Social Security is a Ponzi scheme, says … Chris Matthews

posted at 11:25 am on September 9, 2011 by Ed Morrissey

Has Chris Matthews started feeling tingles when he sees Rick Perry? After the debate, MSNBC hosts were aghast at Perry’s reaffirmation of his argument that Social Security in its present form is a Ponzi scheme, sucking cash from new entrants in order to fund payments to people at the top of the pyramid. Mitt Romney has spent the last two days blasting Perry for his blunt talk, and other conservative analysts have fretted that such rhetoric would make Perry unelectable in a general-election matchup against Barack Obama. Now, one of Obama’s biggest media fans — and one who idolizes Social Security’s creator, FDR — says Perry is right:

Matthews first put forth what he thought Social Security was originally intended to be: “You pay for it while you work. When you retired and have no other form of income, this will help you out. In fact, a lot were impoverished in the old days without Social Security. It’s a great anti-poverty program. But then people started to live past 65. Even the great Franklin Roosevelt didn’t make it to 65. In those days, if you made it to 65, you were lucky. You got a few bucks on Social Security.”

Then he put forth what it has become: “Today, lots of people fortunately make it past 65,” he said. “They live into their 80s and 90s. They’re still getting checks. The system doesn’t work that way anymore. It’s not as healthy as it once was. So, how does a Republican deal with the fact it is a Ponzi scheme in the sense that the money that’s paid out every day is coming from people who have paid in that day. It’s not being made somewhere.”

In all the handwringing on both sides of the aisle over Perry’s remarks, no one has made the case that Social Security isn’t a Ponzi scheme and isn’t broken. Thomas Friedman melted down when confronted over Perry’s remarks by Rick Santelli over this basic point. Any system that floats benefits to the top from funds seized at the bottom is a pyramid or Ponzi scheme, with or without the illegality. And it’s actually worse, since the government forces us to participate even though it has become clear that our money is not going to our own benefits any longer but subsidizing those of others.

If Chris Matthews can admit that Social Security is a fraud and a Ponzi scheme, why is it so tough for conservatives to do so?

Update: David Freddoso gives Perry “two cheers” for essentially echoing Ronald Reagan and a generation of Republican leaders:

So why are people like Karl Rove and former Massachusetts Gov. Mitt Romney attacking Texas Gov. Rick Perry for repeating the same truth that Reagan and countless other Republicans have spoken for decades? In his book “Fed Up!”, and then again at Wednesday’s Republican debate at the Reagan Library, Perry rightly labeled Social Security as a “Ponzi scheme.” Yes, it’s a provocative phrase but the Texas governor understands that most Americans have had it with mealy-mouthed political talk.

But instead of supporting Perry’s courage in speaking frankly about entitlements, the Romney campaign wants conservatives to believe that Perry’s “Ponzi” comment automatically disqualifies him from being the GOP nominee. If Republican primary voters buy that argument, it will be a disaster for our country’s fiscal future. The big three entitlements, Social Security, Medicare and Medicaid, add hundreds of billions to our federal debt every year. And the drain they are inflicting on our economy will only get worse. Why not speak bluntly about this fact?

Should Perry be specific about how he proposes to fix Social Security and insure the benefits of those who are or are nearing retirement? Absolutely — and no doubt he will in the days ahead. But so should all the Republican candidates, as well as Democrats like President Obama. Anything less is just business-as-usual gibberish from the professional politicians in Washington.

Let’s recall what Perry actually said, emphases mine:

PERRY: Well, I think any of us that want to go back and change 70 years of what’s been going on in this country is probably going to have a difficult time. And rather than spending a lot of time talking about what those folks were doing back in the ’30s and the ’40s, it’s a nice intellectual conversation, but the fact is we have got to be focused on how we’re going to change this program. And 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.

So yes, Perry was talking about changing the program, and not eliminating it. He will have to follow up with a plan to do so, of course — but as Freddoso writes, Perry’s challenge will now force everyone else to do so as well. Isn’t that what elections are about?

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no one has made the case that Social Security isn’t a Ponzi scheme and isn’t broken.

Perry set a trap. Romney fell in. It looks like Obama is too smart. Obama will not say that SS is not a Ponzi scheme.

faraway on September 9, 2011 at 11:29 AM

Step 1) Admit you have a problem.

I hope we can have this adult conversation this election cycle.

WashJeff on September 9, 2011 at 11:31 AM

Perry set a trap. Romney fell in. It looks like Obama is too smart. Obama will not say that SS is not a Ponzi scheme.

faraway on September 9, 2011 at 11:29 AM

Wait until the general election. He’ll be shouting it from the rooftops.

Nethicus on September 9, 2011 at 11:31 AM

Perry fires back

Last night, Romney said, “Under no circumstances would I ever say, by any measure, it’s a failure. It is working for millions of Americans.”

However, in his book “No Apology: The Case For American Greatness”, which was published just last year, Romney compared those managing Social Security to criminals, saying: “Let’s look at what would happen if someone in the private sector did a similar thing. Suppose two grandparents created a trust fund, appointed a bank as trustee, and instructed the bank to invest the proceeds of the trust fund so as to provide for their grandchildren’s education. Suppose further that the bank used the proceeds for its own purposes, so that when the grandchildren turned eighteen, there was no money for them to go to college. What would happen to the bankers responsible for misusing the money? They would go to jail. But what has happened to the people responsible for the looming bankruptcy of Social Security? They keep returning to Congress every two years.”

