Ambidextrous Thoughts

This site is intended to offer research and commentary on current events covering a wide scope of topics. Over and over again, I see social media offering quick access to the latest news or trend, but often with very little thought or fact-checking put into it, which lends itself to misleading half-truths. The intent here is not to take a political side, but to discuss the differences expressed by many who use social media as their source of news and information. My aim is to look at both extremes of a topic, and try to find a way to come together. I welcome input and suggestions on subjects that you’d like to know more about. Some conversations may have a political theme, but I hope to discuss issues that affect our everyday life, whether it be what kind of education our children are really getting, why are medication prices spiraling out of control, are unions a help or a hindrance to our workers today, or what “entitlement” really means. Bookmark this spot and see how we do as we try to make a fair place to open discussions on the subjects that interest you most. By – JRBecker

SOCIAL SECURITY – ENTITLEMENT or PONZI SCHEME?

Posted by on Sep 30, 2016 | 2 comments

SOCIAL SECURITY – ENTITLEMENT or PONZI SCHEME?

CONVERSATION: Today, entitlement is almost a dirty word. It is still used to mean a right, as in, “you’re certainly entitled to your own opinion.” But it has also come to be used as a label for assistance programs provided by, or administered by the government.

Part of this is caused by our own language. We have many words in English that have more than one meaning, and some meanings are actually contradictory. One term for words used in a new or different way is semantic change, referring to a word definition that has changed over time. https://en.wikipedia.org/wiki/Semantic_change. An example of semantic change is the word “hack.” It has meant everything from a taxi or taxi cab driver, a bad cough, to roughly chop, and a lazy person, or a quick and easy way of doing things. The most recent changes involve the Internet or computer technology. Most people don’t know that to be a computer hack started out meaning being able to find fixes, both temporary and permanent to various problems that cropped up as computer technology came to life. It has evolved over the last 20 years to mean a network or computer break-in for nefarious purposes, or the person who commits that break-in. And yet the Internet is filled with articles called ‘Closet Hacks’ or ‘Garage Hacks’ or ‘Patio Hacks’, explaining how to cut costs, or time, or do something in an entirely new way.

“Entitlement” is a victim of semantic change. Entitlement was originally something to strive for, as in: to become independent and wealthy so as to live a life of entitlement. Although that’s a little stuffy sounding for today’s society, I hope it makes the point.

So the question is, if not an entitlement, what do you call Social Security? It’s not a personal account. It’s not invested monies (thankfully – or it might be gone now) and it’s not a tax refund. It originally included assistance for the unemployed, but states have since taken over that portion of the original Social Security Act, that came into being under Franklin D. Roosevelt in 1935 – although the government still sometimes helps the states. It is money that comes out of our paychecks as a tax, (FICA) – along with money that goes for Medicare – and is administered by the government based on how long we’ve worked and how much we’ve made. (But not how much we’ve paid in, other than the correlation with the formula used for disbursement.) It’s then redistributed to us, individually, when we reach retirement age or suffer a debilitating injury or illness. And our families – spouses and children – may benefit from our Social Security as well, not only while we’re alive, but continuing after, should we die before them or in the case of children, until they are no longer minors.

Officially, Social Security is defined as an entitlement. If you wish to read more about the concept of Social Security, the following is a good place to start:  http://www.pewresearch.org/fact-tank/2015/08/18/5-facts-about-social-security/  But there are actually many people who believe that this money is a form of government welfare. Even very wealthy people can qualify for Social Security and receive benefits as long as they have worked and paid into the FICA system for at least 10 years. They would then also qualify for Medicare. They are entitled to it – this is the distinction between an earned entitlement and generalized welfare programs.

The definition of welfare is: a government program for poor or unemployed people that helps pay for their food, housing, medical costs, etc. http://www.merriam-webster.com/dictionary/welfare. No one has to pay into a welfare program in order to receive it. Yes, I know, we all pay towards welfare with our taxes, but the recipient has no obligation to have worked, ever. They do have to be either United States citizens or legal residents in order to receive anything from most welfare programs. These funds are also called entitlements, but they fall under the definition of “funds provided by government for a special group”; indigents, mentally ill, children, etc.

It is important to note that refugees from other countries do not just get to jump onto Social Security or any of the welfare programs. They do, however, receive assistance from our government as provided under the Refugee Act of 1979. http://www.acf.hhs.gov/orr/resource/the-refugee-act. The aid is mostly in the form of helping refugees find work, learn English, and find housing until they become self-sustaining. Also note, refugees are not the same as immigrants. Refugees are people fleeing from persecution, war, or other unsustainable living conditions. Many of them will want to return home, in the event their homeland is again safe. Immigrants are people moving here for a variety of reasons, such as school or jobs, but mostly because they want to live here, and usually because they would like to become U.S. citizens. Both refugees and immigrants must be vetted by our government, and that process can take two years or more. Prior to being approved to enter the U.S., refugees are often held in temporary camps or other accommodations in countries that have agreements with America to help in relocation processing. In any account, monies used to help refugees and immigrants comes from our tax dollars, but not from our standard entitlement programs such as Social Security, unemployment, welfare, etc. (In some cases, refugees and immigrants have their own means of support, and do not need government assistance.) For more about the vetting process go to http://www.heritage.org/research/commentary/2015/12/how-the-refugee-vetting-process-works.

Another favorite criticism is that Social Security is a Ponzi scheme. A Ponzi scheme is where people receive an income from new investors who then receive their income from even newer investors, and so on. In a typical Ponzi scheme, each layer of investors receive a percentage of income from all of the layers that come after them.

What makes the Social Security system appear to be a Ponzi scheme is that each generation is paying into the retirement program for the previous generation. With a Ponzi scheme, investors eventually stop investing, leaving earlier investors with no income. Social Security will always have income, although it may need to be adjusted from time to time (and has been) because of fluctuations in the population. Sometimes the payouts of “returns” on a Ponzi scheme become so high that the investments coming in can’t cover the returns. Every year until 2009 more money came in through FICA than was disbursed in retirement and disability checks. (In 2009 the surplus faltered, due to the recession, but is now climbing again.)

In 1938, the Advisory Council on Social Security, (a new group comprised of economy experts) endorsed the purchase of U.S. Treasury Bonds with the annual surplus money from FICA taxes. Since then, the surplus has always been placed in a trust fund, but the government has borrowed money (T-Bonds) from the trust fund and replaced it with IOUs. Since that time, Congress and presidents from both political parties have borrowed the T-Bonds to finance projects, wars, tax cuts, and other budgetary needs. Although Social Security does not, and cannot by its nature, contribute to the National Debt, the money owed to it by our government is figured into the National Debt. That amount currently stands at about 15% of the total debt, or over half of the intragovernmental debt, according to http://www.justfacts.com/nationaldebt.asp. The government pays interest on the money it owes, but is not paying the actual debt off, at this time. In the event repayment of those bonds became an immediate necessity, the government would have to borrow the money from an outside source, or from some other existing program. Currently, there is no plan in place for the government to begin paying back the money it has borrowed. Might this be a logical matter for congressional and presidential candidates to consider on their platforms? Let’s talk about this. Tell me what you think in the comments section.

For more information on these topics, The Institute for Public Accuracy (IPA) has a site that discusses this and other government functions and is found at http://www.accuracy.org/release/social-security-has-a-large-and-growing-surplus/

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