The Corner

Romney: Social Security Is Like a Criminal Fraud

Mitt Romney’s demagoguing of Rick Perry for calling Social Security a Ponzi scheme is just mind-boggling. Let’s put aside for a moment Stanley’s invaluable column on the home-page today, demonstrating that, for nearly half a century, reputable commentators across the ideological spectrum have referred to Social Security as a Ponzi scheme due to the undeniable fact that its structure is — and has always been — unsustainable. The fact is that, just last year, Romney himself compared social security to a fraudulent criminal enterprise.

As John McCormack recounts at TWS:

[I]n his book “No Apology: The Case For American Greatness”, which was published just last year, Romney compared those managing Social Security to criminals, saying:

“Let’s look at what would happen if someone in the private sector did a similar thing. Suppose two grandparents created a trust fund, appointed a bank as trustee, and instructed the bank to invest the proceeds of the trust fund so as to provide for their grandchildren’s education. Suppose further that the bank used the proceeds for its own purposes, so that when the grandchildren turned eighteen, there was no money for them to go to college. What would happen to the bankers responsible for misusing the money? They would go to jail. But what has happened to the people responsible for the looming bankruptcy of Social Security? They keep returning to Congress every two years.” [Emphasis in McCormack’s post.] 

Social Security is a Ponzi scheme — only worse, because Ponzi schemes are voluntary and Social Security is compulsory. Moreover, the Washington politicians who have promoted and maintained Social Security well knowing that it is a swindle — and well knowing that there is no “trust fund” because they have raided it — are the same Washington politicians who have prescribed federal sentencing guidelines that (a) impose life sentences on swindlers like Bernie Madoff for comparatively modest frauds, and (b) enhance the jail term of every fraud convict if his conduct — e.g., the raiding of a trust fund by a trustee — has violated a fiduciary duty he owed to his victims.

Under Social Security as designed, younger Americans are being forced to pay into a system based on assurances that the government fully knows to be false: they are told their compulsory payments guarantee a stream of benefits from retirement until death (in fact, it is known that there is not enough money to pay promised benefits to prospective retirees); and they are told their compulsory payments are going into a trust fund (in fact, government spends the money on other things and writes itself IOUs that Americans are on the hook to pay off).

Until five minutes ago, Romney used this system would be deemed criminal if someone in the private sector tried to pull it off. Now, he calls Perry “reckless” for saying it is criminal. I hope someone asks him what changed his mind.

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