On Ponzi Schemes, Clamoring and Largess

Let me bore you all for a bit . . .

In 1927 a boy was born onto a dirt poor, hard-scrabble farm, no electricity, no indoor plumbing, in Jackson County Florida.  He grew up working the farm, second oldest of 11 children.  His education was basic; how to plow a mule, plant crops, and butcher livestock for food.  There was no formal high school (forget about college) education.  When WW II broke out, he volunteered, joined the US Army, and served as a military policeman in the European Theater where he advanced to the rank of corporal.  The war ended, he came home.

He went to work for the Rural Electrification Association (REA), a government-funded agency, for $ .50 a day, using dynamite and 8′ posthole diggers to set power poles.  High-lift bucket trucks and digger trucks didn’t exist in those days.  The work was all done on climbing spikes and safety belts using handlines to hoist transformers and wires to the top of the poles.  He also learned to wire residential homes to supplement his income.  Electricity in the rural areas of Jackson County was rare in those days, and when the line was built to the family farm in Graceville, he wired his parent’s house.  He got married and began to raise his family of four children.  He was relocated to Sneads, Florida and was the lone REA service man on the east end of Jackson County.  He went to night school and got his GED and he advanced to supervisor and then to manager of the “Sneads District” when an office was finally built there.  He worked hard and advanced, putting his job before almost everything else.  He managed his finances carefully, invested some of his money, and bought the family home.  His wife (my mother) died of cancer in 1984.  His company insurance paid the majority of her medical cost.  The rest came out his pocket.  He remarried one year later.  He and his wife were comfortable – middle class.  He retired in the late 1980s after 43 years with the Co-op.  It was his life.

He was a big, healthy man, but as he got older, his health began to deteriorate.  A mild stroke, aneurism (leaker), and heart problems left him with memory issues, poor circulation, and a pacemaker.  Then he developed prostate cancer.  He passed away in 2008 at 82 years of age.  He left some small investments (bank stock devastated by the economy), a small life insurance policy that had been paying itself out, his retirement, and the family home to his four children and his wife.

The point of this story?  Without Medicaid and Social Security checks which he paid for out of his taxes, my dad’s quality of life would have been greatly reduced.  He would have probably died (sooner) with his home mortgaged to pay for his medical care.  We (most of us common folk anyway) are all just one catastrophic illness or accident away from being totally bankrupt.  We simply can’t afford to pay the astronomical price of medical care out of our own pockets, especially after we retire, are retired, or become unable to work and have no income.

My dad served his country, raised his family, worked hard all his life, paid his taxes (honestly), and never once asked for, “clamored” for, or expected any “largess” or entitlement from the government, but when he needed the government, it was there for him. He was/is known as one of the most honest men in Jackson County.  I still try to be just like him every day; a common, everyday, simple man.

32 thoughts on “On Ponzi Schemes, Clamoring and Largess

  1. I hate when people use personal stories to try and illustrate a point. It makes any contrary reply seem like a personal attack.
    I hope you don’t see mine that way.
    That said,
    Where in the Constitution does it provide for health care? Does anyone really think the framers of the Constitution thought health care a RIGHT? They were pretty clear explaining that RIGHTS came from GOD, not man.
    To which I have said many times since Obama care reared it’s communist head…

    God did not guaranty you good health.
    And neither DO I!

  2. And when I look at my check stub, I think of how much better I could provide for my family if I didn’t have to provide for everyone else.
    Government isn’t charity. For every tax dollar that IS paid out, how many are consumed in salary, retirements, and those lavish buildings that they build for themselves.
    There is nothing that the government provides for free!

    • hmmmm – Well then maybe I should be up in arms over the taxes I pay to maintain the interstate system. You do drive on the interstates, right? Isn’t that providing for the greater good of “everyone else”, but wait, the cost of maintenance has now grown greater than the amount of money being taken in for that purpose so I just want to opt out! Maybe I should petition the government to let me stop paying to support the US military, after all, I’m dead set against the war in Afgahnistan and building these F22s and M1 Abrams tanks has not benefitted me. Think how much better my check stub would look! Perhaps the state of Florida, the county, and city will let me stop paying taxes to support the schools since I don’t have children in the school system anymore. Piss on that, I don’t need it.

