Perry: Social Security a "Ponzi scheme"

[pbrower2a]

I think Rick Perry's repeated cases of foot-in-mouth disease should slowly make evident the reality that he is not a credible candidate for president of the United States.

I'm still willing to support someone other than Romney but the Republicans have to do better than this guy. Imagining the primary as a job interview, how can the Republicans not pick Romney at this point? I don't completely trust Mitt either, but we need someone the American public can take seriously and Perry isn't it.

The Republican Party will need to find some new constituency that the Democrats have either under-served or taken for granted. The Religious Right, American tycoons and executives, and racist white people just won't be enough. Before someone says "Tea Party", then note well that the Tea Party depends heavily upon those constituencies. Those are not numerically-growing constituencies, and they are shrinking with respect to the rest of us.

The current GOP now has a problem with credibility. The Tea Party galvanized the base, but that isn't enough.  It offended a group of people (teachers) who have great influence upon future voters.  Whatever gains the GOP had with blacks, Hispanics, and Asians in the 1980s and 1990s have reversed.

Winning coalitions for Presidential politics often involve people who have little in common -- as it was for the Democrats when "ethnic", largely blue-collar white people and southern agrarians shared the Democratic Party as their electoral alliance.  Maybe that was because those ethnic whites rarely went south of about Louisville and Washington DC before about 1960.     

[TJ in Oregon]

I disagree with that point. The Republican Party doesn't need to find a new constituency or somehow redefine itself: the two party system will naturally result in a a nation roughly evenly divided. The Republican Party just needs credible candidates. That's all. It's not so much the positions most of them hold (well....apart from the Tea Party types who want to abolish the Fed and return to the gold standard), but the presentation. It seems like the way to get ahead in the Republican Party right now is to lay down some kind of provacative zingers to try and make some 'enemy' look stupid. Sorry, but that's not a good way to run the country. I want my politicians to try not to say controversial things. I am sick of mindless pep rallies and bumper-sticker slogans. I'm sick of the Republicans trying to be 'folksy'. I don't want my next door neighbor to be president.

[krazen1211]

The definition of 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." According to Dictionary.com it is "a swindle in which a quick return, made up of money from new investors, on an initial investment lures the victim into much bigger risks."

I doubt that Social Security is a Ponzi scheme because it requires fraud or a swindle, and I doubt that the implementers really intend to misrepresent the future fiscal health of the program. Of course, we can't know that for certain.

In the second definition I am also having a hard time seeing. However it does meet some of the requirements of the first definition, as returns paid to recipients come from money inserted by younger workers.

I think what Perry is getting at is that the structure of SS is such that current workers must support current retirees, and as life expectancy grows and the population curve shifts up, fewer payers-in will support more recipients, under dynamics similar to the collapse of a Ponzi scheme that cannot attract new investors.

It is important to safeguard SS, a program that I very much support. I find it disturbing that SS revenues are built on top of a highly leveraged economy directed out of irresponsible Wall Street banks.

The money paid into social security by does not belong to the social security beneficiary. Rather, it belongs to the schemer, who has absolute authority to simply renege on 'promised' benefits if Pelosi chooses.

[Ⓐnarchy in the ☭☭☭P!]

I think Rick Perry's repeated cases of foot-in-mouth disease should slowly make evident the reality that he is not a credible candidate for president of the United States.

I'm still willing to support someone other than Romney but the Republicans have to do better than this guy. Imagining the primary as a job interview, how can the Republicans not pick Romney at this point? I don't completely trust Mitt either, but we need someone the American public can take seriously and Perry isn't it.

The Republican Party will need to find some new constituency that the Democrats have either under-served or taken for granted. The Religious Right, American tycoons and executives, and racist white people just won't be enough. Before someone says "Tea Party", then note well that the Tea Party depends heavily upon those constituencies. Those are not numerically-growing constituencies, and they are shrinking with respect to the rest of us.

The current GOP now has a problem with credibility. The Tea Party galvanized the base, but that isn't enough.  It offended a group of people (teachers) who have great influence upon future voters.  Whatever gains the GOP had with blacks, Hispanics, and Asians in the 1980s and 1990s have reversed.

Winning coalitions for Presidential politics often involve people who have little in common -- as it was for the Democrats when "ethnic", largely blue-collar white people and southern agrarians shared the Democratic Party as their electoral alliance.  Maybe that was because those ethnic whites rarely went south of about Louisville and Washington DC before about 1960.     

The Republicans might seem to be backed into a corner, but it has been flying in every direction to try and figure out a "new path". Depending on how things go, they could rob the Democrats of their constituencies.

-White middle/working class voters who previously supported the Democrats are shifting Republican. Maybe it's because the unions are slowly losing influence, maybe its because of the recession, but whatever the case it is rather noticeable and accounts for the Republican shift in Pennsylvania. If the Republicans expanded this base, they could probably make states like Michigan and Indiana lean slightly or strongly to the Republicans and make states like Pennsylvania and Oregon become tossup.

