Presidential candidate Rick Perry calls Social Security a Ponzi scheme. By deeming Social Security a "monstrous lie," the Texas governor follows the same anti-government propaganda tactics of some local bloggers who shout about some "pernicious lie," hoping to undermine our faith in government and democracy in general. Making government out to be a bunch of liars and criminals fits the GOP playbook of undermining general confidence in the political system, alienating more independent and middle-of-the-road voters, and boosting the chances that a small minority of determined extremists can hijack democracy.
Alas, Rick Perry is the liar. Social Security is not a Ponzi scheme. You probably won't believe it if Social Security's own historian's office says so... but they do. The SSA Historian's Office explains how the original Ponzi scheme worked... or didn't work, since it depended on (a) an unsustainable geometrically expanding pool of new investors and (b) deceit about that unsustainability. Social Security depends on neither:
In contrast to a Ponzi scheme, dependent upon an unsustainable progression, a common financial arrangement is the so-called "pay-as-you-go" system. Some private pension systems, as well as Social Security, have used this design. A pay-as-you-go system can be visualized as a pipeline, with money from current contributors coming in the front end and money to current beneficiaries paid out the back end.
There is a superficial analogy between pyramid or Ponzi schemes and pay-as-you-go programs in that in both money from later participants goes to pay the benefits of earlier participants. But that is where the similarity ends [Larry DeWitt, Social Security Historian's Office, "Ponzi Schemes vs. Social Security," Research Note #25, updated January 2009].
Nick Baumann at Mother Jones puts the false comparison into a Venn diagram,showing that the only point of overlap between Social Security and Ponzi schemes is Rick Perry's claim that they are the same.
Social Security is an open, honest, publicly controlled transfer payment system whereby we workers say we'll take care of retirees. Social Security is up front with its participants about how its money is spent and how long the program will be able to sustain itself. Some people may misunderstand the program, but that doesn't make the program itself a lie or a scam.
The lie, the scam, is Rick Perry's effort to make people misunderstand Social Security. It was a scam last November when he published the Ponzi claim in his book Fed Up. It's still a scam now as he uses the claim to win votes. It's no less of a scam just because Chris Matthews and Paul Krugman have used the same incorrect language.
Rick Perry and other Republicans are working hard to change the language we use to talk about government. They don't want us to be proud of our democracy or our efforts to take care of each other. They can't win if we do. They need us to believe that the landmark social programs that they want to destroy are lies and scams... when the real lies and scams are the propaganda and platforms pitched by monsters like Rick Perry.