Conservatives Gone Nuts - The Hysterical Claim By Republicans That Social Security is a Ponzi Scheme

"Ponzi! Ponzi! Ponzi!" Conservative Republican Media Dig In On Social Security Lie

Right-wing media have continued to claim that Social Security is a "Ponzi scheme." However, experts say that people who make this claim "are very wrong."

Stossel: "Ponzi! Ponzi! Ponzi! There, I Said It. ... People Need To Hear It." In a September 13 Washington Examiner op-ed, Fox Business host John Stossel wrote that "[t]o the extent people believe there are trust funds with their names on them, Social Security is absolutely a Ponzi scheme."

- Texas governor [Rick Perry] is under attack for telling the unpleasant truth. At the GOP debate in Florida on Monday, CNN's Wolf Blitzer asked presidential contender Rick Perry whether he was changing his tune after other Republicans and pundits slammed him for saying Social Security is a "Ponzi scheme." The Lone Star State chief executive stood his ground: "It has been called a Ponzi scheme by many people long before me."

Mr. Perry is correct in his assessment, but Republicans shouldn't waste air time arguing semantics.

-Hannity And Gasparino Agree: Social Security "Is A Ponzi Scheme." During the September 13 broadcast of Fox News' Hannity, host Sean Hannity and Fox News contributor Charles Gasparino claimed that Social Security "is a Ponzi Scheme."

Experts: People Who Call Social Security A Ponzi Scheme "Are Very Wrong"

SSA Historian: Social Security's "Structure, Logic, And Mode Of Operation Have Nothing In Common With Ponzi Schemes." From a January 2009 post by Social Security Administration (SSA) historian Larry DeWitt:

    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.
   
    Unlike A Ponzi Scheme, Social Security Discloses Its Finances
   
    Ponzi Schemes Rely On Fictional Accounting To Pretend That Contributors' Money Is Being Invested. From the Securities and Exchange Commission:
   
        A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity. [Securities and Exchange Commission, accessed 9/8/11]
   
    But Social Security's Finances Are Fully Disclosed To People Paying Into The System. The SSA publishes an annual report on the finances of the Social Security trust fund. The latest 235-page report was published on May 13 and is available on the SSA website. [Social Security Administration, 5/13/11]
   
    Social Security Trust Fund Is Invested In Government Bonds. From Dean Baker's "Letter to Gov. Rick Perry on Social Security Comments":
   
        Dear Governor Perry,
   
        When asked about Social Security during a recent campaign stop in Iowa, you said:
   
        "It is a Ponzi scheme for these young people. The idea that they're working and paying into Social Security today, that the current program is going to be there for them, is a lie," Perry said. "It is a monstrous lie on this generation, and we can't do that to them."
   
        With all due respect, this is not true. The recommendations of the National Commission on Social Security Reform in 1983 led to the growth of a large surplus in Social Security. This surplus was used to buy bonds and now Social Security holds more than $2.6 trillion in government bonds. As a result, the Congressional Budget Office's projections show that the program will maintain full solvency through the year 2038. [Center for Economic and Policy Research, 8/29/11, emphasis in original] - with minor tweaks Social Security will remain solvent for your great great great grandchildren.

   
    Unlike A Ponzi Scheme, Social Security Is Not At Risk Of Not Having Enough Investors
   
    A Ponzi Scheme Inevitably Collapses When The Organizer Runs Out Of New People To Defraud. From the Securities and Exchange Commission (SEC):
   
        With little or no legitimate earnings, the schemes require a consistent flow of money from new investors to continue. Ponzi schemes tend to collapse when it becomes difficult to recruit new investors or when a large number of investors ask to cash out. [Securities and Exchange Commission, accessed 9/8/11]
   
    But The Government Can Continue To Collect Taxes To Pay For Social Security Indefinitely. From a CNNMoney piece by professor Mitchell Zuckoff:
   
        Social Security is exactly what it claims to be: A mandatory transfer payment system under which current workers are taxed on their incomes to pay benefits, with no promises of huge returns. (Of course, it's true that if Madoff had the power to require participation, he would have had an easier time keeping his alleged scheme rolling.)
   
    Second, Social Security isn't automatically doomed to fail. Played out to its logical conclusion, a Ponzi scheme is unsustainable because the number of potential investors is eventually exhausted. That's when the last people to participate are out of luck; the music stops and there's nowhere to sit.

The Right has always hated Social Security because it is an egalitarian system which helps provide a buffer to keep seniors out of extreme poverty. If Social Security is a scheme than what was that we witnesses from 2007 to 2008 - when the housing market and Wall St collapsed. When it did it wiped out a lot of middle-America's life savings. The only thing they will likely have in retirement is S. Security.

