The word, well words, in question are “Ponzi Scheme.” Texas Governor Rick Perry, who wants to make us longingly remember the George W. Bush presidency by inflicting his own version of ignorant swagger on the nation for the next four years, has repeatedly referred to Social Security, one of the most successful government programs ever, one that has allowed generations of senior citizens to retire from the work force and live out their years in dignity, as a Ponzi Scheme.
Now, a Ponzi scheme is a form of fraudulent investment that promises a payoff but has no means of funding said payoff for a given investor beyond the investments of subsequent investors. Of course, there’s a finite number of potential investors and when that number is exhausted, the whole scheme falls apart.
Current Social Security benefits are paid by current workers, so it is true that future investors are funding current payments. That is where the comparison ends. While “infinite” does not quite reflect the size of the future American work force, that work force, that pool of contributors is constantly replenishing itself. Every day, Americans are born and they die. They leave the work force and go onto Social Security, and they enter the work force and start contributing to Social Security, exactly as the program was conceived.
Now, it’s true that there are some stresses on the system, but nothing that can’t be corrected by some basic reforms. It is certainly not on the verge of collapse.
So the question remains, does Rick Perry not understand how a Ponzi Scheme works, not understand how Social Security works, or is he counting on the rest of us not understanding one or both of those things? There is no answer that is not beneath someone wanting to be President.
By the way, there is a way for Social Security to become a Ponzi scheme. You would have to end the program without providing any compensation for those of us who have been contributing in good faith through our working lives. Frankly, the idea that politicians would do something that incredibly unpopular is, well…