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The Republicansí Social Security Choice (Is it helpful to call it a 'Ponzi' Scheme?)
National Review ^ | 09/09/2011 | The Editors

Posted on 09/09/2011 6:18:11 AM PDT by SeekAndFind

Gov. Rick Perry has drawn a lot of criticism for calling Social Security a “Ponzi scheme,” but the fact is that it bears more than a passing resemblance to one. In both cases earlier participants can only get their money back if new participants join; in both cases no wealth is actually created; in both cases the earlier participants get a better return than the later ones; and in both cases the system is unsustainable. But of course there are also differences. Ponzi schemes are run to make their originators a profit. The federal government is running Social Security at a loss that is set to increase.

And Social Security, unlike a Ponzi scheme, can be reformed to be made sustainable. Slow the growth of benefits sufficiently, for example, and the program’s fiscal gap will disappear. Its disincentive effect on saving, and on delaying retirement, would also diminish. But neither Governor Perry nor his principal critic, former governor Mitt Romney, has offered any specific proposals on Social Security, and both of them run the risk of setting back the cause of reform.

In Perry’s case, the risk comes from the combination of rhetorical maximalism with policy vagueness. He says that program is unconstitutional, a failure, and a lie. These claims would seem to imply that the program should be abolished. He has mused about the idea, and his advisers have refused to rule it out. But he has not endorsed it either, doubtless because he knows it would be an act of political suicide. As such, it would make it impossible for him to accomplish any practical reforms to the program and, for that matter, to accomplish anything else on his agenda. “Maybe it’s time to have some provocative language,” says Governor Perry. We hope it provokes him to explain how he would bring the program’s benefits in line with its revenues — and his proposals in line with his premises. In last night’s debate he wisely suggested that his campaign will not relitigate the political battles of 70 years ago. If he wants to move the discussion to the future, as he should, he needs to start talking about a plan.

Governor Romney correctly notes that the public, while aware that Social Security’s financing is unsound, remains extremely attached to the program. “Our nominee has to be someone who isn’t committed to abolishing Social Security, but who is committed to saving Social Security,” he says. But is he that man? At the debate he refused to say how he would save it. In subsequent remarks he expressed openness to raising the eligibility age, imposing a means-test on the program, and instituting voluntary personal accounts. But unless he unveils his own plan, the effect of his attacks on Perry will be to strengthen the political taboo against candid and realistic discussion of the program’s flaws. Romney has a choice to make: He can run as a realistic reformer, or he can say “me, too” to Democratic criticisms of conservatives.

What either or both of them should say is that Social Security is a program on which millions of Americans rely, that people who are in retirement or near retirement will not be asked to make a sudden change in their plans, and that to secure the program’s future the benefits formula will have to be gradually adjusted. As it stands, the feud between Perry and Romney is accomplishing nothing for anyone outside the White House.


TOPICS: Culture/Society; Government; News/Current Events; Politics/Elections
KEYWORDS: ponzischeme; socialsecurity

1 posted on 09/09/2011 6:18:13 AM PDT by SeekAndFind
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To: SeekAndFind

Ponzi Schemes are voluntary.


2 posted on 09/09/2011 6:25:25 AM PDT by massgopguy (I owe everything to George Bailey)
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To: SeekAndFind

The fact of the matter is that if Congress were the board of a private company managing their employees pension fund the way that they manage SS they would all be in prison! That’s where most of them belong anyway.


3 posted on 09/09/2011 6:26:16 AM PDT by pgkdan (Time for a Cain Mutiny!)
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To: SeekAndFind
I am starting to believe (maybe I'm slower than the rest of you) that Rick Perry is carving out a niche` platform and not budging from his positions. A man of true honor. But in doing this, he risks a lot. He risks being handed his head on a plate if the people don't buy his philosophy. Some of it is going to be a tough sell.

On the other hand, I have even more respect for him after that first debate. Basically, he's relying on his gut instincts and not swaying with whatever changes in the wind.

4 posted on 09/09/2011 6:26:16 AM PDT by mikhailovich
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To: SeekAndFind

Use the democrat’s tactic of removing the words “ponzi scheme” from their vocabulary in favor of “Amway-like monetary solution”.


