Blue Mass Group

Reality-based commentary on politics.

Social Security = Ponzi Scheme – The Zombie That Will Not Die

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The Globe today published a mercifully brief letter to the editor comparing Social Security to a Madoff-like Ponzi scheme. Since no one at the Globe seems to spend anytime using the internet as a resource, they could not have known that dozens-no hundreds-of comments exactly like this have already been posted. Not surprisingly, these seem to have peaked around 2005, the time the Bushies were declaring war on Social Security and, in the wake of the market collapse of recent weeks, have pretty much petered out. But as this letter shows, some stupid ideas never die.

As Paul Krugman wrote last year

“…doomsaying about Social Security – declaring that the program as we know it can’t survive the onslaught of retiring baby boomers – is regarded as a sort of badge of seriousness, a way of showing how statesmanlike and tough-minded you are.” In evidence he cites two gasbag goofs, Chris Matthews and Tim Russert: “Russert: : “Everyone knows Social Security, as it’s constructed, is not going to be in the same place it’s going to be for the next generation, Democrats, Republicans, liberals, conservatives.” Matthews: “It’s a bad Ponzi scheme, at this point.” Russert: “Yes.”

Contrary to the persistent right-wing meme, Social Security, whatever it faults, is not a Ponzi scheme. Measured by its long history of payouts, its low administrative costs, and its projected future (and here), it is one of the most successful federal programs in our history. But the persistent attacks by the Right have even some people who identify themselves as progressives aping this poisonous falsehood. Time to fight back.

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Comments

  1. but it’s not exactly in good shape.  the social security trust says:

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    The projected actuarial deficit in the OASDI Trust Fund over the infinite future is 3.2 percent of taxable payroll (1.1 percent of GDP), or $13.6 trillion in present value terms.

    The system could be brought into actuarial balance over this time horizon with an immediate increase in payroll tax revenues of 26 percent (from 12.4 percent to 15.6 percent) or an immediate reduction in benefits of 20 percent, or some combination of the two.

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    p>13 trillion here, 13 trillion there.  at some point it adds up to real money.  

    • nonpartisan government projections showing that ss will be fine going into the 2040s or 50s. We have a 1,000 more important things to deal with until then. But, if people are that willing to fall for Republican talking points, then there’s a very, very easy solution. Get rid of the $100,000 cap. Problem solved, both for SS and medicare.  

  2. … that are bankrupting us, its health care.

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    p>From an earlier post:

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    Ezra:

    The following chart tracks the budget deficit as it’s projected to grow over the next 50 years. The blue line — that’s the one shooting up — is what we expect our deficit to actually look like. Those other lines, the one’s going down (and down means no budget deficit, but instead a surplus), show what would happen if our health spending were equivalent to that of other rich nations like Japan, Germany, and Canada. The difference is stark:

    And its not the ‘entitlement’ programs that are bankrupting us, it’s a structural deficiency in our overall health care system that results in ever-rising costs.  Note that the graph above assumes no fixes to Social Security, which is not the emergency the right would like to claim.

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