Economics of Austerity - Serious Conservatives and The Consequences

Economics of Austerity - Serious Conservatives and The Consequences

Martin Wolf is getting frantic, as well he should. The austerians have brought us to the brink of a vast disaster. A recession in Europe looks more likely than not; and the question for the United States is not whether a lost decade is possible, but whether there is any plausible way to avoid one.

Wolf directs us to a recent speech by Adam Posen (pdf), which opens with a passage that very much mirrors my own thoughts:

    Both the UK and the global economy are facing a familiar foe at present: policy defeatism. Throughout modern economic history, whether in Western Europe in the 1920s, in the US and elsewhere in the 1930s, or in Japan in the 1990s, every major financial crisis-driven downturn has been followed by premature abandonment—if not reversal—of the macroeconomic stimulus policies that are necessary to sustained recovery. Every time, this was due to unduly influential voices claiming some combination of the destructiveness of further policy stimulus, the ineffectiveness of further policy stimulus, or the political corruption from further policy stimulus. Every time those voices were wrong on each and every count. Those voices are being heard again today, much too loudly. It is the duty of economic policymakers including central bankers to rebut these false claims head on. It is even more important that we do the right thing for the economy rather than be slowed, confused, or intimidated by such false claims.

Indeed. Posen’s “unduly influential voices” are my Very Serious People. And it has been an awesome spectacle watching the VSPs search, obsessively, for reasons not to fight mass unemployment. Fiscal policy must tighten to appease the invisible bond vigilantes and please the confidence fairy. Interest rates must rise because, well, um, inflation, well, no, low rates cause moral hazard — yes, that must be it.

And we’re not (just) talking about ignorant politicians. This stuff has been coming from the European Central Bank, the Organization for Economic Cooperation and Development, the Bank for International Settlements.

I don’t fully understand it. But a large part of it, it seems obvious, is the intense desire to see economics as a morality play of sin and punishment, where the sinners are, of course, workers and governments, not the bankers. Pain is not an unfortunate consequence of policies, it’s what is supposed to happen.

How obsessive are these people? So obsessive that when the financial doom they predict fails to materialize, they consider this a bad thing: punishment must be administered, so what are the markets waiting for? Here’s Alan Greenspan a while back:

    Despite the surge in federal debt to the public during the past 18 months—to $8.6 trillion from $5.5 trillion—inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued. This is regrettable, because it is fostering a sense of complacency that can have dire consequences.

Gosh, it’s regrettable that the markets aren’t confirming my warnings! And today Ronald McKinnon laments, yes, laments the failure of the invisible bond vigilantes to show themselves — they’re supposed to be “disciplining the government”, so why aren’t they here?

Just to reiterate a point I’ve made before, none of this reflects actual economic theory. Throughout this crisis, people like Adam Posen and yours truly have been basing our arguments on standard textbook macroeconomics, whereas the Very Serious People have been making up stories on the fly to justify their calls for pain. As Wolf, who really seems to have eaten his Wheetabix, puts it,

    The waste is more than unnecessary; it is cruel. Sadists seem to revel in that cruelty. Sane people should reject it. It is wrong, intellectually and morally.

And this cruelty rules our world.

We have never cut spending and taxes to turn a corner during a recession. No country has ever cut spending to the bone to recover from a economic downturn. America cannot cut spending as a way to recovery. Don't worry if you disagree, the serious people, the cruel people, the people who do not have clue, are winning and the world is likely yo to fall back into another bad recession as a result.

Ironically Working Class Republicans Are Helping The Wealthy Conservatives With Class Warfare

Ironically Working Class Republicans Are Helping The Wealthy Conservatives With Class Warfare. While this article is primarily about Democrats and cautioning them not to back off the class warfare rhetoric. It notes that blue-collar/working class conservatives are helping the wealthy take away their earning power and labor rights.

While the GOP has been attempting to get the whole “Obama as class warrior’ narrative to catch on for a few years now, it appears that the phrase ‘class warfare’ may finally be taking root in the public consciousness.

It’s about time.

On Sunday, the Republican Congressional leadership launched a concerted effort to sell the notion of the president fomenting class warfare by his insistence that wealthy Americans pay more in taxes to help bring down the nation’s debt obligations while financing the federal government.

Appearing on “Fox News Sunday”, GOP Budget Committee Chairman, Paul Ryan, had this to say -

    Class warfare may make for good politics, but it makes for rotten economics. We don’t need a system that seeks to divide people. We don’t need a system that seeks to prey on people’s fear, envy and anxiety.

