Ponzi Perry

Social Security is a government-run insurance program that provides the typical retiree with single-digit returns on contributions deducted from their paychecks over the course of their working lives. The program has operated for 76 years amid praise from presidents of both parties. In 1983, even as staunch a critic of big government as President Ronald Reagan vowed: “The Social Security system must be preserved.”
In December 2010, 54 million Americans received either retirement or disability payments under the Social Security program.

Poverty among elderly Americans was endemic before the program was created in 1935. The first benefit checks weren’t issued until 1940, and as late as 1959 more than 35 percent of the elderly were living below the poverty line, according to the Social Security Administration. In 2009, the most recent Census Bureau data available shows, the figure was 8.9 percent.

To presidential hopeful Texas Governor Rick Perry, however, the country’s most expensive entitlement program is a financial con that would have made Charles Ponzi blush. “It is a Ponzi scheme to tell our kids that are 25 or 30 years old today, you’re paying into a program that’s going to be there,” Perry said during a Sept. 7 debate of the Republican presidential candidates, reprising a theme from his 2010 book “Fed Up.”

Experts on both Ponzi schemes and Social Security say Perry is wrong. “Ponzi schemes are, by definition, fraud,” said Mitchell Zuckoff, author of “Ponzi’s Scheme: The True Story of a Financial Legend.”

“Social Security is above board,” he added. “We can argue about whether it’s a good system. But you can’t call it a fraud.”

The Social Security and Medicare Trustees project a deficit this year of $46 billion and continuing annual shortfalls until the $2.5 trillion fund is exhausted in 2036. Beyond that point, the program is expected to have sufficient funds from continuing infusions of payroll taxes to pay about 75 percent of promised benefits.

Perry’s aversion to the program is nothing new. In his 2010 book “Fed Up,” he lambastes Social Security as a “crumbling monument to the failure of the New Deal” and likens it to “a bad disease.”

Democrats crowed over a statement they regarded as political gold. “Ponzi Perry just lost the general election,” former Michigan Governor Jennifer Granholm tweeted during the debate.