Thursday, September 08, 2011

Gov Perry a little confused about Social Security

Texas Governor Perry has characterized Social Security Insurance as a "Ponzi Scheme". He repeated the claim in  tonight's 'debate'.


Definition of PONZI SCHEME (

: an investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks .
Several points that Mr.Perry seems to have missed in his research into Social Security Insurance.
      Investment: : the outlay of money usually for  income or profit
      Swindle: Fraud
      Risk: 4: the chance that an investment will lose value

Definition of INSURANCE  (

1a: the business of insuring persons or property b: coverage by contract whereby one party undertakes to indemnify or guarantee another against loss by a specified contingency or peril c: the sum for which something is insured
There are similarities between the legitimate and transparent business of Insurance and the immoral and fraudulent schemes to enrich the perpetrators at the expense of most of the 'investors' in the fraudulent plan.
Social Security is clearly a legitimate insurance plan:
     Legitimate: properly authorized and structured
     Transparent: Employers and Employees (157 million in 2010) can determine accurately
                          what their premiums will be and employees (the insured)
                          can determine their benefits will be.
     Loss insured against: Living past a specified age,
     How funded: A large majority of American and guest workers pay into
                           the Insurance plan. (157 million in 2010) . Income exceeded
                           benefits paid in 2010 by $68.6 billion.
     Who Benefits: Some , but not all, will receive benefits from retirement
                             until their death. (37.5 million in 2010)
                             Family members of deceased insured may receive partial benefits
                             until their own retirement or until reaching adulthood.  (6.4 million in 2010)
      Who does not benefit: Persons dying before retirement. Illegal immigrants who pay in
                             but will never collect any benefits. 
     Insurance Plan Assets: Positive $2.6 Trillion at end of 2010
     Projected Problem: By 2023 annual benefits paid will exceed annual income.
                              Check with any insurance executive about the options
                               to fix this problem. 
The States are involved in  regulating the Insurance Industry in their jurisdiction. If Gov Perry believes that legitimate insurance plans are 'ponzi schemes' the Insurance Industry in Texas must be very frustrated if not scared. 
For all of us in the Knights of Columbus (a mutual insurance fraternity) it interesting to know that Gov Perry probably believes we are involved in a fraudulent scheme.     

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