5 posted on 09/09/2011 6:26:29 AM PDT by broken_arrow1 (I regret that I have but one life to give for my country - Nathan Hale "Patriot")
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To: SeekAndFind
Ponzi schemes are run to make their originators a profit. The federal government is running Social Security at a loss that is set to increase.

The profit SS's originators hoped for was a permanent dem majority in Congress...FDR said so. And they threatened then to do exactly what they're doing now to anyone who dared try to take away their 'golden goose'. They'd play the fear card on seniors duped into believing the federal government was responsible for their retirement. I hope to God that this is finally the time when we wise up and ram that gar5bage down the democrats throats when they try it. And ram it down the throats of any republican who tries it too!

Keep it up Gov. Perry! Don't let the bastards get you down!!

6 posted on 09/09/2011 6:32:01 AM PDT by pgkdan (Time for a Cain Mutiny!)
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To: SeekAndFind
And Social Security, unlike a Ponzi scheme, can be reformed to be made sustainable

B.S.

Delaying the inevitable crash of the Ponzi scheme far enough into the future that you'll be dead before those paying the bill are born doesn't somehow prevent it from still being a Ponzi scheme.
7 posted on 09/09/2011 6:34:53 AM PDT by chrisser (Starve the Monkeys!)
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To: SeekAndFind

If you take the lipstick off a pig, does that mean the pig is no longer a beautiful woman?


8 posted on 09/09/2011 6:36:39 AM PDT by Mr Ramsbotham (Laws against sodomy are honored in the breech.)
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To: pgkdan
Herman Cain hit the nail on the head when he mentioned a VIABLE and PROVEN method of fixing Social Security which worked for a smaller country whose SS was on the verge of bankrupcy 30 years ago...

We discussed it at FR yesterday. It's called : The Chilean Model

The leading candidate for the Presidency should be looking into it right now.

The thing about the Chilean Model is it was AMERICANS ( from the Chicago School of Economics when Milton Friedman was alive ) who helped them design it. We here in the USA ignored them while a then, third world country like Chile embraced them to their benefit.

Rick Perry ought to be calling on the economists (many still alive) who consulted for Chile to be one of his advisers on this issue.
9 posted on 09/09/2011 6:37:07 AM PDT by SeekAndFind (u)
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To: SeekAndFind

More than half of Americans, 56 percent, would be less likely to vote for a presidential candidate who favored phasing out Social Security so that workers could invest their payroll taxes in the stock market, according to a nationwide poll in June by The Wall Street Journal and NBC News. That included 64 percent of Democrats and 57 percent of independents, whose swing votes decide elections, and even a 45 percent plurality of Republicans. Only one-third of Republicans said they would be more likely to vote for someone who espoused ending Social Security.


10 posted on 09/09/2011 6:38:32 AM PDT by KDD (When the government boot is on your neck, it matters not whether it is the right boot or the left.)
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To: SeekAndFind
Ponzi schemes are run to make their originators a profit. The federal government is running Social Security at a loss that is set to increase.

The criminalgovernment wasn't complaining about "running Social Security at a loss" when the money was pouring into the General Fund like a waterfall.

FAIL. It's a Ponzi scheme.

11 posted on 09/09/2011 6:42:17 AM PDT by kiryandil (turning Americans into felons, one obnoxious drunk at a time (Zero Tolerance!!!))
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To: Mr Ramsbotham

Don’t you love the question about whether it is “helpful” to call it a Ponzi Scheme?

How about we worry less about hurting feelings and more about telling the truth.


12 posted on 09/09/2011 6:45:40 AM PDT by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
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To: MrB
How about we worry less about hurting feelings and more about telling the truth.

My sentiments exactly.

13 posted on 09/09/2011 6:49:46 AM PDT by Mr Ramsbotham (Laws against sodomy are honored in the breech.)
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To: Mr Ramsbotham

Just fine with Perry calling SS a Ponzi scheme. He needs to make sure though to articulate well why it is that and give viable solutions to it in the future campaigning.


14 posted on 09/09/2011 6:57:36 AM PDT by tflabo ( to have been selected)
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To: SeekAndFind
And Social Security, unlike a Ponzi scheme, can be reformed to be made sustainable.