-Hispanics and Asians have plenty of potential to start going for the Republicans. Both are generally fairly conservative, and if the Republicans worked at targeting them they could probably manage to switch the demographics in their favour. This would basically clinch Florida for them, make Texas even more of a stronghold, and make New Mexico and California competitive.

[Bull Moose Base]

http://www.washingtonpost.com/opinions/romneys-plan-to-beat-perry/2011/08/29/gIQAKbaRnJ_story.html?wprss=rss_opinions

Here's a good overview of Romney's strategy of letting others attack Perry and, if that fails to slow him, the lines of attack Romney's campaign will go to.

[Snowstalker Mk. II]

So Romney will morph into a Democrat? Good to know.

[mondale84]

The definition of 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." According to Dictionary.com it is "a swindle in which a quick return, made up of money from new investors, on an initial investment lures the victim into much bigger risks."

I doubt that Social Security is a Ponzi scheme because it requires fraud or a swindle, and I doubt that the implementers really intend to misrepresent the future fiscal health of the program. Of course, we can't know that for certain.

In the second definition I am also having a hard time seeing. However it does meet some of the requirements of the first definition, as returns paid to recipients come from money inserted by younger workers.

I think what Perry is getting at is that the structure of SS is such that current workers must support current retirees, and as life expectancy grows and the population curve shifts up, fewer payers-in will support more recipients, under dynamics similar to the collapse of a Ponzi scheme that cannot attract new investors.

It is important to safeguard SS, a program that I very much support. I find it disturbing that SS revenues are built on top of a highly leveraged economy directed out of irresponsible Wall Street banks.

The money paid into social security by does not belong to the social security beneficiary. Rather, it belongs to the schemer, who has absolute authority to simply renege on 'promised' benefits if Pelosi chooses.

WTF?

[TheDeadFlagBlues]

[Ⓐnarchy in the ☭☭☭P!]

Every single point here is either a difference in scale (forcing everyone to pay or printing money to pay does not make it any less of a ponzi scheme, it just means it can last far longer) or a difference in intent (Yes, the guys in charge of Social Security aren't out to steal the money. No, that doesn't make it any more sustainable or less of one, it just means the schemers are well intentioned and the money will spread a bit better).

Oh, and being invested in treasury bonds, currently, is worse than being invested in nothing.

[Okay, maybe Mike Johnson is a competent parliamentarian.]

Well...yeah, the thing is, a huge part of what makes a fraud scheme a fraud scheme is the fraudster's intent to rip people off.

At what point does Ponzi scheme that can last an incredibly long time, whose overseers are well intentioned, and which spreads the money reasonably well stop being a Ponzi scheme? I'd say 'around the time it gets to that stage', myself.

[TheDeadFlagBlues]

You could say the same thing about a mountain and a molehill. "The only difference is a difference in scale guys!"

Scale is extremely important and makes all the difference when it comes to definitions.

[King]

I disagree with that point. The Republican Party doesn't need to find a new constituency or somehow redefine itself: the two party system will naturally result in a a nation roughly evenly divided. The Republican Party just needs credible candidates. That's all. It's not so much the positions most of them hold (well....apart from the Tea Party types who want to abolish the Fed and return to the gold standard), but the presentation. It seems like the way to get ahead in the Republican Party right now is to lay down some kind of provacative zingers to try and make some 'enemy' look stupid. Sorry, but that's not a good way to run the country. I want my politicians to try not to say controversial things. I am sick of mindless pep rallies and bumper-sticker slogans. I'm sick of the Republicans trying to be 'folksy'. I don't want my next door neighbor to be president.

The Republican Party can't find credible candidates with what has turned into a joke platform as the litmus test.

[krazen1211]

The definition of 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." According to Dictionary.com it is "a swindle in which a quick return, made up of money from new investors, on an initial investment lures the victim into much bigger risks."

I doubt that Social Security is a Ponzi scheme because it requires fraud or a swindle, and I doubt that the implementers really intend to misrepresent the future fiscal health of the program. Of course, we can't know that for certain.

In the second definition I am also having a hard time seeing. However it does meet some of the requirements of the first definition, as returns paid to recipients come from money inserted by younger workers.

I think what Perry is getting at is that the structure of SS is such that current workers must support current retirees, and as life expectancy grows and the population curve shifts up, fewer payers-in will support more recipients, under dynamics similar to the collapse of a Ponzi scheme that cannot attract new investors.

It is important to safeguard SS, a program that I very much support. I find it disturbing that SS revenues are built on top of a highly leveraged economy directed out of irresponsible Wall Street banks.

The money paid into social security by does not belong to the social security beneficiary. Rather, it belongs to the schemer, who has absolute authority to simply renege on 'promised' benefits if Pelosi chooses.

WTF?

Fleming v Nestor. Look it up.

[sg0508]

Unless this guy comes out and says:

1) Homosexuals should be able to marry
2) Abortion should be legal or left to the states
3) Raise taxes to fix the national debt

He will likely end up with the nomination no matter what the hell comes out of his mouth.  You guys seriously overestimate the intelligence of the people that vote in the GOP primary.  If you stereotype the GOP today and who it pampers to, you'll understand what I mean.

