Both these men sit on opposite sides of the political divide. Yet, they’ve made the same call about Social Security. Perry called it “a Ponzi scheme.” Krugman said, “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).” That was in 1997, even.
Technically, it’s not a Ponzi scheme. A Ponzi scheme involves an intent to defraud. We’re really not intending to defraud people paying into Social Security, but it’s Ponzi in every other way. It needs more people paying in than those collecting benefits. As originally structured, most people would die – losing what they paid in – before being eligible to collect. Now, changing aging in the USA means more people don’t die before collecting, so the system is drawing down rapidly.
As people discuss benefits, the overall consensus is to cut them for younger folks and preserve them for people already receiving them and who are about to receive them. Worse, there is no discussion of what should be done in the place of cutting those benefits, which act as a lifeline for so many people. Even if people never receive the benefits of Social Security, there are a lot of folks that would need to have those benefits in order to keep going.
As a nation, as a people, we have failed in our duty to preserve our vision for what it means to be an American. Our soldiers in our movies and on the battlefield never leave a man behind: why do we lose that camaraderie for the poor, the aged, and the infirm?
We need a plan. We need one that works and that is sustainable. Simply saying, “*I* plan to take care of my family” isn’t enough. There are enough resources in the USA so that nobody would have to go hungry or homeless. We need to figure out how to make it so we don’t have any hungry or homeless.
Or do you prefer images like this?
Dean,
Unfortunately, neither Rick Perry(who is not credible) nor Paul Krugman(who is credible) understands how the Social Security system functions. Go to this link for a proper presentation on the subject.
http://www.netrootsmass.net/2011/04/social-security-the-real-and-the-unreal/
Be sure and also read the 4 links which follow this presentation.
I thought that the real ponzi scheme was the fact that politicians kept borrowing from it every time it was makeing positive gain. Ha ha theres NO way people will live to be 70, with penicilin, artificial organs, and water purification systems thats impossible! Good call guys, good call.
The ponzi scheme disrupts the efficient growth of the economy because it only benefits the affluent individuals, and as our deficits increase, the government might not be able to fund the social security system which is unfortunate for the poor.
I think the ponzi scheme would disrupt the effective growth of economy, and as the deficit increase the government might not be able to fund the social security system which affects the unpriviledged individuals.
So basically, people are raising the social security benefits to an age where hardly any people get to. In the long run, they never have to hand out social security pay, so it’s like they’re getting money from people that was intentionally for the elderly, but never have to give it out because of the age requirement.
Clever. But Cruel.
I guess that’s why politics is politics.
Well, Paul Krugman later clarified his statement, and stated that it is, and always has been, a pay-as-you-go program, and that his views have no Rick Perry cooties.
It was on his blog like 2 weeks ago.
Question: is it right to say that it adds to the deficit because we owe interest on the very money the government borrowed from the program, or is it too misleading?
Why would there even be a comparison between a Ponzi scheme and social security? The difference between them is that Ponzi scheme is a fraudulent process in which it works on the idea of scamming others for profit. That’s different f rom how social security works, in which there is no scam behind it, just the federal government making payments to programs like social security. If it were a Ponzi scheme, social security would have already failed to exist, but it hasn’t.
Social Security is such a vital part of Americans’ livelihood as said before that I don’t believe that we could alter this institution in the first place. Simple changes like Perry suggest are not plausible and I don’t believe they would ever make it out of the gate unless an entirely new system were proposed. The individual loss in security and funding would upset too many people.