NYT Reporters Huff: Social Security Is Not a Ponzi Scheme
Tuesday's New York Times's “Check Point” was the latest liberally slanted fact check of a G.O.P. presidential debate, this time by two liberal reporters, Michael Cooper and Nicholas Confessore, “Perry’s Criticism of Social Security as ‘Ponzi Scheme' Dogs Him in Debate.”
Confessore, who once worked for the liberal journals Washington Monthly and American Prospect, once again staunchly defended Social Security. In a December 2004 post for the Prospect, he praised the Times, the paper he was about to join, for its harsh coverage of President Bush’s attempt at free-market-based Social Security reform.
As Gov. Rick Perry of Texas was assailed by some rivals for the Republican presidential nomination at Monday night’s debate for his exaggerated claim that Social Security is a “Ponzi scheme,” he also seemed to be debating himself at times.
Mr. Perry used the debate to talk about the need to shore up Social Security, which politicians of all stripes agree is needed if the program is to continue paying out full benefits a quarter century from now. In making his case, Mr. Perry adopted a very different tone from what he did in his book “Fed Up” just a year ago, when he described Social Security as a failure that “we have been forced to accept for more than 70 years now.”
....
While there are some superficial similarities, it is ultimately a misleading exaggeration to describe Social Security as a Ponzi scheme.
Charles Ponzi was a Boston con man who promised investors impossibly high interest rates and who paid off his early investors by taking money from later investors -- a pyramid scheme that can work only if an ever-increasing pool of investors puts in money.
Social Security, by contrast, is a pay-as-you-go retirement system by design. Current workers and employers pay taxes that are used to pay benefits to current retirees. For many years, the program took in more money than it paid out. In 2010, Social Security began paying out more in benefits than it received in taxes. As more baby boomers retire, and the number of new workers does not keep pace, that shortfall is expected to grow.
Cooper and Confessore seem unable to conceive that “Ponzi Scheme” is a (potent) metaphor for the unsustainable state of Social Security’s current financing trajectory (one that liberal MSNBC host Chris Matthews has also recently employed), meaninglessly faulting Perry for his comparison not being an exact match in all particulars.
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Comments
→ Right, Huffpo
Submitted by Cool Arrow on Wed, 09/14/2011 - 9:51am.
And AOL wasn't a trojan contract for computer buyers in the late 1990's
yes, it's not a ponzi scheme
Submitted by hbnolikeee on Wed, 09/14/2011 - 9:57am.
it's a gobernment scheme.
NYT should then be fact-checking it's own columnist.
Submitted by stunned on Wed, 09/14/2011 - 10:02am.
Paul Krugman:
From a distant 1997, which perhaps one would have expected to remain buried:
"Social Security is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in. So it does not look like a redistributionist scheme. In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics, so that the typical recipient henceforth will get only about as much as he or she put in (and today's young may well get less than they put in)."
tired of liberal lies
OK to call it a ponzi scheme if you are defending the system
Submitted by stunned on Wed, 09/14/2011 - 10:10am.
Jonathan Last has already identified a 1967 Newsweek column by liberal economist and Nobel laureate Paul Samuelson as perhaps the earliest use of the Social Security/Ponzi-scheme comparison in public argument. Samuelson was actually drawing on the Ponzi analogy to defend Social Security. His claim was that the perpetual succession of human generations establishes the conditions for a sustainable Ponzi scheme. Regardless of whether Samuelson was the first commentator to use the Ponzi analogy, he has clearly been the most influential. Policy briefs and books churned out by conservative think tanks such as Heritage and Cato have cited Samuelson’s Ponzi column for years.
Samuelson’s idea that Social Security could best be understood as an enduring and rational Ponzi scheme grew out of his “overlapping-generations model,” introduced in a seminal 1958 paper. Samuelson’s model implied that public debt in general, and Social Security in particular, could be financed over successive generations without major tax increases.
Defenders of Samuelson forget to note that he went back to the drawing board and realized his model didn't work anymore:
In an April 1978 follow-up in Newsweek to his original 1967 column, Samuelson acknowledged that demographic reality was disproving this assumption. Samuelson repeated his use of the Ponzi analogy and continued to defend his hopes for Social Security as best he could. While Samuelson hung onto some slim indications in 1977 that U.S. fertility might be on the upswing, it grew increasingly clear to critics that the post–Baby Boom decline in births was not going to be reversed.
tired of liberal lies
The ridiculous assertion that
Submitted by Snappy on Wed, 09/14/2011 - 10:31am.
The ridiculous assertion that SS is NOT a ponzi scheme all seems to hinge on the fact that SS is legal and ponzi schemes are not. "How can SS be a ponzi scheme when its legal?" I keep hearing.
The frustrating thing is that people ARE actually stupid enough to fall for the insane logic they are using.
Duck Identification 101
Submitted by BuffNBone on Wed, 09/14/2011 - 12:43pm.
If it walks like a duck, talks like a duck, squawks like a duck, and so on. Be assured it is a duck.