Romney also says in his book, “To put it in a nutshell, the American people have been effectively defrauded out of their Social Security.”

windansea on September 9, 2011 at 11:32 AM

Perry spoke the truth loud and clear. Now his opponents are having (or wanting) to tell lies and half-truths to attack him. Perry wins this going away. The American people KNOW that Social Security is a trainwreck on the horizon. Perry looks like the true adult in the race by stating the obvious.
Have to laugh at Dims saying his statements will hurt him. Are you freaking kidding me? The more they try to hammer him on it, the more people will realize he’s the guy speaking the truth.

Sugar Land on September 9, 2011 at 11:33 AM

I agree that it is brilliant to call it a Ponzi scheme.

When a leftwing (or even rightwing) big-govt lover says that calling it that is ridiculous, ask them first to tell everyone what a Ponzi scheme is.

Then ask them to define what the problem with SS is.

Boom. Point made.

Good Lt on September 9, 2011 at 11:34 AM

no one has made the case that Social Security isn’t a Ponzi scheme and isn’t broken.

Because they can not make that case. It fundamentally is a Ponzi scheme. It is broken.

IowaWoman on September 9, 2011 at 11:35 AM

Perry is right. It is absolutely a Ponzi scheme. Where is the trust fund, it’s spent-this equals a Ponzi scheme.

rjoco1 on September 9, 2011 at 11:35 AM

Oh, there’s a “courseness” to what Perry said? Oh Noes!! Because Dems can’t abide that “courseness” can they? So refined they’ve been!

Shay on September 9, 2011 at 11:35 AM

Social Security was designed in large measure to alleviate unemployment first, and be an anti-poverty program secondarily, though for many people it certainly is that.

The New Dealers wanted to create an incentive to encourage older people to leave the workforce, freeing up jobs for the younger unemployed workers. Since most older workers didn’t have pensions, they worked until they dropped. With unemployment in the teens, the idea was that older workers would now have less to worry about knowing that Social Security was available. And since it was available to virtually every person at age 65, that would be a bigger prod to retire. Voila–”new” jobs.

DRPrice on September 9, 2011 at 11:36 AM

Ed said:

If Chris Matthews can admit that Social Security is a fraud and a Ponzi scheme, why is it so tough for conservatives to do so?

Because in order to be in a position to reform SS, they first have to get elected?

Chris Matthews isn’t running for office and the Dems aren’t going to run a billion dollars in attack ads against him claiming he wants to kill SS.

Jon0815 on September 9, 2011 at 11:36 AM

From Wikipedia. Tell me this isn’t straight on accurate.

A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors. The Ponzi scheme usually entices new investors by offering returns other investments cannot guarantee, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the returns that a Ponzi scheme advertises and pays requires an ever-increasing flow of money from investors to keep the scheme going.

Red Cloud on September 9, 2011 at 11:37 AM

If Chris Matthews can admit that Social Security is a fraud and a Ponzi scheme, why is it so tough for conservatives to do so?

Indeed!

Romney isn’t a conservative, but I still expect him to admit the truth.

flyfisher on September 9, 2011 at 11:37 AM

For once, Chrissy and I agree on something, that SS is a Ponzi scheme. Hell has finally frozen over.

glockomatic on September 9, 2011 at 11:37 AM

If Chris Matthews can admit that Social Security is a fraud and a Ponzi scheme, why is it so tough for conservatives to do so?

Because Romney believes telling the truth is not very politically astute. Even when the truth is helpful. Such as admitting he totally blew it with RomneyCare.

NotCoach on September 9, 2011 at 11:37 AM

Refusing the admit the problem shouldn’t sit well with younger voters, and by “younger” I mean anybody under the age of 65. And it really shouldn’t sit well with older voters either.

forest on September 9, 2011 at 11:38 AM

Everyone needs to face this reality. The sooner the better. It’s not going to be there for ANYONE unless we do. Perry is right, and kudos for Matthews, at least for now, admitting the same. I don’t look for that to last though.

capejasmine on September 9, 2011 at 11:39 AM

It was a stroke of genius to quantify the Social Security issue into a single sound bite – “Ponzi Scheme”. Now the debate that it is a Ponzi Scheme, something people can relate to, works in Perry’s favor, as the coiner of the phrase.

moc23 on September 9, 2011 at 11:39 AM

Romney, in his rush to offend no one, mistook Perry’s comments for truth no one was adult enough to hear. In his usual way, then, Romney decided he would simply try to “package” the truth in words he thought voters would tolerate. Typical political calculation. Except he really screwed up– maybe fatally so to his political aspiration.

MTF on September 9, 2011 at 11:39 AM

OT- the markets are tumbling following Odumbo’s jobs plan!

rjoco1 on September 9, 2011 at 11:40 AM

If a Private Enterprise set up a System like Social Security they would end up in Jail – end of story.

gullxn on September 9, 2011 at 11:40 AM

Tell that to morning Joe tingles….

Perry wants to abolish SS
-mj

cmsinaz on September 9, 2011 at 11:43 AM

It is a Ponzi scheme, so let’s fix it.

We could transition to a private system where the government cannot raid the funds

or

Link the retirement age to life expectancy. When Social Security was first introduced the retirement age was 65. Life expectancy was 64.5 so you could retire, on average, six months after you were dead.

So lets make the retirement age three years less than life expectancy and adjust the retirement age by six months each year until the target is achieved. As life expectancy changes, so does the retirement age.

A slow transition would insure that nobody gets blind sided.

