Matthews Was Against Calling Social Security a Ponzi Scheme Before He Was For It

As NewsBusters previously reported, MSNBC's Chris Matthews on Thursday admitted that Social Security is technically a Ponzi scheme.

Less than 24 hours earlier, in numerous post-debate discussions, the "Hardball" host criticized Republican presidential candidate Rick Perry for saying the same thing (video follows with transcript and commentary):

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RACHEL MADDOW, MSNBC: But there’s much more to say tonight about this debate. We’ll begin with our friend Chris Matthews, who is live from Simi Valley. Chris, what’s the headline for you here tonight?

CHRIS MATTHEWS, HOST, "HARDBALL": Well, you know, I thought about halfway through, Rachel, that it was and still may be the Ponzi scheme reference you pointed you. The fact that Governor Perry backed up an earlier charge on his list of attacks on the establishment, the fact that he did so strongly, calling Social Security a Ponzi scheme, using other words -- I think that’s the lead in "The New York Times" tomorrow, I would bet.

I think he’s no doubt the leader of the discussion tomorrow morning. He will be the lightning rod for the Pelosi wing of the Democratic Party, the core liberals. They’ll go after him on that, it’s an easy one. It’s about constituency politics. They’ll simply defend Social Security, it’s basically 101 politics. [...]

MATTHEWS: Let’s go to the key issue, what I think is the headline. I think all of us agree it’s probably going to be the headline of the major papers tomorrow, and of the “Today” show, “Morning Joe,” and everybody, this issue of calling Social Security a Ponzi scheme.

Also, if you listen to Lawrence O’Donnell, who really knows the derivation of this, it goes back to calling it a criminal active. Do you think that’s what he meant? Do you think that it going to hurt him?

CONGRESSMAN MICK MULVANEY (R-SOUTH CAROLINA): No, I don’t think it’s going to hurt him. Because, again, what it means to me and what it means to a lot of folks who are my generation is that a Ponzi scheme is where we take money from people who come into a system, any system, and promise that we’ll give it back --

(CROSS TALK)

MULVANEY: It’s not an investment. We’re paying the current recipients with the folks who are buying into the system right now. The only plan for the people who are my age is to hope there is somebody around 20 years from now to pay for it. That’s the Ponzi scheme aspect of it. And I think --

MATTHEWS: But that’s always been the heart of Social Security. It’s a currently funded program based upon worker bees paying for retiree bees. What’s wrong with that if it works, if the formula’s right?

"What’s wrong with that if it works, if the formula’s right?"

Ironically, it was Matthews himself that explained why the formula's wrong less than 24 hours later:

MATTHEWS: The genius of Franklin Roosevelt, who was a great president, maybe one of the greatest two or three, I think, was that he figured out that Social Security had to be for everybody, no; means test, you pay for it while you work. When you retired and have no other form of income, this will help you out. In fact, a lot were impoverished in the old days without Social Security. It's a great anti-poverty program.

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 on Social Security.

Today, lots of people fortunately make it past 65. They live into their 80s and 90s. They're still getting checks.

TODD HARRIS, REPUBLICAN STRATEGIST: OK.

MATTHEWS: The system doesn't work that way anymore. It's not as healthy as it once was.

So, how's the 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 have paid in that day. It's not being made somewhere --

HARRIS: That's absolutely right.

Quite a switch in less than 24 hours, don't you agree?

Of course, Thursday's version of Chris Matthews was either the more honest or the wiser one, for as I wrote that same day, in purely technical terms, the structure of Social Security is indeed quite similar to a Ponzi scheme.

What seems to be tripping up people like Matthews is the implication of criminality which folks like Perry and me aren't suggesting.

When someone calls Social Security a Ponzi scheme, it is not to suggest that laws were violated and people should be thrown in jail. This is despite Roosevelt threatening a huge change to the Supreme Court if they didn't rule his plan Constitutional.

With Social Security starting to pay more in benefits than it received in contributions last year, it should be critical that presidential candidates on both sides of the aisle including the current White House resident be able to discuss the finances of this program without being criticized for doing so.

One would have hoped that was the case Matthews was making Thursday.

Unfortunately, that iteration of the "Hardball" host vanished overnight, for on Friday he was back to challenging Perry's assessment saying, "He needs to deal with some of the language of his book like calling Social Security a Ponzi scheme."

Will the real Chris Matthews please stand up?

Noel Sheppard
Noel Sheppard
Noel Sheppard, Associate Editor of NewsBusters, passed away in March of 2014.