Since Ryan’s appearance - one echoed by Senate Minority Leader Mitch McConnell during his own Sunday morning talk show turn -the GOP has been using every opportunity to parrot the phrase.

In response, the Democrats have taken every chance presented to them to once again go on defense by rejecting the allegation. By so doing, they are completely forgoing the opportunity to acknowledge that there is most assuredly such a war, it’s been raging for decades, and it’s high time that people begin to focus on who is on the side of the rich and who is on the side of the middle class and the poor.

Considering that this war was launched in the mid-1970’s, when CEO’s decided that it no longer served their interest to continue paying their workers a fair wage, it’s difficult to understand how anyone could be shocked to learn that the middle class has been under attack since Jimmy Carter sat in the White House or be persuaded that, somehow, Barack Obama is responsible for its creation.

Back in the 1970’s, before the first shot was fired, the richest 1 percent of Americans earned 9 percent of the income. By 2007, that 1 percent was taking 23.5 percent of the money. The numbers are even more depressing when we add in the next 4 percent at the top of the income scale. Meanwhile, everyone else has been left to suffer stagnating household incomes.

What does the wealthy class have to do to make it any clearer that they’ve been fighting a war where the other side has not only done little to nothing to fight back but is incapable of acknowledging the war even exists?

With these being the rules of engagement, who can blame the GOP for trying to pin the tail on Obama?

Not only have the forces of the wealthy, under the capable direction of four star generals like Charles and David Koch, managed to have their way with relative ease, they’ve cleverly succeeded in convincing many of their victims to join in on their side.

Exhibit ‘A’ to support that reality would be the Tea Party, a collection of middle class people financed by the Koch brothers who have locked arms with their enemy without even knowing they have done so. By sounding a false alarm about the dangers of big government, the upper class has fooled these people into believing that laying down the only defenses they’ve ever had - government and unions-is the way to solve the problems that plague them.

With successes like this in hand, it’s no wonder that Republicans believe they can sell the notion that Obama is somehow responsible for trying to start a class war that has already been going on for decades.

And yet, rather than take advantage of the opportunity the GOP has presented, the Democrats have chosen to take the narrow, defensive position of protecting the president from the attacks without taking the proverbial bull by the horns and sounding the alert that it is time to join the battle and fight back.

Democrats will not get a better chance to do what they should have done years ago. Not only is it good politics in an election year, it is an obligation that they cannot continue, in good conscious, to pass up.

As the president likes to say, it’s a simple math.

If those tasked with fighting the political battles for the middle class continue to engage in political malpractice by refusing to stand up to the forces of the wealthy, others will take up the fight for them. But these warriors will fight the battle beyond the walls of the Capitol and the White House. They will replace floor fights in the House of Representatives to battles that will play out on the streets of our largest cities.

Is this really the way we want to see this war go?

Democrats who play the game on the national scene need to follow the lead of the courageous Democrats in states like Wisconsin- Democrats who were willing to engage in the fight to stop the advances of the wealthy class.

This week, the President set the tone. Now his party must stop playing defense and step up to the fight.

Rewarding Stupidity. John Boehner (R-OH) and Eric Cantor (R-VA) Show Why They Are Unqualified to Hold Public Office

 Rewarding Stupidity. John Boehner (R-OH) and Eric Cantor (R-VA) Show Why They Are Unqualified to Hold Public Office

During a town hall meeting today, Doug Edwards, the former Director of Consumer Marketing for Google, asked President Obama to please raise his taxes. “I would like very much to have the country to continue to invest in things like Pell Grants, infrastructure, and job training programs that made it possible for me to get to where I am,” Edwards said, noting that he is unemployed by choice because he was “fortunate enough to work for a start-up down the street here that did quite well.” “It kills me to see Congress not supporting the expiration of the tax cuts that have been benefiting so many of us for so long,” he said.

The spokesmen for both House Speaker John Boehner (R-OH) and House Majority Leader Eric Cantor (R-VA) — Brendan Buck and Brad Dayspring, respectively — proceeded to mock the exchange on Twitter by densely insinuating that the man only wants taxes to go up because he is unemployed and wouldn’t have to pay them:

These two — either out of ignorance or because they’re being disingenuous — completely missed Edwards’ point and the point behind the “Buffett rule” that the administration has proposed. Many people, Edwards included, make their income through investments, which are taxed at a much lower rate than wages. The Bush tax cuts not only lowered income tax rates, but also the rate on capital gains, taking it all the way down to 15 percent.