The Rock on September 9, 2011 at 11:43 AM

If Chris Matthews can admit that Social Security is a fraud and a Ponzi scheme, why is it so tough for conservatives to do so?

I have repeatedly made this point, and will again: Chris Matthews is a pundit, he is not running for office. Like it or not, most of the voting public do not want to hear that SS is a ponzi scheme. They want to know how it can be fixed.

Buy Danish on September 9, 2011 at 11:44 AM

If Chris Matthews can admit that Social Security is a fraud and a Ponzi scheme, why is it so tough for conservatives to do so?

I’ll go out on a limb and say “Florida’s 29 Electoral Votes” for $1000, Alex…

JohnGalt23 on September 9, 2011 at 11:44 AM

It’s notjust a pyramid scheme, but it’s an INVERTED pyramid nowadays.

I’m guessing that in the 1930′s when Social Security was devised, a much larger percentage of the US population was part of the “working age” group, particularly the younger range of that group was proportionally larger, compared with the older “retired” group. People were expected to work until 65 and most either died before reaching that age or within a couple to a few short years after turning 65.

In those days, the math worked. The demographics made it a workable Ponzi scheme.

Nowadays, with greater longevity rates, and if it is in fact true that the US has a far larger proportion of baby-boom and older retirees among the population as a whole compared with the younger working-age group, the pyramid basically inverts. Which means it IS effectively a Ponzi scheme regardless of whether the original math made it one or not. I don’t see how Social Security avoids turning insolvent. The obligations that will need to be paid, won’t be matched by the funds taken in.

And I can’t understand why Medicare isn’t being talked about with the same degree of urgency. It’s far larger, and to my understanding, the scheme doesn’t work much differently.

Shirotayama on September 9, 2011 at 11:46 AM

I guess what is required as far as social security is concerned is that those already retired and those close to being retired are owed the retirement they were promised and supplied to the generation before them. They earned it, dontcha know? When they were spending $14,000B more than they earned through the federal government, they were actually being taken advantage of. They thought that money come from money trees fertilized by unicorn farts. While they were half fast educating the next generation, they were earning the $100,000B in unfunded liabilities that the government they elected imposed on the following two or three generations’ backs. They earned it, dontcha know? While their companies, the baby boomers owned them, were sending all the jobs overseas, they were earning their multi decade retirements, they plan on having their deep in debt follow on generations that they themselves poorly educated create the wealth the same way they created wealth, money trees and unicorn farts, since there is very little industrial capacity left in this nation. They created all these great inventions, and then turned them over to every other nation, but our own. Korea, Taiwan, China, Japan are the real heirs to the baby boomers who plan to leave their real children nothing from their life’s work, other than $100T of debt and future liabilities.

astonerii on September 9, 2011 at 11:46 AM

Like it or not, most of the voting public do not want to hear that SS is a ponzi scheme. They want to know how it can be fixed.

Buy Danish on September 9, 2011 at 11:44 AM

I agree with you that they want to know how it can be fixed, but calling it a ponzi scheme can also cast doubt on it’s creators, democrats.

darwin on September 9, 2011 at 11:47 AM

It’s not a Ponzi Scheme if the Government does it.

portlandon on September 9, 2011 at 11:47 AM

You know what the Third Rail is, right?

That’s where all the power comes from.

logis on September 9, 2011 at 11:48 AM

Moaning Joe claims his “very Conservative mother is afraid Rick Perry is going to take her social security away!”. I suppose because her idiot kid is on TV saying Rick Perry is going to take his mom’s social security away. That douche can not stand a successful Conservative Republican in office. He just seethes. You’re right, Scarborough. You couldn’t be elected dog catcher when MSNBC finally cans your butt.

Marcus on September 9, 2011 at 11:48 AM

Buy Danish on September 9, 2011 at 11:44 AM

Yes, but fixed with no changes or any impact on themselves. At least that’s what I am being told. I don’t feel that way but apparently I am in a minority.

Cindy Munford on September 9, 2011 at 11:48 AM

The government is only doing what Madoff did…

…without going to jail…

PatriotRider on September 9, 2011 at 11:49 AM

Move over Bernie Madoff…..Our Federal Government’s got a plan that makes you look like a county fair grifter.

Rovin on September 9, 2011 at 11:49 AM

Red Cloud on September 9, 2011 at 11:37 AM

There are only two differences between SS and a true Ponzi scheme.

One, the intent to defraud the last investors out of their money. That’s not here in this case – SS payments are going out no matter how much it bankrupts the country.

Two, social security is mandatory. You buy in whether you want to or not.

KingGold on September 9, 2011 at 11:50 AM

Thank you, Captain Obvious.

Weebork on September 9, 2011 at 11:50 AM

Like it or not, most of the voting public do not want to hear that SS is a ponzi scheme. They want to know how it can be fixed.

Buy Danish on September 9, 2011 at 11:44 AM

The public needs to be mature enough to understand an undefined problem cannot be fixed.

WashJeff on September 9, 2011 at 11:50 AM

For a very long time, social security hasn’t been solely a retirement insurance program for people who’ve contributed to it. If ss wasn’t burdened by the inclusion of all kinds of other “needy” people who didn’t kick in a dime, like drug addicts, drunks, abusive parents who live on their minor children’s ss checks, etc., perhaps it wouldn’t be involvent and …

FICA with all its many tentacles are confiscated from our incomes and we have no choice in the matter.

