Social Security A Ponzi Scheme?

Feb 29th, 2019 Filed under: Economics Samuelson — Economic Author

This is great.  I really think Rick Perry is right.  Social Security has turned into a big ponzi scheme.  I don’t think anyone thought it would but things have changed.  Sure makes you think about how wer’re going to fix this mess.  Here’s what he had to say:

 

Presidential candidate Rick Perry (left) opined in the first Republican debate that  Social Security is a failure and a Ponzi scheme, and then reiterated the charge in the second debate on Monday night. At the first debate, Perry said Social Security is a Ponzi scheme for these young people. The idea that the current program is going to be there for them is a lie. When pressed by the moderator, Perry reiterated, saying Social Security is a monstrous lie to our kids.

On Monday night Perry refused to back down: It is a Ponzi scheme to tell our kids that are 25 or 30 years old today, youre paying into a program thats going to be there. Anybody thats for the status quo with Social Security today is involved with a monstrous lie to our kids, and its not right. But in his op-ed piece in USA Today on Sunday, Perry backed off, writing instead that the system could still be salvaged somehow: Social Security benefits for current recipients and those nearing retirement must be protected. For younger workers, we must consider reforms to make Social Security financially viable. He failed to mention the words Ponzi scheme nor did he explain just what reforms would be required. 

Balderdash. Taxes paid by todays workers are used to pay todays retirees. If money is left over, it finances other government spending though, to maintain the insurance fiction, paper entries are created in a trust fund that is simultaneously an asset and a liability of the government. When the benefits that are due exceed the proceeds from payroll taxes, as they will in the not very distant future [he wrote this in 1999], the difference will have to be financed by raising taxes, borrowing, creating money, or reducing other government spending. 

 

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