Texas Gov. Rick Perry is standing firm in insisting that Social Security, the federal government’s insurance programs for retirees and disabled, is a Ponzi scheme designed to deceive the young.
In a weekend campaign stop in Ottumwa, Iowa, Perry, who has surged into the lead in the Republican presidential sweepstakes in at least one major poll, repeated his characterization of the social insurance program that is generally supported by the electorate. He has made the same point before, especially in his book, “Fed Up!,” though at one point his campaign tried to explain that he had softened his language.
“It is a Ponzi scheme for these young people,” Perry insisted. “The idea that they’re working and paying into Social Security today, that the current program is going to be there for them, is a lie.”
At a later stop in Des Moines, he also threw cold water on his own campaign’s efforts to portray his position in a more tempered light. “I haven’t backed off anything in my book. So read the book again and get it right,” he said.
Perry’s stand is the type of vintage ferocity that the governor has generated in his Texas political career and even in his limited time as a GOP presidential hopeful. For example, he has suggested that Federal Reserve Chairman Ben S. Bernanke would be behaving in a “treasonous” fashion, if he loosened the money supply in a presidential election year.
Despite complaints from some quarters that his choice of words in condemning the Fed was too strong, Perry has stood firm in that area as well, raising questions about when a colorful and forceful position crosses the line into political gaffe.
But the Fed is an easy and favored target for Perry and much of his conservative constituency, which distrusts most forms of central government in general and central banks in particular.
It is different with the social safety net. Polls show that people overwhelmingly like Social Security, whose future increasingly has become a political football in a very partisan game between Democrats and Republicans. According to many polls, voters overwhelmingly, by a ratio of almost 2-to-1, oppose cuts in benefits though almost three out of every five surveyed said they expected such trims down the road.
Because so many expect cuts, it is less politically devastating to argue that the Social Security system is designed to fulfill that expectation of decreasing benefits.
Perry and others argue that this year’s benefits are paid by a payroll tax on this year’s workers and employers. As more people retire, and as the birth rate falls, next year’s workers will have to pay more to support the beneficiaries, they say. Eventually, there will not be enough new workers to carry the load of retirees who can expect to live longer.
Supporters of Social Security argue that the program is a general benefit so it is proper for it to be funded through a general tax on employees and employers. Opponents, like Perry, see the program as a robbing of one generation to pay for the older one, a type of cheat akin to a Ponzi scheme in which contributions from unwitting new members of a bogus investing pool are used to pay promised profits to old ones. Those at the end of the Ponzi scheme ending up losing the most while those on top of the pyramid earn the most.
The usual suggestions to fix Social Security involve cutting benefits, increasing the retirement age and raising the taxes paid into the system. Democrats and Republicans split over how much to reduce benefits or increase taxes.
Increasing the retirement age is usually backed by both sides.