FYI, a Ponzi scheme is something greedy people voluntarily opt to join thinking they’ll be getting OPM (Other People’s Money).

erp on September 9, 2011 at 11:51 AM

However, in his book “No Apology: The Case For American Greatness”, which was published just last year, Romney compared those managing Social Security to criminals, saying: “Let’s look at what would happen if someone in the private sector did a similar thing. Suppose two grandparents created a trust fund, appointed a bank as trustee, and instructed the bank to invest the proceeds of the trust fund so as to provide for their grandchildren’s education. Suppose further that the bank used the proceeds for its own purposes, so that when the grandchildren turned eighteen, there was no money for them to go to college. What would happen to the bankers responsible for misusing the money? They would go to jail. But what has happened to the people responsible for the looming bankruptcy of Social Security? They keep returning to Congress every two years.”

windansea on September 9, 2011 at 11:32 AM

He is not saying that the program is criminal, he is saying those who are supposed to manage it are criminal. He did not say that trust funds are criminal, he said that bankers who fail to manage a trust fund as is their fiduciary duty are criminal.

Buy Danish on September 9, 2011 at 11:53 AM

When you lost Mr. Tingles…

Wolftech on September 9, 2011 at 11:54 AM

Well…the markets sure liked the speech…Dow down over 300…

PatriotRider on September 9, 2011 at 11:54 AM

It was a stroke of genius to quantify the Social Security issue into a single sound bite – “Ponzi Scheme”. Now the debate that it is a Ponzi Scheme, something people can relate to, works in Perry’s favor, as the coiner of the phrase.

moc23 on September 9, 2011 at 11:39 AM

Yep. Once that debate heats up, the truth comes out. Ponzi is the magic word, Something most politicians have been avoiding for half a century.

a capella on September 9, 2011 at 11:55 AM

And how does cutting the payroll tax for social security for a year or two affect that ponzi scheme? Hmmmmmm.

AverageJoe on September 9, 2011 at 11:57 AM

Social Security is a Ponzi scheme, says … Chris Matthews

I really hate it when I agree with this drooling, spittle-flecked, tingle-legged idiot.

UltimateBob on September 9, 2011 at 11:58 AM

So am I to understand that originally SS was set up as a retirement plan for age 65 when the life expectancy was known to be 64.5? So FDR wanted to force people to contribute to a fund that he KNEW most would never draw from? How did this ever get sold to the American public?

Many people consider FDR to be one of the greatest presidents of the 20th century. Not domestically, no way.

hamnj7 on September 9, 2011 at 12:01 PM

This actually worked out better for Perry than I ever thought it could. Even the drive-bys(most of them anyway) are conceding that he’s right. The only thing they can really attack Perry on is the coarseness of the term “Ponzi scheme”(cry me a river, you pansies), its potential toxicity in a general election(Sen. Ron Johnson of Wisconsin would beg to differ), and the claim that he wants to abolish Social Security(which is untrue).

Mittens’ got suckered by the establishment into using the same tired playbook that was clearly exposed as outdated in last year’s midterms. He may have given an overall better performance in Wednesday’s debate, but that exchange will haunt him for the rest of the primaries.

Doughboy on September 9, 2011 at 12:02 PM

Like it or not, most of the voting public do not want to hear that SS is a ponzi scheme. They want to know how it can be fixed.

Buy Danish on September 9, 2011 at 11:44 AM

Not so sure about that, Ron Johnson called social security a ponzi scheme when running against Russ Feingold in Wisconsin and he beat Russ like a rented mule. …

and in NY despite the message that Democrats have been hammering home at events across the district and through ads and direct mail — that Turner would cut benefits for Medicare and Social Security — the Republican led 49 percent to 45 percent among likely voters older than 55.

so maybe voters are waking up

windansea on September 9, 2011 at 12:02 PM

Everyone knows it to be true, there’s no arguing it if you’re intellectually honest. That’s not to say the left will not demogogue the ever living poopy out of the issue with seniors.

Still it’s honest and I like that he’s tackling it. Just reassure the elder generations they’ll still get their checks and we need to fix it for their grandkids.

Dash on September 9, 2011 at 12:02 PM

Yes, but fixed with ino changes or any impact on themselves. At least that’s what I am being told. I don’t feel that way but apparently I am in a minority.
Cindy Munford on September 9, 2011 at 11:48 AM

The fixes have to be gradual. You cannot pull the rug out from Seniors or those approaching retirement who have no time to plan an alternative, and who did not (say) have the option of taking some of their funds and investing them privately as Bush suggested.

I would add that the payroll tax tax cut makes absolutely no sense as it’s purpose is to fund SS.

The public needs to be mature enough to understand an undefined problem cannot be fixed.
WashJeff on September 9, 2011 at 11:50 AM

I don’t understand this comment.

Buy Danish on September 9, 2011 at 12:03 PM

argh! [its] purpose not it’s…

Buy Danish on September 9, 2011 at 12:04 PM

Just to watch liberal heads explode, during the next debate I hope someone ups the ante and says that if the Boomers hadn’t aborted all those babies we would have a lot more taxpayers to fund their retirement.

flyfisher on September 9, 2011 at 12:06 PM

Perry set a trap. Romney fell in. It looks like Obama is too smart. Obama will not say that SS is not a Ponzi scheme.

faraway on September 9, 2011 at 11:29 AM

Can we all take a deep, cleansing breath. It was great to see Mathews hypocrisy pointed out.

But let’s be real. Who cares if you call it a Ponzi scheme or say that it is only broken? We’re arguing over language here. The bottom line is both Romney and Perry and any other rational observer knows that we need to do something about it. Let’s see what the candidates propose to do and take it from there.

