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Ponzi Ping-pong



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Thanks to Michael, Andy, and the commentariat . . . for making my point for me.

You don’t call Social Security a Ponzi scheme if you want to reform it and are using urgent language to focus the public’s attention on reform. You call Social Security a Ponzi scheme if you believe that Social Security is a fraud that should be dismantled. That’s what Ponzi schemes are: egregious frauds. 

In Andy’s words: “I’m very surprised by your claim that Social Security’s designers and perpetuators have not attempted to perpetrate a fraud.”

In Michael’s: “Can Social Security be saved? Maybe. Should it be saved? Much better question.”

Does the public want to obliterate Social Security rather than fix it? We’ll see, but I doubt it. Governor Romney doubts it, too

Sure, there are some voters who are unhappy, not with presidential incompetence in the face of 9.1 percent unemployment, but with the last three-quarters of a century’s worth of bipartisan policy, and have decided that now is an excellent opportunity to re-hear whether the country should have an old-age safety net at all, not what kind of safety net it should have. These voters would have to throw Reagan out with the rest of the bums if Reagan ran for office today. “I believe in the Social Security system,” the FraudsterGipper said in 1981. 

But even for these voters, Governor Perry’s position falls short. Calling Social Security a Ponzi scheme and then saying that you want to keep it going for a few more decades, as Governor Perry has done, is nonsensical.

If Social Security is a Ponzi scheme, one that Americans wouldn’t support absent their mass stupidity or complicity, it’s gotta be stopped, now. Taking such a position, though it would still be a political dead end, would at least be intellectually consistent. 

Going further: If Social Security is a fraud and all sentient voters, including wily old Grandma, should know it’s a fraud, why even protect today’s recipients? As Andy says, “the neon clarity of the fraud, and [Ponzi victims'] conscious avoidance of it, does not change the unpleasant fact that fraud it was.” 

Under this line of reasoning, today’s 85-year-olds should have known better than to trust their dotage to something whose collapse was inevitable, just as Bernie Madoff’s victims should have known the same thing. Today’s retirees had no choice but to pay their Social Security taxes, you say? Sure they did. They coulda thrown the pols out long ago. 

The Ponzi rhetoric is a policy dead end, too. Voters won’t trust a candidate on Social Security reform if that candidate — whatever his solution or lack thereof — believes that the entire program is a fraud. Anyone who wants Washington to raise the “early” retirement age, then, or who wants Washington to create partial private accounts for younger workers, should cringe at the “Ponzi scheme” language. Conservatives who would punish incremental pragmatism on this issue in favor of sweeping radicalism may as well start inking up “Four More Years” placards. 

Three minor points:

1. Andy notes that Social Security commingles funds. Sure. But Social Security administrators say that the program commingles (and redistributes) funds. That’s a key difference between Social Security and a Ponzi scheme.

2. Michael says he agrees with his fellow Irishman. Hey, I’m a quarter Irish, too!

3. For more on Social Security, watch me help liveblog tonight’s debate here

— Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal



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