Rick Perry says Social Security is a Ponzi scheme

Discussion in 'Media' started by hvactec, Sep 17, 2011.

  1. hvactec
    Offline

    hvactec VIP Member

    Joined:
    Jan 17, 2010
    Messages:
    1,315
    Thanks Received:
    106
    Trophy Points:
    83
    Location:
    New Jersey
    Ratings:
    +132
    One of the most talked-about comments from the Sept. 7, 2011, Republican presidential debate at the Ronald Reagan Presidential Library was Texas Gov. Rick Perry’s claim that Social Security is a "Ponzi scheme." At the Sept. 12, 2011, GOP debate in Tampa, Perry toned down his rhetoric somewhat -- but didn’t disown the phrase that caused such a stir.

    The claim that Social Security is a Ponzi scheme became fodder for sparring between Perry and former Massachusetts Gov. Mitt Romney -- the two candidates many observers consider the frontrunners for the nomination.

    Romney and his camp argued that the comparison of the retirement-security program for older Americans to an insidious financial fraud raised questions about Perry’s commitment to the program, which remains popular among Americans, and particularly older Americans who are statistically likelier to vote.

    Here’s the original quote and context from the Sept. 7 debate at the Reagan Library in Simi Valley, Calif.:

    "People who are on Social Security today, men and women who are receiving those benefits today, are individuals at my age that are in line pretty quick to get them, they don't need to worry about anything. But I think the Republican candidates are talking about ways to transition this program, and it is a monstrous lie. It is a Ponzi scheme to tell our kids that are 25 or 30 years old today, you're paying into a program that's going to be there. Anybody that's for the status quo with Social Security today is involved with a monstrous lie to our kids, and it's not right."

    Perry didn’t explicitly back away from the term, but he has sought to reframe the issue in a less polarizing fashion. In an op-ed in USA Today titled, "Rick Perry: I am going to be honest with the American people," Perry didn’t mention the phrase "Ponzi scheme," but he reiterated his concerns about Social Security’s financial outlook using less controversial language.

    "Our elected leaders must have the strength to speak frankly about entitlement reform if we are to right our nation's financial course and get the USA working again," he said, adding, "We must have the guts to talk about its financial condition if we are to fix Social Security and make it financially viable for generations to come."

    During the Sept. 12 CNN/Tea Party Express debate in Tampa, moderator Wolf Blitzer asked Perry why he had changed his tone in the op-ed.

    Perry maintained the cooler tone but didn’t back away from the terminology. "Well, first off, the people who are on Social Security today need to understand something," he said. "Slam-dunk guaranteed, that program is going to be there in place for those. Those individuals that are moving towards being on Social Security, that program's going to be there for them when they arrive there.

    "But the idea that we have not had the courage to stand up and look Americans in the face, young mid-career professionals or kids that are my children's age and look them in the eye and said, listen, this is a broken system. It has been called a Ponzi scheme by many people long
    before me. But no one's had the courage to stand up and say, here is how we're going to reform it.

    "We're going to transform it for those in those mid-career ages, but we're going to fix it so that our young Americans that are going out into the workforce today will know without a doubt that there were some people who came along that didn't lie to them, that didn't try to go around the edges and told them the truth."

    As Perry noted, he was hardly the first person to compare Social Security to a Ponzi scheme; it has popped up frequently as an analogy among conservatives for many years. And in the wake of Perry’s comment, conservatives have gleefully dug up examples of liberals writing similar comparisons. A Sept. 12 article in the conservative National Review Online by Stanley Kurtz, a senior fellow at the Ethics and Public Policy Center, detailed Ponzi comparisons made by a half-dozen left-of-center columnists, including William Raspberry, Max Frankel and Michael Kinsley.

    Still, Perry’s use of the comparison in the midst of a heated Republican primary campaign has attracted far more public and media attention than previous mentions -- and the fact many commentators have made this case doesn’t mean the comparison is justified. So we thought it would be worth recapping the evidence we’ve found for and against the idea that Social Security is a Ponzi scheme.

    *****

    So what is a Ponzi scheme? PolitiFact Texas looked at this question when researching the issue for a fact-check of Perry’s Ponzi-related comments from November 2010, when he was touring to promote his book, Fed Up!: Our Fight to Save America from Washington.

    According to an online post by the Social Security Administration, the term originates with Charles Ponzi, a Boston swindler who conned investors out of millions in 1920 by promising returns of up to 100 percent in 90 days on investments in foreign postal coupons. After first-round investors harvested those profits, others flocked to Ponzi, unaware his "profits" consisted of money paid in by other investors.

    "The reason that this is a scheme and not an investment strategy is that the geometric progression it depends on is unsustainable," the government post says. "You must continually get more and more new people into the system to pay off the promises to the earlier members."