MJBrutus on September 9, 2011 at 12:06 PM

Social Security was designed in large measure to alleviate unemployment first, and be an anti-poverty program secondarily, though for many people it certainly is that.

The New Dealers wanted to create an incentive to encourage older people to leave the workforce, freeing up jobs for the younger unemployed workers. Since most older workers didn’t have pensions, they worked until they dropped. With unemployment in the teens, the idea was that older workers would now have less to worry about knowing that Social Security was available. And since it was available to virtually every person at age 65, that would be a bigger prod to retire. Voila–”new” jobs.

DRPrice on September 9, 2011 at 11:36 AM

Well, No. I think it was a whole lot more devious than that. At a time when the economy refused to improve and FDR had his public works jobs programs running he needed more tax money to pay for them but, how could he tell the voters he wanted to raise their taxes? Eureka!
Let’s tell the people we will manage some of their income for them and they can reap the profits when they reach age 65. Bear in mind that a person born in the US in the year the program started had a life expectancy of about 62 years. It was always about getting onto your wallet.

oldernwiser on September 9, 2011 at 12:07 PM

It’s not a Ponzi Scheme if the Government does it.

portlandon on September 9, 2011 at 11:47 AM

Sarc tag broken, is it?

JohnGalt23 on September 9, 2011 at 12:09 PM

Who cares if you call it a Ponzi scheme or say that it is only broken?

MJBrutus on September 9, 2011 at 12:06 PM

Apparently Rove and the rest of the GOP establishment.

flyfisher on September 9, 2011 at 12:10 PM

Chris Christie vindicates Romney:

http://tiny.cc/4qaqe

People are stuck on “Ponzi Scheme”. But that’s just one DNC ad. There’s one on the burner for “monstrous lie” one for “failure” and one for “like a bad disease”. And much more.

swamp_yankee on September 9, 2011 at 12:11 PM

so maybe voters are waking up
windansea on September 9, 2011 at 12:02 PM

It’s possible, but don’t forget that polls have shown that even self-identified Tea Partiers reject entitlement cuts. They support cuts in principle, not in reality.

To be clear, I am not suggesting that politicians lie to voters or deceive them in any way; I am merely suggesting that moderate language is more effective, that politicians have to be more circumspect than pundits when they frame arguments.

Buy Danish on September 9, 2011 at 12:12 PM

There was an article the other day, that I have fruitlessly tried to relocate since, that snipped and clipped the congressional (or maybe it was CBO) explaination of Social Security and the SEC’s definition of a Ponzi scheme and put them side by side. Without the letter-head and redaction of names (SS & Ponzi scheme) you were hard pressed to identify which was which. It was/is a beautiful illustration that there is no differentation between the two. None. Nada. Zilch. Congress’ own definition of SS & the SEC’s definition of a Ponzi scheme are almost verbatim the same.

I thought I saw this piece on NRO or TWS but all attempts to track it down have been to no avail. Did anyone else come acorss this too, and if so, do you recall where?

Archimedes on September 9, 2011 at 12:13 PM

Apparently Rove and the rest of the GOP establishment.

flyfisher on September 9, 2011 at 12:10 PM

Right. When did we start caring about them? And I’m with you here and am just trying to say that it doesn’t make sense for us to go along with their BS or fall in to their line of thinking. They’re just making noise to get viewers. I like both candidates and am looking forward to hearing how they plan to clean the mess up.

MJBrutus on September 9, 2011 at 12:15 PM

The public needs to be mature enough to understand an undefined problem cannot be fixed.
WashJeff on September 9, 2011 at 11:50 AM

I don’t understand this comment.

Buy Danish on September 9, 2011 at 12:03 PM

You said they didn’t want to hear that it was a Ponzi scheme, they wanted to know how to fix it. And then he said, how can you ‘fix’ something if there is no defined problem.

preallocated on September 9, 2011 at 12:16 PM

Just to watch liberal heads explode, during the next debate I hope someone ups the ante and says that if the Boomers hadn’t aborted all those babies we would have a lot more taxpayers to fund their retirement.
flyfisher on September 9, 2011 at 12:06 PM

Riiight. That’s a real vote-getter./

Buy Danish on September 9, 2011 at 12:17 PM

Like it or not, most of the voting public do not want to hear that SS is a ponzi scheme. They want to know how it can be fixed.

Buy Danish on September 9, 2011 at 11:44 AM

Not so sure about that first part. The voting public also includes young and middle aged people. Are you saying the majority of them are confident they will enjoy the same SS benefits as today’s recipients? They understand the Ponzi concept very well. I’ve never heard one of them say they would rather have the government handle their retirement investments by using payroll deductions, then using that money for other purposes.

a capella on September 9, 2011 at 12:17 PM

Ed’s looking to Chris Matthews for backup, the guy who would love to see the GOP nominate Perry.

I’ll stick with Chris Christie for back-up.

swamp_yankee on September 9, 2011 at 12:18 PM

And then he said, how can you ‘fix’ something if there is no defined problem.
preallocated on September 9, 2011 at 12:16 PM

It is not necessary to use that particular rhetoric to define the problem.

