The Washington Post

Perry’s Ponzi scheme rhetoric

Greg has spent a lot of time reporting on whether Rick Perry is going to attempt to run away from the rather extraordinary positions he staked out in his pre-campaign book and other rhetoric before his formal campaign commenced. Perry, however, made it clear over the weekend in Iowa that he’s going to stand by what he’s said. Even when it’s totally wrong.

That’s the case for Perry’s claim that Social Security is a Ponzi scheme. Here’s what Perry told Iowans:

“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.”

Perry either doesn’t understand Social Security, doesn’t understand Ponzi schemes or is simply not telling the truth. There is nothing at all about Social Security that is anything like a Ponzi scheme. As I’ve said here before, I like the definition attributed to Sen. Russell Long: “Social Security is nothing more than a promise to a group of people that their children will be taxed for that group’s benefit.”

It’s true that there’s a relatively small actuarial imbalance in Social Security going forward, but what’s important is that unlike the problems for Medicare and other health programs, the Social Security imbalance is basically stable over the long haul. That means it’s pretty easy to fix — and if it isn’t fixed, and even if future Congresses make the unlikely choice to keep taxes the same and only pay out benefits that those taxes can support, future beneficiaries will still receive most of what they’re being promised today.

Of course, this has nothing whatsoever to do with a Ponzi scheme, which involves deliberate and outright fraud. It’s irresponsible to say that Social Security won’t be “there for them” when, in fact, the only way that will happen is if politicians choose to eliminate it.

In my view, saying that Social Security is a deliberate fraud — a Ponzi scheme — is about as irresponsible as truther or birther conspiracy thinking.


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