So many Republican politicians call Social Security a Ponzi scheme that Ezra Klein says he’s basically stopped taking notice of it.
But Rick Perry’s recitation of the talking point has attracted a fresh round of ire from hardier souls than me. Jonathan Bernstein, for instance, writes that “anyone who says that Social Security is a Ponzi scheme either misunderstands Social Security, misunderstands Ponzi schemes, is deliberately lying, or some combination of those.”
As he explains, a Ponzi scheme is a fraud that relies on new investors being unaware of the program’s financing mechanism. Social Security is a fully transparent system of age-based redistribution that releasesregular actuarial reports explaining, in great detail, how it is financed now, and what it will need to be fully financed into the future. Or, as Russell Long (apparently) put it, “Social Security is nothing more than a promise to a group of people that their children will be taxed for that group’s benefit.” You may like that structure or you may hate it, but it’s not a Ponzi scheme. And in case you forget, Nick Baumann went ahead and made a Venn diagram explaining the situation.
Just so it’s clear, keep reading Ezra Klein’s article here.
***Updated***One of my conservative friends turned me on to this argument:
Calling Social Security a Ponzi scheme is not original.
The Ponzi epithet for Social Security originated in a 1967 Newsweek column by Paul Samuelson, the eminent economist and author of the benchmark college textbook in his field. “The beauty about social insurance,” he wrote, “is that it is actuarially unsound. Everyone who reaches retirement age is given benefit privileges that far exceed anything he has paid in. And exceed his payments by more than ten times as much (or five times, counting in employer payments)!” The mechanism worked, according to Samuelson, because “there are always more youths than old folks in a growing population…. A growing nation is the greatest Ponzi scheme ever contrived. And that is a fact, not a paradox.”