Buy Danish on September 9, 2011 at 12:19 PM

Riiight. That’s a real vote-getter./

Buy Danish on September 9, 2011 at 12:17 PM

I said that tongue-in-cheek. But what I said is true.

flyfisher on September 9, 2011 at 12:22 PM

The elephant in the room that is not being noticed here is this:
Social Security would not be in the shape that it’s in now, if greedy, self-serving bureaucrats had kept their hands off of the fund. Instead, over its lifetime, these dirtbags kept draining money out of the fund for their own pet projects, and to further their own reelection prospects. Fact is, a lot of Americans, were forced to put their hard-earned money into the fund, and expect to get back what they are owed. This is not an entitlement – it’s money owed to them. It’s not their fault that garbage politicians drained the fund dry for their own personal and political gain.

If there is any “reform” that needs to happen now, before anything else, it’s to identify the individuals who stole money from the fund, and never paid it back. These people should immediately have all monies owed, plus interest, taken out of their bank accounts, property holdings, and assets. I don’t care if it puts them out on the street corners begging for change. Make them pay back, before the American citizen has to pay.

“Government Bureaucrat” is just another word for “Thief”. If a private citizen ever commits theft of this magnitude, they’d be doing time for a felony.

realitycheck on September 9, 2011 at 12:24 PM

I’ve said before and I’ll repeat it. When Social Security became the law in 1937, the life expectancy of the average American was 63.7 years. Look it up.

oldleprechaun on September 9, 2011 at 12:25 PM

I like both candidates and am looking forward to hearing how they plan to clean the mess up.
MJBrutus on September 9, 2011 at 12:15 PM

+1

Are you saying the majority of them are confident they will enjoy the same SS benefits as today’s recipients?
a capella on September 9, 2011 at 12:17 PM

No, I’m not saying that. I am talking about language, semantics, rhetoric – what’s effective with voters and what alienates them.

CU all later…

Buy Danish on September 9, 2011 at 12:26 PM

You said they didn’t want to hear that it was a Ponzi scheme, they wanted to know how to fix it. And then he said, how can you ‘fix’ something if there is no defined problem.

preallocated on September 9, 2011 at 12:16 PM

Exactly. I am engineer. Engineers cannot solve problems unless the problem is known and defined. SocSec core problem is that it is ponzi/pyramid scheme. Changing elgibility ages or payroll tax amounts does not fix the problem. A problem can only be fixed by moving away from the pyramid funding structure.

Perry should let this Ponzi thing course through the media for a week or two than start coming up with his solution. A solution must take politics\electability into account. His solution should involve a slow migration (i.e., decades long transistion) from the current ponzi scheme to invidual account system.

WashJeff on September 9, 2011 at 12:29 PM

D@mnit, now he’ll NEVER get elected.

/Karl Rove

Lily on September 9, 2011 at 12:30 PM

As Rush said yesterday, it’s actually WORSE than a Ponzi scheme. Madoff’s investors gave him money by choice. The fed govt doesn’t give us a choice…

spinach.chin on September 9, 2011 at 12:30 PM

Here’s another problem with Social Security: The pay-as-you-go structure of SS takes what should be a savings/investment behavior (i.e. planning for your future retirement) and converts it into straight-up consumption. It is just another government-sponsored bit of social engineering in the century-long process of degrading Americans down to being live-for-the-moment, wage-slave consumption machines. It didn’t have to be this way.

stevieray on September 9, 2011 at 12:35 PM

It is not necessary to use that particular rhetoric to define the problem.

Buy Danish on September 9, 2011 at 12:19 PM

Yes, it is. You can’t fix a problem until people admit that there is a problem. People will not believe there’s a problem unless language like this is used.

blink on September 9, 2011 at 12:36 PM

Agreed. If you are familiar with Jonathan Edwards you know there is a good reason “Sinners in the Hands of an Angry God” is his most remembered and discussed sermon. Strong, direct, and vivid language is effective.

flyfisher on September 9, 2011 at 12:43 PM

OT- the markets are tumbling following Odumbo’s jobs plan!

rjoco1 on September 9, 2011 at 11:40 AM

The stock market is reacting to the Greek debt crisis, not Obama. The market knows Barry’s “new and [not] improved” stimulus plan is going nowhere. Republicans control Congress now, and they’re not about to vote in favor of this garbage.

The Greek government is in such bad shape that they’re now paying interest rates of 90% on their bonds. Greece will default soon. The market knows it (and that other defaults will follow) and that’s why it’s dropping today.

Back on topic: this is what I hate about Romney. He knows very well that SS is a Ponzi scheme. He also knows that Americans need to face that fact and deal with it. But when Perry takes the political risk of being honest about it, Romney attacks him for it and tries to take political advantage. Romney cares more about promoting his own political interests than he does about promoting the country’s best interests. That’s inexcusable.

AZCoyote on September 9, 2011 at 12:54 PM

It is a Ponzi scheme, so let’s fix it.

We could transition to a private system where the government cannot raid the funds

or

Link the retirement age to life expectancy. When Social Security was first introduced the retirement age was 65. Life expectancy was 64.5 so you could retire, on average, six months after you were dead.

So lets make the retirement age three years less than life expectancy and adjust the retirement age by six months each year until the target is achieved. As life expectancy changes, so does the retirement age.

A slow transition would insure that nobody gets blind sided.

The Rock on September 9, 2011 at 11:43 AM

I like these ideas. If the retirement age is raised gradually, those closest to retirement only need to work a year or two more, while those most affected are younger and have more time to set aside their own money for retirement.

Under the current system, benefits received are proportional to the amount a worker put in, which is proportional to income up to the Social Security “cap”, meaning that higher-income people get more benefits than low-income people. But many of the higher-income people have set aside money in IRA’s and 401K plans since the 1980′s, and don’t need Social Security, while low-income people couldn’t afford private savings plans and need SS more.

