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The Real Crime? Calling Social Security a Ponzi Scheme

September 25th, 2011


In a better world, words and facts would be the only things that matter in a serious discussion about the future of the country.

Sadly, in this world, the facts are that the current crop of Republican presidential candidates (backed by their senior advisors and supporters) is so dramatically distorting the meaning of two words in the English language that the future is in serious jeopardy.

Ponzi Scheme happily rolls off the tongues of Rick Perry, former Minnesota Governor Tim Pawlenty, Rush Limbaugh, University of Maryland economist Peter Morici and many others.

(I guess I should bang my head against a wall for deluding myself that they really don’t know what a Ponzi Scheme is. Of course they do.)

But let’s refresh. Here is the standard definition of this phrase in the English language.
Ponzi Scheme: “a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.” (For you keeners, here’s the SEC definition.)

The crucial word here is “fraud.” So just to be clear, let’s review what fraud means.
Fraud: “A wrongful or criminal deception intended to result in financial or personal gain.”
Now, let’s take this a little further, sticking with facts.

The Social Security Act was approved by the Congress of the United States and then signed into law by President Roosevelt on August 14, 1935. It has never been overturned by the US Supreme Court in the 76 years since then.

Who — exactly — over the past three-quarters of a century has criminally benefited from Social Security?

Social Security’s serious challenges — and there are many — derive from huge changes in the demographic makeup of the country, startling shifts in the ratio of workers to recipients, dramatic differences in the structure of the country’s economy since the 1930s, questions of appropriate contribution rates and debates over rising administration costs, among other factors.

Crime, however, ain’t one of the problems facing the system.

The real “deception” here is the craven mislabeling of Social Security as a Ponzi Scheme by so many Republicans. Their blatant distortions about Social Security are clearly — and only! — designed to result in “personal gain” for themselves during this election cycle.

Gee, doesn’t that sound like fraud?

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