[Torie]

SS is a ponzi scheme which just goes to show, that not all ponzi schemes are bad. Anyone familiar with the investing habits and savings habits, and ability to budget and make intelligent financial decisions, of John Q Public, knows that SS is an essential government program. Period.

If anyone want to take me on this I'm here. Go for it! 

[Ⓐnarchy in the ☭☭☭P!]

Well...yeah, the thing is, a huge part of what makes a fraud scheme a fraud scheme is the fraudster's intent to rip people off.

At what point does Ponzi scheme that can last an incredibly long time, whose overseers are well intentioned, and which spreads the money reasonably well stop being a Ponzi scheme? I'd say 'around the time it gets to that stage', myself.

The methods are exactly what define a Ponzi scheme, not the intent or size.

The first investors make money from later investors who then make money from later investors, which is the exact definition of a ponzi scheme.

Does a murder cease to be a murder if the killer uses enough firepower to turn the victim into a red mist?

[○∙◄☻¥tπ[╪AV┼cVê└]

So Romney will morph into a Democrat? Good to know.

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LOL

[Likely Voter]

Well to be fair to Romney's plan regarding attacking on SS,  the most likely strategy would be to allow his outside Super PACs to do the work. They dont need to switch people from Perry to Romney, but just get enough to switch from Perry to any of the other remaining candidates when they get to SC and FL. And Perry could be vulnerable on SS as his strongest constituency (in the latest Gallup poll) was 65+. Romney has to keep Perry from winning both SC and FL before the first super Tuesday to stand a chance. This SS thing could help.

[DrScholl]

He shows once again just how ignorant he is, no wonder he got terrible grades in school. Social security isn't technically an investment, it's a savings that gives a safety net to those who may end up with no retirement at old age.

[Okay, maybe Mike Johnson is a competent parliamentarian.]

Well...yeah, the thing is, a huge part of what makes a fraud scheme a fraud scheme is the fraudster's intent to rip people off.

At what point does Ponzi scheme that can last an incredibly long time, whose overseers are well intentioned, and which spreads the money reasonably well stop being a Ponzi scheme? I'd say 'around the time it gets to that stage', myself.

The methods are exactly what define a Ponzi scheme, not the intent or size.

The first investors make money from later investors who then make money from later investors, which is the exact definition of a ponzi scheme.

'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.'

Look at the first eight words.

Even the online Oxford Advanced Learners' Dictionary, which is for people approaching English from other mother tongues and hence tends to avoid qualitative and/or technical terms like 'fraud', has a definition beginning 'a plan for making money'. Social Security isn't a plan for making money for the people running the plan, it's a plan for distributing it to an agglomeration of people who were the ones paying into it decades earlier.

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Does a pony cease to be a pony if it's twenty-one hands high and pulls ploughs around fifteen acres?

[🐒Gods of Prosperity🔱🐲💸]

He shows once again just how ignorant he is, no wonder he got terrible grades in school. Social security isn't technically an investment, it's a savings that gives a safety net to those who may end up with no retirement at old age.

It's not a safety net. You get it whether you need it or not.
It's not a savings. It's a transfer payment.

[WillK]

I'm not a Perry fan, but how is he wrong here?

Those of you who think this will sink him don't know GOP primary voters.  This line of rhetoric is VERY popular - I've heard people say it before.  Heck, I've probably said it before.

Saying it is a ponzi scheme doesn't mean he's advocating for it to end tomorrow (though I'm more concerned about him harping about its Constitutionality in his book).  I would like to hear more from him on how he would save it as opposed to just talking about how it was created.

I agree with you.  I am amazed that many are reacting to this like its a gaffe or a blunder.  Seems to me Perry is just speaking to his base.

The "Ponzi" motif has been around for a while:
http://blog.nj.com/njv_paul_mulshine/2008/12/the_ponzi_scheme_that_baby_boo.html

http://www.mrc.org/bmi/articles/2008/Cramer_Social_Security_a_Bigger_Ponzi_Scheme_than_Madoffs.html


Edit: I forgot to mention that Ron Paul has been saying this for years and Bachman has said something similar, calling Social Security a 'tremendous fraud'.

Second Edit:  Milton Friedman (Nobel prize winning economist, heart-throb of the Reagan-conservatives) called Social Security 'The Biggest Ponzi Scheme on Earth'. 

[Ⓐnarchy in the ☭☭☭P!]

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Does it say the people running the plan are the ones making money? No.

It does apply even to that, though; the government regularly raids the Social Security fund to hide deficit spending among other things. It wouldn't be especially untrue to say that those in charge of the money involved take a cut out of it.

You can think of the government as a whole as the top, the people directly below as the second layer who still gain a profit (those who started getting returns before the 80s or so), the third layer who probably will gain nothing (those who receive returns in the present), and the fourth layer who will lose money (the current generation which is supposed to receive returns in the future).

Anyway, if SS isn't a ponzi scheme, then presumably it doesn't require that people be forced into the system. So, why not allow people to opt out of it? I mean, you're saying it isn't a ponzi scheme, so it must be capable of still functioning if people aren't coerced into paying.

[Ogre Mage]

This will come back to haunt Perry if he makes it to the general election.