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Social Security No Ponzi Scheme; Rick Perry Monstrous Liar

By caheidelberger on 2011.09.15

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.

graphic of a pipeline

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.

Published in national

caheidelberger

23 Comments

  1. Steve Sibson 2011.09.15

    "hoping to undermine our faith in government and democracy in general"

    Yes, you now admit that you are part of a religious theocracy established by the government. You have to have blind faith to belief that these two things are both true:

    1) Social Security is pay as you go
    2) Without raising the debt ceiling, Social Security checks would not go out in August.

    Your blind faith argues that the checks won't go out because the government will be shut down. Why? We are still paying payroll taxes and federal witholding. A true pay as you go would not need more debt to function.

    I am very sure that you blind faith in pantheism and its worship of the sun will not be shaken by Solyndra's bankruptcy.

  3. Steve Sibson 2011.09.15

    Bill,

    Why do you personally attack instead of dealing with the facts? Either Social Security is pay as you go or it is a ponzi scheme. Somebody is lying. We have yet to uncover the truth and determined who it is yet. Once we end the partisan fights and the personal attacks, perhaps then we can get something constructive done. And life can become more pleasant at the same time.

  4. Bill Fleming 2011.09.15

    There's no personal attack here Sibby. I'm just laughing about your "sun worshiping" comment and your claim that Cory is a political "theocrat". That's just ridiculous, bordering on delusional. It's like if you had your zipper down. Somebody should tell you. Hopefully a friend. So there it is. Your post is just plain goofy.

  5. Steve Sibson 2011.09.15

    "There’s no personal attack here Sibby."

    "bordering on delusional. It’s like if you had your zipper down."

    Kind of like saying there is a Social Security trust fund, take a breath, and then say Social Security checks won't go out unless we raise the debt ceiling. You guys must be worshipping sometheng demonic. [Using lies to justify calling someone else a liar.] Just because you do not accept pagan religions as being religious...

    Now go back up and read Cory's statement of "faith".

  6. Bill Fleming 2011.09.15

    The money owed to the SS trust fund is a debt, just like all the other debt. The explanation could have been more complete, but it was not deceptive. Nor was it "religious." It was a perfectly logical cash flow argument.

  7. Steve Sibson 2011.09.15

    Bill,

    Yeah right, it is logical to borrow from myself and call it an asset. Who else did that? I think it was Enron.

  8. Steve Sibson 2011.09.15

    I need to explain my sun worship statement. In case you all don't know about Solyndra. They are (were?) into solar energy. Obama gave them a $535 million loan guarantee from the so-called stimulus package, but they are now bankrupt, so 1,000 people lost their jobs. So the taxpayers paid $535,000 per job for jobs that no long exist.

    Go ahead Cory and Bill, defend more of the same in the name of having faith in government:

    The Obama administration simply cannot help itself. Like a hapless gambler scouring the sidewalk for slot quarters, the White House continues — in spite of the embarrassing failure of its pet project Solyndra — to shower billions on “green” companies in the form of taxpayer-guaranteed loans. The LA Times reports:

    The U.S. Energy Department hopes that a new solar energy project will result in about 900 construction and permanent operations jobs.

    Energy Secretary Steven Chu said today that his department had finalized a $1.2-billion loan guarantee to Mojave Solar for the development of the Mojave Solar Project. When complete, the 250-megawatt solar generation project in San Bernardino County will increase the nation’s currently installed concentrating solar power capacity by approximately 50%.

    http://www.nationalreview.com/corner/277131/doe-announces-12-billion-loan-solar-firm-andrew-stiles

  11. Bill Fleming 2011.09.15

    p.s. Sibby, how's it going down in the rabbit hole this morning, anyway brother? If you see Tweedle Dee and the Mad Hatter down there, give 'em my regards, will ya? Oh, and tell 'em not to worry about Alice. Thanks to Obama, she just got a pay raise at General Motors.

  12. mike 2011.09.15

    Fleming,

    The stimulus didn't work. We are still well under where we were supposed to be.

    The stimulus was like a bridge that kept state govenments from having to make cuts,

    Now they are making the cuts because the bridged gap the stimulus created has ended.

    I don't like Noem one bit because she is a flat out liar but the stimulus wasn't a godsend either. It simply made it so liar politicians like Noem didn't have to make a hard decision.

  13. mike 2011.09.15

    Let's make some cuts and get this country back in order. If we need to raise taxes to do that than so be it but let's stop pretending pouring money down a hole will change anything other than allow us to pretend for a couple years until the money runs out.

  14. Steve Sibson 2011.09.15

    " Spin it all you want, Sibby, it’s just not that big of a deal in the scheme of things."

    No not at all BIll. Neither was no Social Security checks unless the government does what Solyndra can't...print money.

    When Republicans pull this stuff, you are all over it. Just because it is the Democrats doing it, all of a sudden it is no big deal.

    And that pay raise came from wealth yet to be created by future generations Bill. It does not take a big man to steal.

  15. Steve Sibson 2011.09.15

    " but let’s stop pretending pouring money down a hole"

    So that must be the rabbit hole Fleming is talking about.

  16. Bill Fleming 2011.09.15

    Oh brother, you guys are wearing me out. If you have to be miserable, go for it. But I'm not playing that game.

  17. Steve Sibson 2011.09.15

    Cory,

    Now with Bill out of the game, it is now up to you to defend your accusation that Rick Perry is a liar. You need to answer:

    If Social Security is not a Ponzi scheme, then why did Obama have to raise the debt ceiling in order to send out SS checks in August?

  19. Steve Sibson 2011.09.15

    "The truth is that the stimulus increased employment by between 1.4 million and 3.3 million people, compared with what employment would have been otherwise."

    Jana,

    What "Fact Check" has not determined is the number of jobs lost when the debt used to finance the programs is paid back.

  20. mike 2011.09.15

    Steve I think you make a great point about the debt ceiling and the ponzi scheme.

    Obama is a disaster as a president and I republicans could win by running Michele Bachman. Obama is that bad.

Comments are closed.