Shock: Chris Matthews Admits Social Security Is Ponzi Scheme

It's not often that you see a member of the liberal media elite concede an important point to conservatives. It's even rarer when the person doing it is Obama cheerleader Chris Matthews. But that's just what happened  during last night’s “Hardball” when the former Tip O’Neill aide dared to state the obvious fact that Social Security is remarkably similar to a Ponzi scheme—a truth that has become not just inconvenient to the left, but almost verboten.

Matthews’s admission occurred in a discussion about Republican presidential candidate Rick Perry who has come under a huge amount of fire from the left and even from fellow candidates for repeatedly stating that the pay-as-you-go nature of Social Security has many similarities to a classic Ponzi pyramid scheme.

Democrats and their media allies have tried to shield the American public from this fact but Perry’s continued usage of “Ponzi scheme” in his rhetoric has significantly raised awareness of Social Security’s fundamentally unsound nature, and in the process earned him the ire of the professional left.

That’s why Chris Matthews’s almost blithe admission is all the more surprising when he asked Republican strategist Todd Harris: “How does a Republican deal with the fact that it is a Ponzi scheme, in the sense that the money that’s paid out every day is coming from people who paid in that day?”

The discussion that followed was remarkably free of the usual liberal imprecations and fearmongering, to the credit of both Matthews and Democratic strategist Steve McMahon who was also participating in the discussion. See video below for the full context, transcript of Matthews's specific remarks below:

Social Security had to be for everybody. No means test. You paid for it while you worked. When you retired and had not other form of income, this would help you out. In fact a lot of people in the old days were impoverished without Social Security. It’s a great anti-poverty program.

But then people started to live past 65. Even the great Franklin Roosevelt didn’t make it to 65. In those days, if you made it to 65, you were lucky, you got a few bucks out of Social Security. Today, lots of people fortunately make it past 65. They live into their 80s and 90s. They’re still getting checks. The system doesn’t work that way anymore. It’s not as healthy as it once was. So, how does a Republican deal with the fact it is a Ponzi scheme in the sense that the money that’s paid out every day is coming from people who paid in that day? It’s not being made somewhere.

This conversation comes in stark contrast to the one that NB’s Noel Sheppard noted yesterday between CNBC’s Rick Santelli and Tom Friedman during which the latter seemed almost ontologically unable to admit that a system that pays old stakeholders with the funds of new ones is basically a Ponzi scheme.

Instead of focusing on the general principle, Friedman kept getting hung up on the specific difference that private pyramid schemes are illegal.

“A Ponzi scheme is a criminal endeavor and I don’t think this is it,” Friedman insisted.                 

See the rest of Sheppard’s entry for a thorough debunking of Friedman's nonsense.

Hat tip: Bryan Preston who notes: "So now, Mitt Romney has positioned himself to the left of MSNBC’s Chris Matthews on Social Security. Do I need to point out that that’s not going  to help in a GOP primary?"

Matthew Sheffield
Matthew Sheffield
Matthew Sheffield, creator of NewsBusters and president of Dialog New Media, an internet marketing and design firm, left NewsBusters at the end of 2013