When asked after the event if he supported raising the capital gains tax, Edwards replied that he did. This jives with what billionaire investor Warren Buffett has said:

    The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot…I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off.

Remember, it was the raging socialist President Ronald Reagan who totally equalized the treatment of investment income and wage income, rejecting the argument that investors needed to pay a lower tax rate. Edwards, meanwhile, is earning enough income from his stock options in Google to donate all of the proceeds from a book he wrote to charity, while supporting three children.

But the spokesmen for the two most powerful congressman in the House managed to miss the point entirely. When it was pointed out to Dayspring that Edwards was still likely making investment income, all he could respond with was “he is welcome to pay more.”

Some of you may have heard that we supposedly have a huge deficit problem - those would be the deficits that John Boehner (R-OH) and Eric Cantor (R-VA) voted for. Since conservatives used to like to compare government budgets to household budgets, lets do that. John Boehner (R-OH) and Eric Cantor (R-VA) both voted to spend all the families money plus max out all the credit cards and than borrowed money to spend on more stuff. Now they're apparently clueless about where the money is going to come from to pay for the financial wreckage they left for President Obama to clean up. Making the people who benefit most from a stable government and infrastructure is apparently unfair to these two clowns even though many wealthy Americans think they should be taxed at a higher rate - say rates similar to those under Reagan or Clinton. Americans wonder why government is broken, it is because we have utterly incompetent clowns like John Boehner (R-OH) and Eric Cantor (R-VA)  in Congress.

Republicans Panic, Desperately Seeking Dirt on Massachusetts Next Senator Elizabeth Warren

Republicans Panic, Desperately Seeking Dirt on Massachusetts Next Senator Elizabeth Warren

Elizabeth Warren's surprise lead in Massachusetts polls only days after she got into the Senate race to oust Republican Scott Brown has thrown GOP operatives off balance.

Their first storyline was that Warren was either a creature of the Beltway or a pointy-headed Harvard professor. Neither seems to be sticking.

On Tuesday, when the Democratic-affiliated polling firm, Public Policy Polling, reported Warren narrowly leading Brown, 46 to 44 among likely voters, Brown spokesman Colin Reed put out a statement contending that "we have always known that Scott would be the underdog against whichever candidate wins the Democratic primary next September."

But this past summer, before Warren enjoyed decent name recognition, Republicans were touting early polls showing Brown leading Warren 53-28, and declaring him a winner.

Now Republicans are putting out the word that there was something duplicitous or corrupt about Warren's leadership of the Congressional Oversight Panel that monitored the Treasury's Troubled Assets Relief Program (TARP).

Politico ran a piece this morning headlined, "Warren's TARP Panel under Scrutiny." It quotes a Republican congressman alleging that the panel failed to disclose its own budget, including Warren's own salary; and the authors of the piece rely on undisclosed sources to contend that Warren was cavalier in what she paid her staff.

According to Politico's story,

    "For an entity whose purpose was to disclose where government funds went through the bailout, it is very disturbing that they [the oversight panel] did not disclose how they spent the money..." said Rep. Patrick McHenry (R-N.C.), a member of the Financial Services Committee who pressed Warren on this issue repeatedly. "It showed more incompetence than anything else. But it raises concerns about how she led that government agency, especially one in terms of getting [the public] disclosure on TARP."

But in fact, the panel's budget and expenditures were disclosed to Congress in several reports that are public record, and its staff salaries were capped at the level of congressional staff. Its total outlays in its more-than-two-year life, as Politico reports, were a paltry $10.5 million. All of the records of the panel, which went out of existence earlier this year, are now on file with the Senate Rules Committee and available for public inspection.

Back before Warren was a political candidate, and she was critical of a TARP bailout program that was extremely unpopular among both Republicans and liberal Democrats, leading GOP figures lavished praise on her. Spencer Bacchus of Alabama, the arch conservative who now chairs the House Financial Services Committee, told Warren when she testified in July of 2009, "This is a panel [COP] that actually is going to end up making the taxpayer some money. Often the consumer, the taxpayer, is not at the table, and I think they were through this panel."

If a sifting of the entrails of Warren's widely acclaimed service as head of the Oversight Panel is the best that Republican spin-meisters can come up with to raise questions about her integrity or competence, they will have pretty slender pickings.