      Frank, we can’t pick and choose. As you said, there is nothing that government provides for free. I pay into the government just like you do (I guess you do). Fiscal responsibility? I’m all for it. These “lavish buildings” like the Taj Mahal legal building recently built in Tallahassee are a blight on the state’s fiscally responsible spending and are not necessary.

      • Well then maybe I should be up in arms over the taxes I pay to maintain the interstate system
        We pay a tax on every gallon of gas for that!

        let me stop paying to support the US military
        “Provide for the common defense” One of the few things the government still does as required by the Constitution!

        Perhaps the state of Florida, the county, and city will let me stop paying taxes to support the schools
        I thought we we talking about the federal government, but while on the subject of schools…
        Why is there a dept. of education? Why do they take our tax money and black-mail the state schools into teaching their agenda?
        Maybe someone here can help me find that in the constitution?

        Frank, we can’t pick and choose
        I’ll PICK the Constitution, and CHOOSE those that support it!

        • We can talk about the “federal” education budget if you like.

          “The structure of education finance in America reflects this predominant State and local role. Of an estimated $1.15 trillion being spent nationwide on education at all levels for school year 2011-2012, a substantial majority will come from State, local, and private sources. This is especially true at the elementary and secondary level, where about 87.7 percent of the funds will come from non-Federal sources.
          That means the Federal contribution to elementary and secondary education is about 10.8 percent, which includes funds not only from the Department of Education (ED) but also from other Federal agencies, such as the Department of Health and Human Services’ Head Start program and the Department of Agriculture’s School Lunch program.”
          http://www2.ed.gov/about/overview/fed/role.html

          Got any idea what 10.8% of $1.15 trillion dollars amounts to? Take away the federal contribution and see how loudly the states howl. Besides, like any other government program, in exchange for these dollars, the fed gets to push it’s own agenda.

          Show me in the constitution where the feds are prohibited from contributing to the educational fund.

          • “Show me in the constitution where the feds are prohibited from contributing to the educational fund.”

            The enumerated powers were very clear. So show me where in the US Constitution where they were mandated under the enumerated powers to contribute to the educational fund.

            • Never said it was mandated augger, I simply responded to Frank’s post. It’s not prohibited, it’s not mandated. The fed can give or not, but if you will read what I posted, I went on to say that it obligates the states to use the money as the fed requests (Head Start, school lunch programs, etc.). I’m not for the fed meddling in a state’s rights issue. Frank was wrong, I just pointed it out to him.

  3. Your story is one that is played out in households all over America and was the intent of Social Security. The problem is that while the output from SS is addressed, the inputs are ignored. Many people are drawing out of the plan more than they paid in, even if you count the effect of compounding returns (which some economists now place at less than 2% per annum). At the currrent rates, money “invested” in SS doesn’t even keep up with the historical rate of inflation, thereby achieving a negative return. That is a gap that has to be made up by other people who pay in – or the government has to borrow so that all taxpayerss cover it.

    SS is what is termeed a “defined benefit” plan, not a “defined contribution” plan – like a 401K. Defined benefit plans do not take into account changes in expenses at points in the future that exceed the anticipated rates of increase, they have to pay whatever the market rate for those goods and services are and as a result, are succeptable to bankruptcy. Defined benefit plans are a guaranteed failure if thier rate of return drops below the rate of inflation or miscalcculate future costs. You point out this in youur comments that in the case of your dad, that is exactly how SS operates.

    No doubt your dad has an expectation that he get paid because that was the promise that was made to him but this doesn’t change the fact that SS is a fiscal time bomb that was set ticking in 1936 and excacerbated with every expansion of the program without coorresponding tax increases or increases to accurately match anticipated future costs.

    I’m not saying that this is the case with your father but know this: the minute that someone draws out more than they paid in (plus interest) or the plan pays out money to people who did not pay at all for any service that isn’t retirement related – the program becomes a wealth transfer program and not a “retirement” program.

    Anyone can make a legitimate case based on one example but that does not change the fact that the plan has run up against the edge of insolvency for 30 years and if it were subject to private sector accounting regulations would show a 30 billion dollar unfunded liability today. This is a fact. What is also a fact that for whatever reason, when the plan started the ratio of payor to payees was something like 25:1, today it is almost 1:1. Whether you want to admit to the use of the term “Ponzi scheme” or not, that is the effect in reality.