Mealy Mouthed Republican of the Week - Sen. Chuck Grassley (R-IA) Knows How to Save Social Security But Won't

Mealy Mouthed Republican of the Week - Sen. Chuck Grassley (R-IA) Knows How to Save Social Security But Won't

Constituents waved signs and gave boisterous applause when one Iowan after another stood up and urged Sen. Chuck Grassley (R-IA) to strengthen Social Security rather than cut the retirement program at a town hall in Carroll, Iowa on Monday.

One middle-aged woman, Rosie Partridge, pointedly asked Grassley, “Why can’t we raise the wage cap in order to ensure that Social Security can continue on as it is without talking about cutting it?” (The current payroll tax does not tax income above $106,800.) Partridge, a small business owner, went on to tell her senator that despite the fact her business “would pay more” in payroll taxes, “you know what? No complaints. We want to have Social Security!” Grassley, who helped lead his party’s efforts to privatize Social Security in 2005, backed down, saying, “You have to have everything on the table”:

PARTRIDGE: My husband and I have a business in Carroll County. [...] My question is, why can’t we raise the wage cap in order to ensure that Social Security can continue on as it is without talking about cutting it? [Applause] And if we, as a business, we would have some people that would be giving more to that, actually a family member that’s part ownership of the business. And the business would pay more, too. And you know what? No complaints. We want to have Social Security! [Applause]

GRASSLEY: I think when it comes to Social Security, if anybody’s going to bargain in good faith, you have to have everything on the table. But if your point of view is to solve the Social Security problem just by taking the cap off, that isn’t going to solve it, as the trustees looked at it and said five years.

Watch it: video at link.

In fact, lifting the payroll tax cap would keep Social Security solvent for the next 75 years. Last week, Sen. Bernie Sanders (I-VT) announced he would introduce legislation to this effect, because doing so would keep Social Security fully-funded without having to cut benefits.

Though it may be tempting to hear “everything [is] on the table” and believe that Grassley is open to Partridge’s proposal, this is a phrase he commonly employs in tough policy fights. Optimists may believe that Grassley genuinely considers all options; pessimists will point to the health care reform debate when he made similar musings, only to string Senate Democrats along for months before criticizing the bill for supposedly allowing government to “pull the plug on grandma.”

Later in the town hall, another older woman chastised Grassley and his fellow Republicans for including Social Security in the recent debt ceiling standoff. “We have not caused the debt,” the woman said. “You owe Social Security recipients just like you owe China and anybody else that has treasury bonds.”

Grassley worships at the alter of no increase in taxes even if hard working average Americans have figured out that sacrificing a few dollars now means income security for millions of Americans for the next 75 years. Like all weird cultish thinking Grassley doesn't have to make sense or justify what he believes, he just believes it and that should be enough.

Three Charts To Email To Your Right-Wing Brother-In-Law - America has a revenue problem, not a spending problem. It is exactly in bad times like these the government should spend.

How did Gretchen Morgenson, one of America’s best financial reporters, get the story of Fannie Mae’s role in the financial collapse so wrong? Fannie and Freddie have some mud on them, but it was private sector banks who went hog wild on sub-prime loans.

America Hating Gov. Rick Perry Again Claims Social Security is Unconstitutional

America Hating Gov. Rick Perry Again Claims Social Security is Unconstitutional

During a campaign stop in Des Moines, Iowa today, Texas Gov. Rick Perry (R) reaffirmed all the views expressed in his book Fed Up!, including that Social Security is unconstitutional, despite previous attempts by his campaign staff to walk back the candidate’s words.

In Perry’s book, released just nine months ago, he writes on page 48 that Social Security is “by far the best example” of a program “violently tossing aside any respect for our founding principles.” On page 50, he goes on to say that we have Social Security “at the expense of respect for the Constitution and limited government.”

Last week, Communications Director Ray Sullivan tried to limit the damage from Perry’s book by saying that its contents were, as the Wall Street Journal writes, “not meant to reflect the governor’s current views on how to fix” Social Security.

ThinkProgress asked Perry today whether, in light of his campaign’s statements, states rights supporters should be worried that his views on Social Security have shifted now that he’s running for president. Perry dismissed his Communications Director’s comments, declaring “I haven’t backed off anything in my book. Read the book again, get it right.”

KEYES: But should states-rights supporters be worried that, as governor you said that Social Security is not something that falls in the purview of the federal government, but in your campaign, have backed off that?

PERRY: I haven’t backed off anything in my book. Read the book again, get it right. Next question.

Social Security is an income insurance program started by one of America's greatest presidents, Franklin D. Roosevelt. It currently keeps 20 million Americans out of poverty. The Supreme Court of the U.S. has made three major decisions regarding the constitutionality of Social Security. They have all confirmed Social Security is constitutional and is well within the right of the people and their representatives in Congress to make laws that provide for the common good of the people.

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