Conservatives have a few problems with Warren. Instead of getting up everyday of her life and finding ways to make government not work for the people ( the mission of conservatism) she tries to make government a force for good. Warren cannot be bought, unlike your average conservative who is a puppet with strings pulled by special interests. Warren acknowledges that we're all in this together, workers and employers, b oth sides deserve credit. Where as conservatives think corporate CEOs are like holy members of some religious order who should never be questioned.

Republicans Try to Destabilize Economy as President Obama Tries to Fix It

Republicans Try to Destabilize Economy as President Obama Tries to Fix It

We’ve noted that the budget plan President Obama released on Monday would produce a substantial accomplishment:  stabilizing the federal debt as a share of the economy in the second half of this decade.  We were surprised, therefore, to see Maya MacGuineas of the Committee for a Responsible Federal Budget quoted in the Washington Post (a quote that Thomas L. Friedman cited in his New York Times column) as stating that “They don’t even stabilize the debt.”

Her claim seems to hinge on the fact that under one set of assumptions, there is a tiny uptick in the debt-to-GDP ratio between 2019 to 2021.  Yet those same assumptions show that the ratio would be the same in 2021 as in 2017 — and much lower in both years than in 2013.  It is hard to see how a fair observer could conclude that the debt would not be stabilized.

Every major budget commission of recent years has concluded that arresting the rise in the debt as a share of the economy, and then keeping it stable, is the core fiscal policy goal for the decade ahead.  The Office of Management and Budget (OMB) estimates that under the President’s plan, debt would hit 76.9 percent of GDP in 2013 but then decline to 73 percent of GDP in 2021.  In the second half of the decade — 2017 through 2021 — the debt-to-GDP ratio would be stable, declining slightly from 74.8 percent of GDP to 74.2 percent, 73.8 percent, 73.4 percent, and 73.0 percent.

President's Budget Proposal Stabilizes Debt-to-GDP Ratio
OMB also provided estimates of the debt-to-GDP ratio under its plan using Congressional Budget Office assumptions, and the results are similar.  Under CBO assumptions, the debt-to-GDP ratio would hit 77.5 percent of GDP in 2013 and then decline to 74 percent in 2021.  From 2017 through 2021 the ratio would essentially be flat: 74.0 percent, 73.6 percent, 73.6 percent, 73.7 percent, and 74.0 percent (see chart).

To be sure, without further policy changes — particularly changes that will slow the growth in health care costs throughout the U.S. health care system — the debt-to-GDP ratio would start to grow again in years and decades after 2021, and further action would be needed.  But stabilizing the debt-to-GDP ratio through the end of this decade would be a very large accomplishment.  And under either the OMB or CBO assumptions, it seems clear that the President’s plan would meet that goal, effectively stabilizing the debt-to-GDP ratio in 2017 through 2021.

To understand Ms. MacGuineas’ claim that the plan would not stabilize the debt, we looked at the analysis of the plan issued by the Committee for a Responsible Federal Budget, which she heads.  It ignores the estimates under OMB assumptions and says, “Measured against CBO assumptions, the President’s submission would nearly, but not quite, stabilize the debt as a share of the economy.”  It bases this claim on the fact that these estimates show the debt ticking up estimates show debt rising from 73.6 percent of GDP in 2019 to 74.0 percent in 2021.

For starters, one wouldn’t know from MacGuineas’ highly critical quote that her own organization has concluded that the President’s plan “would nearly, but not quite, stabilize the debt.”

More important, it is a stretch to suggest that the very slight increase in the debt-to-GDP ratio from 2019 to 2021 under CBO’s assumptions signifies in any meaningful sense that the President’s plan wouldn’t stabilize the debt through 2021.  Anyone who has ever done multi-year budget projections knows that changes of a few tenths of a percentage point in the debt-to-GDP ratio projected from 2017 through 2021 are not meaningful — the range of uncertainty in budget projections five to ten years out vastly exceeds these small variations.

In any case, no economist would say that a slight reduction in the debt-to-GDP ratio one year followed by a slight increase of the same magnitude over the next couple of years represents an unsustainable budget.

Getting the debt-to-GDP ratio down to 74 percent in 2017 and having it fluctuate slightly between 73.6 percent and 74.0 percent over the second half of the decade (as would occur under the CBO assumptions) clearly qualifies as stabilizing the debt.  And under the OMB assumptions, the debt continues to edge down as a share of GDP over this period.

