Comment: Social security is a Ponzi

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Social security is a Ponzi

Social security is a Ponzi scheme. My grandmother made out like a bandit. Even she admitted that she got back much more than she ever paid in. My mother will probably get back about what she and my father paid in. My generation will not get back what we paid in. The generation after me will probably not get back anything at all. That is the way Ponzi schemes work -- early "investors" make a lot of money and latecomers are left holding the bag. The main difference between a government Ponzi scheme and the usual kind is that the government Ponzi scheme is mandatory. So far the only big change made in Social Security was the cut in the payroll tax -- since that tax funds Social Security it had the effect of putting Social Security into deficit sooner. Remember that entitlement programs are only popular because they are run in ways that guarantee a deficit. If people had to pay enough in taxes to fully fund the entitlements they would see that the entitlement programs are no bargain and wouldn't support them. So was Obama being disingenuous when he said he wouldn't cut Social Security? Sure. But no politician can afford to tell people the truth about Social Security -- either the benefits will have to be cut or the payroll taxes will have to be increased substantially.

However, Social Security is a model of fiscal probity compared to Medicare. Obamacare will be sucking money out of Medicare all the while the demand and expenses for that program continue to climb.