Shacking up: Social Security & Ponzi schemes
By W. Gardner Selby
Published on Tuesday, November 16th, 2010 at 10:54 a.m.
This weekend, we posted our review of Gov. Rick Perry's statement that Social Security is a Ponzi scheme.
We rated the statement False, noting a raft of differences between the retirement assistance program approved by Congress decades ago and a fraudulent criminal enterprise that can't keep delivering promised sky-high profits by illicitly funneling latecomer investors' money to previous investors.
That article was helped along by forays on the same topic by sister PolitiFacts in Wisconsin and Rhode Island.
In September, PolitiFact Wisconsin rated Barely True GOP U.S. Senate candidate Ron Johnson's statement that Washington politicians "run Social Security like a Ponzi scheme." Despite a superficial similarity, Social Security is obligated to pay benefits, a commitment the shysters who run Ponzi schemes do not share. What"s more, participants are aware of how the system is operating. It"s all public. In a Ponzi scheme, investors have no clue where their money is going and are told lies by its promoters.
PolitiFact Rhode Island later rated False Republican U.S. House candidate John Loughlin's statement that "Social Security is a Ponzi scheme." Its analysis zeroed in on the lack of an element of deceit to how the 75-year-old Social Security program takes in money and pays it out.
More than 20 times, Social Security has triggered the Truth-O-Meter needle.
The first instance: In May 2008, PolitiFact in Washington rated Barely True Democratic presidential candidate Barack Obama's statement that Republican candidate John McCain's campaign was suggesting cutting Social Security cost-of-living adjustments and bumping the minimum retirement age to qualify for old-age benefits. Turned out that Obama was linking President George W. Bush's proposal to permit private accounts as an alternative to Social Security with McCain's plans. Also, a McCain adviser's speculation about changing the minimum retirement age wasn't the same as McCain committing to the prospect.
In August, PolitiFact rated another Obama statement —that "some Republican leaders in Congress" are "pushing to make privatizing Social Security a key part of their legislative agenda if they win a majority in Congress this fall" —Barely True. The only "Republican leader" who was really talking about personal retirement accounts was U.S. Rep. Paul Ryan, R-Wisconsin, and even his plan was a far cry from a wholly privatized system.
Leading up to the November 2010 elections, PolitiFact found several instances of Democrats charging Republicans with wanting to privatize Social Security. Sen. Harry Reid of Nevada, the Democratic majority leader, went further, saying his GOP challenger, Sharron Angle, wanted to wipe out Social Security. That statement earned a Half True rating. Angle initially indicated that she thought Social Security should be phased out, saying earlier this year, "It can't be fixed. It's broken." In the fall, though, her comments suggestedwere less clear, suggesting she was leaning toward an optional ongoing program.
Earlier this year in Texas, we rated False a statement by U.S. Rep. Michele Bachmann that Social Security is out of money, though our article also confirmed that this year's payroll taxes aren't expected to cover checks being sent out by Social Security. The program also covers its payments by tapping investments in the Social Security trust fund.
And before the November elections, we bestowed a Full Flop on the Flip-O-Meter to then-GOP U.S. House candidate Bill Flores, who went on to win the seat held by Democrat Chet Edwards of Waco. Flores had shifted around on the idea of raising the minimum retirement age to qualify for Social Security retirement benefits, most recently saying a headache had caused him to tell WFAA-TV in Dallas that the topic should be on the table. A Waco talk-show host showed Flores had similarly speculated about raising the minimum age earlier this year.
Past PolitiFact articles.
Researchers: W. Gardner Selby
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