There are aspects of the President’s plan that budget analysts can reasonably criticize.  But it isn’t reasonable to use tiny variations in the debt projections for the 2019-2021 period to attack the plan for not stabilizing the debt, especially when the five-year path from 2017- 2021 is essentially flat.

Doing so may make a great soundbite, but it doesn’t constitute sound fiscal analysis.

 The fanatical conservative Right would say anything to distract from President Obama's highly conservative and responsible management of an economy Republicans left crashed and burning. If conservatives want a healthy economy they might want to start by becoming good stewards of the public trust. Every time a Republican is in charge they promise free ponies for everyone as they slash taxes and put all their debt on the Future Generations Credit card.. More here - Can't Add It Up: Fox Still Misleading On Economy, Debt, Stimulus

Why Does Rep. Paul Ryan (R-Wis.) Hate America's Senior Citizens

Why Does Rep. Paul Ryan (R-Wis.) Hate America's Senior Citizens

The Republican chairman of the House Budget Committee on Tuesday drew fire from Democrats for backing Texas Gov. Rick Perry’s description of Social Security as a “Ponzi scheme.”

Social Security fits the technical definition of a Ponzi scheme, Rep. Paul Ryan (R-Wis.) told conservative Laura Ingraham on her radio show.

“It’s not a criminal enterprise, but it’s a pay-as-you-go system, where earlier investors — or say, taxpayers — get a positive rate of return, and the most recent investors — or taxpayers — get a negative rate of return,” he said. “That is how those schemes work.”

Perry’s description of the Social Security as a “Ponzi sceheme” has been attacked by former Massachusetts Gov. Mitt Romney, Perry’s leading challenger for the GOP presidential nomination. Romney criticized Perry for scaring seniors and wanting to abolish the program, warning that the Republican nominee needs to work to reform the program.

“They’re both right,” Ryan said of Perry and Romney. “[Social Security] is not working, it is going bankrupt, and current seniors will be jeopardized the most by the status quo.”

The Democratic Congressional Campaign Committee pushed back against Ryan’s comments.

“Ryan’s belief that Social Security works like a Ponzi scheme proves — once and for all — that House Republicans have really declared a war on seniors,” DCCC spokesman Jesse Ferguson said in a statement. “A Ponzi scheme is Bernie Madoff ripping off Americans — not Social Security benefits that seniors earned and depend on during retirement.”

Rick Perry, Paul Ryan, Mitt Romney and all the millionaire pundits at Fox News have a plan for the 20 million Americas who Social Security keeps out of poverty - they can sleep in alleys and under bridges where they can enjoy their daily can of dog food. Social Security is NOT a Ponzi Scheme, Dammit! (copiously sourced)

Many of my most reasonable friends buy into the myth that Social Security is in deep trouble. It’s so accepted and commonly heard amongst major media talking heads, not to mention Republican politicians. In the debate held 9/7/11 at the Ronald Reagan Presidential Library, Rick Perry notoriously labeled Social Security a “Ponzi scheme” and “montrous lie.”

    What are the facts about Social Security’s solvency?

    Well, Social Security continues to be in better shape than everything else in government. It has run a surplus not a deficit for the majority of its years in existence.

    Reasonable entities (meaning parties like the Congressional Budget Office not right-wing hysterics) assure us that Social Security will continue to be able to operate paying full benefits for the next 25 years.

 Lawrence Mishel. Economic Policy Institute.

 Top 5 Social Security Myths. MoveOn.org.


  Straight Facts on Social Security [pdf]. Economic Opportunity Institute.

Why do these know-nothing American hating conservative fanatics want America to believe Social Security is a scheme, so they can funnel those funds to their fiends on Wall St. It was conservatives and their Wall St pals who drove the US economy off the cliff. How can America trust them with the financial security of retirees. It is time for America to wake up and stop believing that conservatives are patriots who care about America.

Conservatives Gone Nuts - The Hysterical Claim By Republicans That Social Security is a Ponzi Scheme

"Ponzi! Ponzi! Ponzi!" Conservative Republican Media Dig In On Social Security Lie

Right-wing media have continued to claim that Social Security is a "Ponzi scheme." However, experts say that people who make this claim "are very wrong."