Actually not National Review. Social Security orinially had a ratio of 24 workers to 1 retiree, now that ratio is about 2.7 workers per retiree and going lower. This is unsustainable and without question a Ponzi Scheme.

15 posted on 09/09/2011 7:00:52 AM PDT by jwalsh07
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To: SeekAndFind

Is it helpful to cut $245 Billion from Social Security and Medicare like Obama proposed last night?


16 posted on 09/09/2011 7:02:11 AM PDT by csmusaret (The only borders Obama has closed is a bookstore.)
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To: SeekAndFind

THE TRUTH IS ALWAYS THE BEST POLICY!

LLS


17 posted on 09/09/2011 7:06:31 AM PDT by LibLieSlayer (Certified Al Palin Hobbit Terrorist)
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To: SeekAndFind

It’s not a Ponzi scheme, it’s an “FDR scheme”


18 posted on 09/09/2011 7:15:19 AM PDT by almcbean
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To: SeekAndFind; All
Is it helpful to know your enemy ?

Is it helpful to know your enemy's game plan ?

If you're in need of assistance, is it helpful to publish the truth about your enemy ?

19 posted on 09/09/2011 7:30:37 AM PDT by knarf (I say things that are true ... I have no proof ... but they're true)
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To: KDD

If the entitlements aren’t radically cut - and I doubt that they will be - it doesn’t matter who is elected. The economy and civil society will collapse and those majorities will get what they deserve. Unfortunately, those who don’t vote out of greed will will tend to get the same thing.


20 posted on 09/09/2011 8:00:02 AM PDT by achilles2000 ("I'll agree to save the whales as long as we can deport the liberals")
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To: SeekAndFind
In 1968 when I started working and the government started taking from me, I predicted to my mother, "Social Security will be the ultimate undoing of the United States." Who knew we would elect Obama first?

ML/NJ

21 posted on 09/09/2011 8:25:16 AM PDT by ml/nj
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To: SeekAndFind
Like all social programs, they use please of emotions and other fallacies to argue for them and vilinize all those that expose the economic dysfunction or human nature to abuse these systems. Like all social programs, it starts small but before long becomes a monstrosity. Like all social programs, it doesn't take long before these programs become political ploys for politicians to “buy votes,” legally.

Eventually these programs end up becoming like a big anchor around the economies ankle. Eventually governments find themselves in the odd predicament of playing shell games and robbing Perter to pay Paul. Of course those politicians that benefited from creating these schemes are long-long gone and you're left with people that are addicted or dependent on this scheme.

22 posted on 09/09/2011 8:32:52 AM PDT by Red6
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To: SeekAndFind
"Ponzi schemes are run to make their originators a profit. The federal government is running Social Security at a loss that is set to increase."

Are the editors at NR blind? There is no profit in a Ponzi scheme. The originators simply spend the excess money that is taken in. The federal government has also spent all the excess money taken in from Social Security taxes. There is absolutely NO DIFFERENCE

23 posted on 09/09/2011 8:52:36 AM PDT by norwaypinesavage (Galileo: In science, the authority of a thousand is not worth the humble reasoning of one individual)
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To: SeekAndFind
Most Ponzi Scheme's even if not detected by law enforcement will implode within a few years. However, Social Security though it is very similar to a ponzi scheme and will fail for the same reasons, because of it's vast size and far horizons is simply where this eventual collapse comes decades or even generations later.

There are some who truly believe that a system not tied to economic output, based on a transfer payment between those working and retired is sustainable. It's only a matter of time and when we do hit the end of the road, the solutions proposed will be increasing the ages of retirement, decreasing amounts, only paying a select group certain amounts (means testing), increasing the burden on those working presently... The way the decision will be made isn't based on who paid what for how long, rather it will be what benefits the policy makers have and which group can influence him most. Instead of a market and people choosing, it becomes a political decision. Those advocating these social schemes essentially believe this is the better form because it's somehow more socially just in their eye's. It's not a question “if,” rather just “when.”

24 posted on 09/09/2011 9:05:02 AM PDT by Red6
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To: SeekAndFind

I really think a more accurate description is a ponzi scheme based on intergenerational theft.


25 posted on 09/09/2011 7:15:38 PM PDT by zeugma (Those of us who work for a living are outnumbered by those who vote for a living.)
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