    FC, the program is broke. There is no fund with money in it for you or anybody else – it is just IOU’s.

    • Utah – Yes, that story played out all across this great nation in the 30s, 40s, and 50s. My dad was not unique. The SS program was a promise (not a guarantee) that support would be there for the elderly of this country. I agree with EVERY word you wrote, right up to the “Ponzi scheme” statement. Perhaps we are arguing semantics but you gave a most excellent explanation of what the program was meant to be and what’s wrong with it. That the program needs to be changed, fixed by tax increases, or simply replaced with a program that only applies to the elderly goes without saying. Thanks.

  4. Good post, Cracker. I also notice that–despite conservatives’ claims that government doesn’t create jobs–that’s what your dad had as a soldier and through the REA. And without all of us paying for it, of course, many rural areas still wouldn’t have electricity.

    • Thanks, James (I’m losing my street creds here). Our entire society is built upon sharing cost, usually through taxes, but not always. The rural electrical issue is still a great example. If you build a home 1/2 mile or mile from an existing power line, the power does not WANT to connect you simply because based on the power usage of one customer, they will never recoup their construction and maintenance costs to build to you. They rely on set charges (think “tax” if you prefer) from all customers to finance the cost to build to that one customer who wants to live in the backwoods. The telcos and water companies are no different. High costs of construction and maintenance are never repaid by the revenues from one or two customers, so other customers are called on to share the costs. Military hardware? I can hardly afford to buy one M16 for a soldier, much less an F22 or M1 tank, so the cost of these weapons and protecting our country are shared by all. The maintaining/expanding the interstate system? Same thing.
      The purpose of my post was demonstrate that if we are good, productive citizens, pay our taxes, and contribute to society, we should expect some help from our government when companies refuse to hire us anymore because of our age. We all know our health will degenerate, and that we will all pay the ultimate debt at some point. We contributed to the welfare and success of our nation through taxes, good citizenship, and military service. We should be able to expect help from our nation at the end of our productive lives. My dad lived the American dream as have I. He worked hard, was successful, paid his bills and taxes, owned his home, and held local political office (civic duty). I never heard him complain one time about owing taxes. He loved this nation and he felt he was obligated to help support it. I’m not that good. I bitch up quick about taxes while enjoying the benefits.

      • ” Our entire society is built upon sharing cost, ”

        Maybe you should tell that to the 50% who pay absolutely nothing in taxes. 🙂

        • “Maybe you should tell that to the 50% who pay absolutely nothing in taxes.”

          There is no such 50 percent, unless you’re counting children. Almost 50 percent pay no federal income taxes. Those people still pay sales taxes, property taxes, gas taxes, sin taxes, utility fees, and often state income taxes, along with other taxes and fees.

    • “And without all of us paying for it, of course, many rural areas still wouldn’t have electricity.”

      This is a lie. 50% of Americans do not pay for anything.

      • “50% of Americans do not pay for anything.”

        That’s a lie, unless you’re counting children. Almost 50 percent pay no federal income taxes. Those people still pay sales taxes, property taxes, gas taxes, sin taxes, utility fees, and often state income taxes, along with other taxes and fees.

        • No James, the money they “pay” with was someone else’s. They did not earn it. It was not theirs to begin with.

          Your still lying. 🙂

          • I assume you mean “you’re still lying,” and you are, in fact, the one who is still lying. I just spent a night with two homeless families who were spending the night in churches as they await housing. Members of both families had jobs (one processing medical tests–you might check the income level of the folks who do yours). They were being paid for their jobs, and were subject to the taxes and fees I mentioned. Pull your head out, huh?

            • James, no matter how you frame it, if you pay 0 in, and receive a refund … you sir have paid no taxes.

              How about I get yours out of mine? 🙂

              • ‘if you pay 0 in, and receive a refund … you sir have paid no taxes”

                True. But that has nothing to do with your original claim, that 50 percent of people have paid “no taxes.” Even people who are getting federal money that they didn’t pay in, are still paying those other taxes I mentioned.

                And by the way, some of those folks who have paid no federal income taxes are rich folks, who are still using electricity, highways, etc. Maybe even Mitt Romney. 😉

        • “Those people still pay sales taxes, property taxes, gas taxes, sin taxes, utility fees, and often state income taxes, along with other taxes and fees.”
          By the time most of them are finished sucking from the govt tit, they probably are not out a penny to still get all the benefits of being an American that I get.

