The Social Security-Ponzi Scheme Kerfuffle

Rather than talk about how the other debate contenders did last night, as I promised I would do when discussing Rick Perry’s performance, it appears the real news coming out of the debate (with apologies to Herman Cain’s 999 plan, Newt Gingrich’s all-for-one, one-for-all fusillade against the moderators and Jon Huntsman’s I’m-for-science-and-Rick-Perry’s-a-bumpkin arrogance) is the fight between Mitt Romney and Perry over the latter’s characterization of Social Security as a Ponzi scheme.

Romney’s people seized on Perry’s determined statement that the political elites are telling a “monstrous lie” to younger Americans that the program will still be around when they get to retirement age with a shocking bit of demagoguery. The Romney camp, through advisor Stuart Stevens. put out the following statement…

He has lost. No federal candidate has ever won on the Perry program to kill Social Security. Never has. never will.

We’re talking about every House candidate that runs, every Senate candidate that runs, would have to run on the Perry plan to kill Social Security. We might as well just admit it now that Nancy Pelosi is going to become Speaker again and the Senate we’ll never get. It’s a position that, in his book he argues for and reasons out well, it’s just a position the vast majority of Americans don’t agree with. We’re talking about a president who will abolish Social Security. It’s not a question of how it’s funded, it’s a disqualifying position.

This is the position the Beltway elite and the mainstream media/conventional wisdom types are pushing – that Perry has made himself unelectable by assailing the Third Rail Of American Politics. And those elites are now defending Social Security.

They’re buoyed by this statement Romney made at the debate…

“And under no circumstances would I say by any measure that it’s a failure. It is working for millions of Americans, and I will keep it working for millions of Americans.”

Romney’s statement doesn’t stand up to a lot of scrutiny. Social Security, which everyone agrees is unsustainable in its current form, isn’t “working” by any stretch of the imagination. “Working” implies soundness and stability, and we know that’s not the case. And the idea that something which forces senior citizens to be dependent on a bankrupt government for their retirement is “working” is not one which is very serious.

But the discussion has been joined, with the elites lining up behind Romney’s unserious position.

Take this exchange, from CNBC’s Squawk Box this morning, in which Rick Santelli and the New York Times’ Tom Friedman went at it on the subject…


(Link in the event the embed doesn’t work)

Redstate’s Erick Erickson is with Santelli, and he’s disgusted with Romney’s camp on this issue.

I realize we’re all supposed to be in the tank for Mitt Romney, but when the heck did we suddenly love social security? It’s nuts.

We’ve got Karl Rove out denying it is a ponzi scheme solely because he hates Rick Perry. It’s all politics, not principle.

Mitt Romney says that millions of Americans being dependent on government for their retirement is the definition of a successful program.

And we’ve got a solid segment of the conservative movement falling in line behind them. It’s all so confusing.

Are we all so damn scared of Rick Perry that suddenly we’re going to abandon the fight for real reform of social security and try to make Perry look like a fringe candidate when, in fact, his position has been the mainstream of the GOP for decades?

Social Security is, for all intents and purposes, a ponzi scheme. Don’t believe me? Try out the Securities and Exchange Commission definition:

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.

Or how about from wikipedia?

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.

It’s one thing to want to defend Mitt Romney. It’s perfectly reasonable to say we’re scared to death to ever touch the supposed third rail of politics again. It’s even reasonable to say that Rick Perry cannot win by holding to this position. In fact, Perry needed to spend more time focusing on the fact that he does not want to abolish social security as the Democrats and Mitt Romney both claim.

But to suddenly proclaim the conservative position as “social security is a-okay and we just need to make it even better” is complete and total bull crap, not to mention seriously chicken and intellectually dishonest for a bunch of people who’ve more or less held Perry’s position for years to suddenly pretend it’s nuts just because they support another candidate or think the political winds have shifted.

Shame on you people.