Another interesting idea would be means-testing: if a retired person has no source of income other than Social Security, he/she receives full benefits, but if the person works or withdraws money from a pension or private investment or retirement account, Social Security benefits are cut by an amount proportional to (but much less than) the other source of income. For example, if a retired person has non-SS income of, say, $50,000 per year, their SS benefits would be cut by $15,000 per year. This would preserve the incentive to work (or draw down private funds) during retirement but would preserve Social Security benefits for the truly needy.

Another interesting idea would be to allow workers below a certain age to divert a proportion of their payroll taxes into private retirement accounts (accessible only after retirement age), on the condition that their eventual SS benefits be reduced proportionally. The percentage that could be diverted would be on a sliding scale with age, with the youngest workers able to divert the most money into private accounts. These workers would then have the CHOICE to invest their retirement money with the Government or in private investments, whichever THEY think is best. This would probably cause a massive infusion of “young money” into the stock market, giving businesses money to invest and hire some of the unemployed.

Another possibility would be to raise the “cap” on income subject to SS tax. Social Security tax is “regressive”–poor and middle-class people pay a fixed percentage of income, while rich people pay a fixed AMOUNT, regardless of income. If the income cap were raised, with more income subject to the tax, the SS tax RATE could actually be lowered and still provide the same revenue into the system. This would be perceived as a tax CUT for the poor and middle-class, a tax hike on the wealthy, and would be very popular politically, since it would help a large number of people and only hurt a few.

Social Security, as it exists now, will NOT be there for those now in their 20′s and 30′s. But if sensible reforms are enacted now, that act gradually over decades, Social Security WILL be there for those who need it, and most of today’s young people probably WON’T need it.

Steve Z on September 9, 2011 at 12:56 PM

If the Fed confiscates 7.5% of my money and gives it to someone else, the “SS lockbox” is a lie. The Fed matches 7.5% in donations while my actual return on investment is around 1% and it takes six people to support my potential SS earnings at age 62, IT IS A PONZI SCHEME.

dthorny on September 9, 2011 at 1:01 PM

Calling it a Ponzi scheme or a “monstrous lie” perhaps obscures the real issues. Social Security is a Ponzi scheme in the sense that any insurance arrangement is a Ponzi scheme. Social Security was passed as an old age insurance program. But insurance arrangements, especially fixed return insurance annuities, which are the model for Social Security, are not inherently fraudulent. A lot of insurance companies are quite reputable.

Insurance programs arguably become fraudulent when the insurer assures the insured that sufficient funds are available to pay claims, when they are not. And Social Security, depending on how you count, now confronts 20 or 45 trillion in unfunded liabilities. It was this sort of unfunded liability of private insurance companies that helped precipitate the 08 meltdown. In 2005 Will Wilkinson of Cato, called Social Security’s promise a “noble lie,” rather than Perry’s “monstrous lie:”

“What is worse is that the Social Security status quo embodies a government-perpetuated deception designed to generate its own political support by misleading voters into believing that their payroll taxes entitle them to later benefits.”

http://www.cato.org/pub_display.php?pub_id=3940

Actually, it’s that voters have been led to believe that they are guaranteed later benefits; whether they get them are not, they are still (institutionally) entitled to them.

Perhaps Perry was referring to this with his “monstrous lie,” but he has several to choose from. Another monstrous lie, typical of many liberal lies, was the left’s insistence that there was no looming crisis when 43 began his second term by trying to reform Social Security in order to save it. And this seems to be the real issue, one that gets slightly obscured when Friedman and Santelli are arguing about whether it’s a Ponzi scheme: if we do nothing, payroll taxes will need to be increased by at least 28% beginning in 2037.

Friends of liberty ought to be as equally outraged about the coercive nature of this arrangement. At best, rates of return are about 1.2% on Social Security; no insurance company would remain competitive offering annuities at 1.2%; TIAA’s current guaranteed return rate is 3.75%. In all his columns insisting that current senior citizens contribute more, Robert Samuelson of Newsweek has never addressed this issue. No persons who value their liberty to make reasonable arrangements for the future course of their lives should permit a government – apparently committed to free markets – to coerce them into obviously defective economic arrangements.

EastofEden on September 9, 2011 at 1:11 PM

Nothing at all to do with topic at hand, but I’m just wondering why nearly every site that produces videos feels they need to add a horror-soundy audio effect in the intro/outro. Tends to make me giggle and expect a slasher-movie preview scene.

whatcat on September 9, 2011 at 1:21 PM

Yes, it is. You can’t fix a problem until people admit that there is a problem. People will not believe there’s a problem unless language like this is used.
blink on September 9, 2011 at 12:36 PM

If the language/rhetoric used by a candidate alienates voters so much that the person least likely to reform/fix the problem wins the general election (say, Barack Obama) the problem isn’t going to be fixed, is it?

Buy Danish on September 9, 2011 at 1:58 PM

If Chris Matthews can admit that Social Security is a fraud and a Ponzi scheme, why is it so tough for conservatives to do so?

Thank you very much, Ed, for this excellent post! Thanks for also being one of the first bloggers/journalists to actually lift quotes from Perry’s book.

Will Romney and his Mittbots be satisfied? I doubt it – how else can they continue their demagoguery?