          • “By the time most of them are finished sucking from the govt tit, they probably are not out a penny to still get all the benefits of being an American that I get.”

            I assume you’re talking about the rich non-payers? Actually, you probably have no idea what you’re talking about. You probably have had almost no contact with either the working poor or the rich. See, I used “probably” twice, to your mere once.

            • “I assume you’re talking about the rich non-payers? Actually, you probably have no idea what you’re talking about. You probably have had almost no contact with either the working poor or the rich.”

              As usual, you have no idea what you are talking about. I work alongside the working poor every day………..and I am the one that deals with the rich, since I am the contractor that builds their homes and businesses. Just today as an example, I worked from 7 this a.m. until 7:30 p.m., and the last 3 hours were alongside two electricians that both said they needed to get financial aid from the govt to help take care of their kids. We were remodeling a medical business owned by 11 doctors that was having to make major changes in order to meet the rules of OWEbozocare. All of the 11 doctors consider me their friend and go out of their way to be my friend.

              Your post was just more typical BS from a liberal idiot.

              • “I work alongside the working poor every day.”

                Maybe you should consider paying them a living wage. 😉 But congrats on having a good job–and on having so many doctor freinds. And if all 11 doctors are rich, I have trouble feeling sorry for them because they have to meet some new regulations.

                • ” Maybe you should consider paying them a living wage”
                  I don’t pay them anything, I pay their bosses.

                  “And if all 11 doctors are rich”
                  They may all be millions in debt for all I know, but I am certain the business makes plenty of income for them.

  5. The only problem I see with SS and Medicare is the link to the govt.

    My take on SS is that if I was able to have taken every cent that was “taken” from my paycheck for SS ( and the match I paid as self employed) and invested it as I have all the other money I have saved from what I had left of that paycheck, it would be considerably more than I will ever see from the govt. Luckily, I learned very early that if I ever wanted anything, I better make it happen myself and not rely on the govt.

    My take on Medicare is the same. I have top of the line medical insurance and it has proven to be better than anything the govt could provide. In 2006, I spent 42 days in the hospital ( mostly in IC) and had 3 surgeries performed. Every that came to see me thought I would never make it thru the ordeal alive. I did live, paid my deductibles of all the bills (total bills equalled $742,000 from the medical providers) and ended up netting an extra $10,000 because of AFLAC. I doubt I would have even lived thru it if I had been completely relying on the govt and Obamacare.

    In about 2 years I can start collecting SS, and yes, I will take every penny I can back until I die.

  6. Show me in the constitution where the feds are prohibited from contributing to the educational fund.

    The tenth amendment
    “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

    If the Constitution dose not state that the feds have the power, THEY DO NOT! It is reserved by the people and the states!
    Pardon me, but YOU have to find it in there, or it does not exist!

    • Good try, Frank, but you showed who is constitutionally responsible for funding education. You did not show me where the fed is prohibited from contributing. When you are able to show me, in the constitution, that the federal government cannot contribute to education, let me know. Oh, and by the way, let both Bush(s), Clinton, Carter, Johnson, Kennedy and all of the other past administrations know as well. They have all run on and had “education initiatives” for as long as I can remember.

      • One last try…
        WHERE IN THE CONSTITUTION, DOES IT EVEN MENTION EDUCATION?

        let both Bush(s), Clinton, Carter, Johnson, Kennedy and all of the other past administrations know as well. They have all run on and had “education initiatives” for as long as I can remember

        Are we down to,
        “Billy’s mommy let him do it, why can’t I, Mommy?”

        You and Billy can both jump off that bridge, I’m not going with you!

        • Frank – when you’re wrong, just suck it up and go on. That bridge was jumped from long before I (or you I’m sure) was born. Like I said, take the feds money away from the state school systems and watch them scream. Of course, then you have to eleminate federal programs (Head Start, free school lunches, etc).

        • “The tenth amendment
          “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”’ (Frank @ 16:04)

          “One last try…
          WHERE IN THE CONSTITUTION, DOES IT EVEN MENTION EDUCATION?” (Frank @ 16:29)

          You answered your own question earlier, didn’t you? 😉

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