Stossel: "Ponzi! Ponzi! Ponzi! There, I Said It. ... People Need To Hear It." In a September 13 Washington Examiner op-ed, Fox Business host John Stossel wrote that "[t]o the extent people believe there are trust funds with their names on them, Social Security is absolutely a Ponzi scheme."

- Texas governor [Rick Perry] is under attack for telling the unpleasant truth. At the GOP debate in Florida on Monday, CNN's Wolf Blitzer asked presidential contender Rick Perry whether he was changing his tune after other Republicans and pundits slammed him for saying Social Security is a "Ponzi scheme." The Lone Star State chief executive stood his ground: "It has been called a Ponzi scheme by many people long before me."

Mr. Perry is correct in his assessment, but Republicans shouldn't waste air time arguing semantics.

-Hannity And Gasparino Agree: Social Security "Is A Ponzi Scheme." During the September 13 broadcast of Fox News' Hannity, host Sean Hannity and Fox News contributor Charles Gasparino claimed that Social Security "is a Ponzi Scheme."

Experts: People Who Call Social Security A Ponzi Scheme "Are Very Wrong"

SSA Historian: Social Security's "Structure, Logic, And Mode Of Operation Have Nothing In Common With Ponzi Schemes." From a January 2009 post by Social Security Administration (SSA) historian Larry DeWitt:

    In contrast to a Ponzi scheme, dependent upon an unsustainable progression, a common financial arrangement is the so-called "pay-as-you-go" system. Some private pension systems, as well as Social Security, have used this design. A pay-as-you-go system can be visualized as a pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end.
   
    Unlike A Ponzi Scheme, Social Security Discloses Its Finances
   
    Ponzi Schemes Rely On Fictional Accounting To Pretend That Contributors' Money Is Being Invested. From the Securities and Exchange Commission:
   
        A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity. [Securities and Exchange Commission, accessed 9/8/11]
   
    But Social Security's Finances Are Fully Disclosed To People Paying Into The System. The SSA publishes an annual report on the finances of the Social Security trust fund. The latest 235-page report was published on May 13 and is available on the SSA website. [Social Security Administration, 5/13/11]
   
    Social Security Trust Fund Is Invested In Government Bonds. From Dean Baker's "Letter to Gov. Rick Perry on Social Security Comments":
   
        Dear Governor Perry,
   
        When asked about Social Security during a recent campaign stop in Iowa, you said:
   
        "It is a Ponzi scheme for these young people. The idea that they're working and paying into Social Security today, that the current program is going to be there for them, is a lie," Perry said. "It is a monstrous lie on this generation, and we can't do that to them."
   
        With all due respect, this is not true. The recommendations of the National Commission on Social Security Reform in 1983 led to the growth of a large surplus in Social Security. This surplus was used to buy bonds and now Social Security holds more than $2.6 trillion in government bonds. As a result, the Congressional Budget Office's projections show that the program will maintain full solvency through the year 2038. [Center for Economic and Policy Research, 8/29/11, emphasis in original] - with minor tweaks Social Security will remain solvent for your great great great grandchildren.

   
    Unlike A Ponzi Scheme, Social Security Is Not At Risk Of Not Having Enough Investors
   
    A Ponzi Scheme Inevitably Collapses When The Organizer Runs Out Of New People To Defraud. From the Securities and Exchange Commission (SEC):
   
        With little or no legitimate earnings, the schemes require a consistent flow of money from new investors to continue. Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out. [Securities and Exchange Commission, accessed 9/8/11]
   
    But The Government Can Continue To Collect Taxes To Pay For Social Security Indefinitely. From a CNNMoney piece by professor Mitchell Zuckoff:
   
        Social Security is exactly what it claims to be: A mandatory transfer payment system under which current workers are taxed on their incomes to pay benefits, with no promises of huge returns. (Of course, it's true that if Madoff had the power to require participation, he would have had an easier time keeping his alleged scheme rolling.)
   
    Second, Social Security isn't automatically doomed to fail. Played out to its logical conclusion, a Ponzi scheme is unsustainable because the number of potential investors is eventually exhausted. That's when the last people to participate are out of luck; the music stops and there's nowhere to sit.

The Right has always hated Social Security because it is an egalitarian system which helps provide a buffer to keep seniors out of extreme poverty. If Social Security is a scheme than what was that we witnesses from 2007 to 2008 - when the housing market and Wall St collapsed. When it did it wiped out a lot of middle-America's life savings. The only thing they will likely have in retirement is S. Security.