TheRightMan on September 9, 2011 at 2:35 PM

You know arguing about social security is irrelevant. Every one knows it’s Ponzi, has been from the start. Rush said the other day when it started 140 workers paid for 1 retiree. Now it’s 3 for each retiree and by 2030 will be down to 2 workers funding each retiree. Good luck with that.

Herb on September 9, 2011 at 2:36 PM

“Why do Texans like this panzi scheme language?”

Because it’s the truth ya dipsh!t!

esnap on September 9, 2011 at 2:46 PM

No, I’m not saying that. I am talking about language, semantics, rhetoric – what’s effective with voters and what alienates them.

Buy Danish on September 9, 2011 at 12:26 PM

If voters are alienated by this language then they are not aware of the seriousness of the problem, and seemingly do not want to be. Sometimes you just have to tell it like it is to get people’s attention. Even if Gov. Perry does not win the Republican nomination, I believe he has done his Country a favor by starting the conversation that no other politician wanted to start.

Susanboo on September 9, 2011 at 3:19 PM

Rick Perry said what a lot of us have been saying about social security and how it is going to affect our children who are already paying into the system. There are not enough dollars going in to pay for all of our baby boomers’ social security not to mention our children.

When you stop paying social security taxes at $106,000 a year no matter what you make, it is going in the hole some day.

Romney doesn’t have to worry about paying social security taxes because he hasn’t held a real job since leaving the Governor’s office in MA in Jan 2007 — he has spent his time running for President. As he said, he is also unemployed.

Why would anyone even consider someone who hasn’t worked as their sole aim for over 4 1/2 years has been to run for President. What experience has he had in the business climate since early Jan 2007 — zero, zip, nada. But he knows how to fix things?

If you want an elitist, establishment Republican supported by Karl Rove and Bush 41, support Romney who was in Presidential Debates in 2007 and now 2011 and is preppred on what to say. Romney has already pulled the MA flip flop on global warming — what next for the Me Too man!

If you want a common sense conservative Governor who isn’t afraid to tell it like it is with a current record of a sitting Governor, then support the sitting Texas Governor Rick Perry who deals in reality not surgar coating. He is on call at any minute as we saw Sunday with the wildfires while also running for President. In his first debate, he showed he was up to the task as he didn’t have time to do a lot of debate prep like the other candidates.

Maybe you could say that Rick Perry is a multi-tasker and what you see is what you get not someone prepped with all the answers.

PhiKapMom on September 9, 2011 at 3:27 PM

The friggen liars…the older than 55 will not be touched. Why is this lie allowed to be propagated?

Schadenfreude on September 9, 2011 at 3:49 PM

I bet Chris Matthews likes Perry’s immigration policy too.

I do not think social security is a ponzi scheme…but I do think it needs real reform if it is going to remain solvent. No doubt about that. But thus far Perry has not exactly given us a lot of specifics in that regard. Talk is cheap..trashing social security is easy, fixing it is not.

Terrye on September 9, 2011 at 4:13 PM

In all the handwringing on both sides of the aisle over Perry’s remarks, no one has made the case that Social Security isn’t a Ponzi scheme and isn’t broken.

I think it is a question of semantics to some degree. If it actually is a ponzi scheme in the classic sense of the word…then it is not broken..because ponzi schemes can not be reformed, this is how they are supposed to work. So I think it is obvious that the system is broken, but that has a lot to do with actuaries and demographics and things like that and not just with the program itself. In other words once we baby boomers kick the bucket some of those stresses will be gone.

I still think it is a bad idea to give Democrats something they can use against Republicans.

Even Bill Clinton has said that social security and medicare need to be fixed..no one is really debating that. The real question is how to do it and who pays.

Terrye on September 9, 2011 at 4:18 PM

In all the handwringing on both sides of the aisle over Perry’s remarks, no one has made the case that Social Security isn’t a Ponzi scheme and isn’t broken.

Perry also said it was unconstitutional and that it had been a lie foisted on us 70 years ago..or something like that.

I don’t think that people were responding to Perry stating an obvious problem with the present system..I think they were responding to Perry attacking the very ideal of the system.

But a lot of that is probably just talk anyway. Apparently, Perry is not going to let a little thing like the fact that he thinks Social Security is unconstitutional get in the way of saving it.

And Reagan raised social security taxes to keep that program going. He did not change it or reform it. Needless to say it would have been next to impossible to do that back then, but I don’t recall Reagan attacking the program publicly either.

Terrye on September 9, 2011 at 4:22 PM

If voters are alienated by this language then they are not aware of the seriousness of the problem, and seemingly do not want to be. Sometimes you just have to tell it like it is to get people’s attention. Even if Gov. Perry does not win the Republican nomination, I believe he has done his Country a favor by starting the conversation that no other politician wanted to start.

Susanboo on September 9, 2011 at 3:19 PM

Actually George Bush started this conversation when he tried to bring market reforms to the social security system..Where was all that back slapping and atta boying back then. It was only about 6 years ago and I don’t recall people talking about how brave he was..they just complained that he was risking scant political capitol on the problem.

Terrye on September 9, 2011 at 4:25 PM

yes, but he also said that states should be able to opt out of it. That’s going to scare people.

My real question is this: Ok SS is a Ponzi scheme. Fine. So, who gets screwed? Why not screw the people whom the lie was perpetrated upon? Why not screw the folks who believed there was such a thing as a free lunch? Why screw future generations? They didn’t have anything to do with it.

The answer is obvious, of course. Because the current generation is a bunch of greedy cowards.

People, there is no good way out. We have politicians in charge.

Pablo Snooze on September 9, 2011 at 8:16 PM