    In contrast, the administration says, Social Security is more like a "pay-as-you-go" system transferring payroll tax payments by American workers to American retirees. Its web post closes: "The first modern social insurance program began in Germany in 1889 and has been in continuous operation for more than 100 years. The American Social Security system has been in continuous successful operation since 1935. Charles Ponzi's scheme lasted barely 200 days."

    When PolitiFact Texas asked Perry for back-up on his Ponzi scheme description, his campaign spokeswoman, Catherine Frazier, said that "this year, Social Security is expected to pay out more in benefits than it collects in taxes. Americans today are being forced to pay for a program that they will no longer see any benefit from or return on their investment as it currently stands, similar to a Ponzi scheme."

    So how valid is the comparison?

    Mitchell Zuckoff, a Boston University journalism professor who has written a book on Ponzi, noted three critical dissimilarities between Social Security and a Ponzi scheme, which by definition is both fraudulent and unsustainable.

    "First, in the case of Social Security, no one is being misled," Zuckoff wrote in a January 2009 article in Fortune. "...Social Security is exactly what it claims to be: A mandatory transfer payment system under which current workers are taxed on their incomes to pay benefits, with no promises of huge returns."

    Second, he wrote, "A Ponzi scheme is unsustainable because the number of potential investors is eventually exhausted. That's when the last people to participate are out of luck; the music stops and there's nowhere to sit. It's true that Social Security faces a huge burden — and a significant, long-term financing problem — in light of retiring Baby Boomers. … But Social Security can be, and has been, tweaked and modified to reflect changes in the size of the taxpaying workforce and the number of beneficiaries. It would take great political will, but the government could change benefit formulas or take other steps, like increasing taxes, to keep the system from failing."

    read more PolitiFact | Rick Perry says Social Security is a Ponzi scheme
     
  2. Truthmatters
    Offline

    Truthmatters BANNED

    Joined:
    May 10, 2007
    Messages:
    80,182
    Thanks Received:
    2,223
    Trophy Points:
    0
    Ratings:
    +2,233
    All the R feild is now talking about privatizing SS.

    That will get Obama a big bounce
     
  3. Zona
    Offline

    Zona A guy in ariZONA

    Joined:
    Aug 15, 2009
    Messages:
    13,874
    Thanks Received:
    941
    Trophy Points:
    48
    Location:
    Phoenix, AZ.
    Ratings:
    +942
    That is the one thing Bush said he wished he could have changed. He actaully wanted to privatize SS even AFTER the stock market crash.

    Freaking amazing.
     
  4. mudwhistle
    Offline

    mudwhistle Diamond Member

    Joined:
    Jul 21, 2009
    Messages:
    65,185
    Thanks Received:
    11,915
    Trophy Points:
    2,070
    Location:
    Wetwang With Fimber, Yorkshire
    Ratings:
    +26,139
    Social Security has been called a ponzi-scheme by numerous people for over a decade.

    This is nothing new.
     
  5. hvactec
    Offline

    hvactec VIP Member

    Joined:
    Jan 17, 2010
    Messages:
    1,315
    Thanks Received:
    106
    Trophy Points:
    83
    Location:
    New Jersey
    Ratings:
    +132
    Well if it is privatized Wall would make billions more taking old folks for a ride, then putting them out on the street.
    Politicians like rick perry get a pension plan, they give them selves raises, all kinds of benefits!
    then they get social security as a back up...
    Most Americans only get social security when they retire & no benefits, they are forced on to a medicare program plus they pay for a healthcare plan to on a very small income, crumbs.

    Rick Perry has all his healthcare insurance paid for by u and me, oh his retirement program pension program is a six figure one.
     
  6. Full-Auto
    Offline

    Full-Auto Gold Member

    Joined:
    Jun 13, 2009
    Messages:
    13,555
    Thanks Received:
    1,614
    Trophy Points:
    153
    Ratings:
    +1,615
    Regardless of your doom day prediction one thing is certain.

    If it were privatized there would be money on account.
     
  7. mudwhistle
    Offline

    mudwhistle Diamond Member

    Joined:
    Jul 21, 2009
    Messages:
    65,185
    Thanks Received:
    11,915
    Trophy Points:
    2,070
    Location:
    Wetwang With Fimber, Yorkshire
    Ratings:
    +26,139
    So what. He's not going around trying to shove Social Security down our throats.

    He believes that we're getting screwed.
     
  8. mudwhistle
    Offline

    mudwhistle Diamond Member

    Joined:
    Jul 21, 2009
    Messages:
    65,185
    Thanks Received:
    11,915
    Trophy Points:
    2,070
    Location:
    Wetwang With Fimber, Yorkshire
    Ratings:
    +26,139
    It was interesting watching Mitt Romney defend a program that Congress has been stealing from for decades. The theft has to be stopped because that is where most of our debt comes from.
     

Share This Page