In the Republican presidential debate last week Texas Gov. Rick Perry called Social Security a “monstrous lie” and called its funding mechanism a “Ponzi scheme.”
The governor’s remarks at the GOP debate at the Ronald Reagan Presidential Library in Simi Valley, Calif., weren’t the first time that Perry attacked Social Security.
In his book, “Fed Up! Our Fight to Save America From Washington,” which was published just last year, Perry vilifies Social Security as a failed social experiment.
“Like a bad disease,” Perry wrote, New Deal-era initiatives introduced in the 1930s by Democratic President Franklin D. Roosevelt have spread. “By far the best example of this is Social Security.” The program, he said “is something we have been forced to accept for more than 70 years now.”
Rick Perry is wrong.
Social Security is not a failure and it can not be liken to a “Ponzi scheme,” a deceptive criminal enterprise.
The term Ponzi scheme originates with Charles Ponzi, a swindler who conned investors out of millions in 1920 by promising returns up to 100 percent in 90 days on investments in foreign postal coupons. The first group of investor collected, the others did not, unaware that “profits” consisted of money paid in by other investors.
By contrast Social Security is more of pay as you go system transferring payroll tax payments from workers to retirees.
Social Security, one of the nation’s most successful social programs, has helped millions of seniors stay out of poverty by providing a guaranteed monthly pension to retirees.
Workers and employers pay Social Security payroll taxes that fund benefits for current retirees. The taxes are not set aside and invested as many taxpayers mistakenly believe.
What is true is that Social Security is headed for trouble in future years unless revenues and projected benefits are brought into line. However even without any changes the program can continue paying full benefits through 2037, according to AARP, the lobbying group for seniors. “After that, the revenue from payroll taxes will still cover about 75 percent of promised benefits,” according to the AARP in an article titled “Social Security: Fears vs. Facts. What Social Security critics keep getting wrong.”
The nonpartisan Congressional Budget Office projects that this year Social Security would deliver more in benefit checks than it’s projected to gather in taxes.
The reckless idea that Perry and other conservatives propose that Social Security should be phased out by privatizing it so that workers could invest their payroll taxes in the stock market would put at risk the retirement funds of millions of seniors.
The AARP notes that the point of Social Security isn’t to maximize the return on the payroll taxes contributed. Unlike a 401 K plan, “Social security is designed to be the one guaranteed part of your retirement that can’t be outlived or lost in the stock market. It’s a secure base of income throughout your working life and retirement.”
Social Security is critical to many Americans. The program provides the majority of income for at least half of Americans over 65.
Polls show the majority of Americans do not want to radically change Social Security.
More than half of Americans, 56 percent, would not vote for a presidential candidate who favored phasing out Social Security for a privatized retirement program, according to a nationwide poll in June by the Wall Street Journal and NBC News.
Social Security is a widely popular and successful entitlement program.
It is an outrage for Perry to suggest abolishing Social Security instead of fixing it.