Also at Redstate, Moe Lane says Romney’s camp is lying when they say nobody has ever won a federal election with Perry’s rhetoric. He shows us a Ron Johnson commercial from last year directly addressing the issue and notes that Johnson took down a long-time Democrat senator in Russ Feingold – in heretofore deep blue Wisconsin…

Then he offers this…

Recommendations, going forward: primarily, that Mitt Romney needs his staff to do better research, frankly. It would have been the work of five minutes to discover that a Republican Senator (surely that counts as a ‘federal candidate’) successfully campaigned on the eminently sensible point that Social Security is a Ponzi scheme; that they did not reflects a certain weakness in the Romney campaign’s infrastructure. In fact… if Mitt Romney feels the need for an independent consultant to help with improving his research staff, he is more than welcome to get in touch with me via the RedState contact form.

Mind you, this offer is not being offered pro bono: I assume that if Romney can afford to keep Stuart Stevens on his payroll then Romney must have money to burn.

With a little cherry on top…

PS: I am ostensibly going to be at retirement age in 2035. I do not expect Social Security to last that long. That means that I am not expecting to see a dime back from all the money that I’ve put into the system thus far. Until circumstances convince me that I’m wrong in those expectations, I am perfectly comfortable in calling Social Security a Ponzi scheme. Because from my point of view – and from the point of view of a lot of people my age and younger – it frankly is.

Lane’s point of view echoes virtually everyone in the country under 45 who has given Social Security any real thought. Let’s repeat something we say over and over again on this site – more people under 45 believe in UFO’s than that Social Security will be there in its current form when they retire.

There is no proof of UFO’s existing. There is proof that Social Security will not exist in 20 years as currently constituted. Period.

But our politicians have been so indoctrinated by the mainstream media to fear any substantive change in Social Security that a real discussion of the program isn’t possible.

Perry understands that this conventional wisdom, while without question a powerful force – it killed the Bush administration’s attempts to reform Social Security in 2005 – is not based on reality. Sure, there are polls which say that more Americans would like to keep Social Security as is than not, but that’s something very different than whether those Americans think it’s realistic to do so.

But Romney’s abrupt pivot into demagoguery on the issue is what’s fatal. Not only is he wrong in overselling this “Third Rail” myth and throwing his lot in with Tom Friedman, he’s also lying about Perry’s position on Social Security.

This is what Perry actually said last night, and it’s extremely similar to what Ron Johnson said in the campaign ad above…

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.

Perry isn’t coming for anybody’s Social Security check. He just said he’s not touching the program for people who are currently on Social Security or will be getting it soon. He said that the program will have to change for people younger than that, and he’s only saying what those people already know.

For Romney to demagogue the issue in such a way merely reinforces what conservatives hate about him as a potential GOP nominee – namely, that he’s an empty suit who will say whatever he thinks is necessary to get elected.

This was what Romney said on Social Security back in 2008

We’re going to have to sit down with the Democrats and say, let’s have a compromise on these three elements that could get us to bring Social Security into economic balance. You can have personal accounts where people can invest in something that does better than government bonds–with some portion of their Social Security. We’re going to have the initial benefit calculations for wealthier Americans calculated based on the Consumer Price Index rather than the wage index. That saves almost two-thirds of the shortfall. You can change the retirement age. You can push it out a little bit.

That sorta looks like Romney is going after people’s Social Security checks, no?

Lefty former MSNBC host Cenk Uygur had his way with Romney on the issue a month ago, as he discussed the issue in Iowa…

Of course, Uygur is unfair and idiotic in his criticisms of Romney. That’s not the point. The point is that Romney can take the exact same abuse on Social Security as he’s attempting to give to Perry.

At the end of the day, it’s good that this discussion has been joined. It’s important that we have a serious conversation about Social Security now. That discussion will have to be joined on the Republican side, because without question the Democrats will demagogue it.

But it’s very unfortunate that Romney has decided to treat the issue in precisely the same way as the Democrats usually do. Romney’s debate performance was generally pretty good last night, but if he thinks his path to victory is to embrace Tom Friedman on Social Security then he’s not qualified to be president.



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