I think I can get a higher return.

It is also fraudulent to force me (as a taxpayer/holder of USD) to bail out such a fund.

I called it a "Ponzi scheme" because of the idea that later "investors" pay for the prior generation of "investors"---which, like a Ponzi scheme, fails (and requires a bailout) when the next generation isn't large enough.

Admittedly, my definition of "fraudulent" above isn't true in a strict accounting sense. AFAIK the books are essential "open." Nobody is being deceived. However, it is someting worse than being deceived. It is knowing the unfortunate truth, but being forced to "invest" (and to "bailout") anyway.

[djur]

How is it a "bailout" for the government to adjust the funding of a tax-funded program by adjusting the tax? By that definition, I'm being forced to bail out the military every time they spend tax money to buy a jet fighter.

You are thinking of Social Security as an investment program. It is not. The government is not forcing you to invest in a fund, it is taxing you to pay for other peoples' benefits. Eventually, it will tax other people to pay for your benefits.

The essential quality of fraud is intentional deception. You might not like being taxed for Social Security, but you are not being tricked, gulled, or conned into it.

[javert]

It is a "bailout" because the government originally claimed that Social Security would be a self-sustaining investment system, as far as I understand it. But I'm not dead set on arguing for calling it a "bailout." It is what it is, the terminology here is not that important.

You are right---I am not being conned. Just forced. I will eventually go to a country that better allows me to pursue my values if I can find one.

[lsc]

>It is a "bailout" because the government originally claimed that Social Security would be a self-sustaining investment system, as far as I understand it.

Please do your research. The government claimed no such thing.

here is as good a place to start as any:

http://www.ssa.gov/history/fdrstmts.html

Social security was a government program. Funded by taxes. From the start.

Note, the first generation? yeah, the retired folks got social security benefits right away, even though they had paid in nothing. This very clearly made it not work as an investment.

I mean, it's perfectly reasonable to disagree with safety net programs.

But don't claim that our safety net programs are bad as investments when they are clearly not investments at all.