In his 2010 book “Fed Up,” Texas governor and GOP presidential hopeful Rick Perry called Social Security a “Ponzi scheme,” a statement that’s been a point of major contention as the 2012 presidential race heats up.
But as media types argue about whether Perry’s metaphor could be right, Alex Seitz-Wald at progressive site Think Progress points out one entity that has sought to debunk the metaphor — the official Social Security Web site.
In an entry on the site’s history page, last updated in January 2009, called “Ponzi Schemes vs. Social Security,” site historian Larry DeWitt writes:
There is a superficial analogy between pyramid or Ponzi schemes and pay-as-you-go programs [in the social security system] in that in both money from later participants goes to pay the benefits of earlier participants... That is where the similarity ends.
DeWitt argues that the Social Security system is, unlike a Ponzi scheme, sustainable; it is a transfer payment, but not a pyramid scam. And he begs readers not to let similarities such as the “bonus” paid to early participants in a pension system, or the rise and fall of the balance in pay-as-you-go systems, confuse them into thinking it’s a Ponzi scheme.
DeWitt concludes his brief history rather snarkily, writing:
The American Social Security system has been in continuous successful operation since 1935. Charles Ponzi's scheme lasted barely 200 days.