Editor's Corner

Rick Santelli nails Thomas Friedman over the Social Security “Ponzi Scheme”

From Ed Morrissey;

My friend Jazz Shaw worries that Rick Perry’s argument that Social Security in its present form is a “Ponzi scheme” leaves him vulnerable in a general election. Rick Santelli gave it a workout on CNBC today against the New York Times’ Thomas Friedman, who ends up sputtering into ad hominems when he can’t counter Santelli’s arguments about the nature of a collective that can’t pay out on its promises — and Santelli responds in kind. The Daily Caller provides the transcript and Greg Hengler provides the clip:

So is Social Security a “Ponzi Scheme”? [My emphasis]

Mug shot of Charles Ponzi (March 3, 1882 – January 18, 1949)

 

Strictly speaking, the metaphor is misleading. A Ponzi scheme, named after Boston conman Charles Ponzi, is a fraudulent investment operation. In its essential design it’s a con. Investors don’t earn interest and instead are paid off by other dupes. Because these schemes require an ever-increasing number of new participants to pay off earlier investors, they inevitably collapse.

Social Security isn’t an individual investment plan. It’s a government insurance plan that offers seniors a predictable income. Retirees do indeed depend on future workers to pay their Social Security benefits, though unlike a Ponzi scheme, nobody pretends otherwise. The notion of this kind of inter-generational transfer is baked into the policy.

So it appears the difference between Social Security and a “Ponzi scheme” is one of definition and legality.

As to “nobody pretending otherwise”, seems a certain Al Gore liked to pretend Social Security was safe in a “lockbox”, which after decades of federal government raiding, it’s obviously not.

And I heart Rick Santelli.

Crossposted to A Tow Dog

Erick Brockway
Work seven days a week at two jobs, a newly RETIRED EO1 (E6) in the Navy Reserves (Seabees), blog when I can from cellphone and computer. @erickbrockway #catcot #tcot

Currently living in Camarillo, CA, about 45 miles North of LA. I have a wife (20+ years) son, and two daughters.
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About Erick Brockway

Work seven days a week at two jobs, a newly RETIRED EO1 (E6) in the Navy Reserves (Seabees), blog when I can from cellphone and computer. @erickbrockway #catcot #tcot Currently living in Camarillo, CA, about 45 miles North of LA. I have a wife (20+ years) son, and two daughters.
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Mike gamecock DeVinetexasgalt Recent comment authors
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texasgalt
Editor

Social security is not sustainable as it exists today. Anyone with a scintilla of reasoning ability knows it.

Mike gamecock DeVine
Editor

Santelli goes overboard here.

Mike gamecock DeVine
Editor

The better characterization of Soc Sec is that it has become unsustainable due to raiding by Congress to pay bills other than Soc Sec, expansion of benefits over time and the decline in the birth rate. The Ponzi scheme metaphor is quite a stretch. It has become like a Ponzi scheme due to the number of workers/recipient over time, but no one schemed to make blacks abort generations and whites to stop having babies.