What's Wrong With the Truth?
I don’t read everything Mona Cheran writes, but when I do read her I am always amazed by the depth and clarity of her work. In her latest column, “Did Rick Perry Blow It on Social Security?” I found that she has written much of what has been rattling around in my head for a couple of days but could not express clearly. She takes a rather contrary position from most of the right concerning Rick Perry’s ideas and attitude toward Social Security when she states, “On this issue, Rick Perry is treating voters as adults.” I agree with her whole heartedly. What is so wrong with the truth regarding this cherished, yet completely disastrous, program?
Perry rightly questions the constitutionality of the program. The way it is sold to us, and one of the main arguments against changing or eliminating it, is that people pay into the system and have a right and reason to expect a return. However, one of the primary reasons the SCOTUS found Social Security to be constitutional is that “The proceeds of both taxes [personal and employer] are to be paid into the Treasury like internal revenue taxes generally, and are not earmarked in any way.” (Helvering v. Davis) In other words, it’s just a tax like any other. The government can do anything it wants with the revenue generated by the program, and it routinely has done anything it wants with the money. It cannot be both ways. Either the government is collecting it and reserving it for the individual, or it is just a tax subject to the whims of the Congress. Only one of these options has been declared constitutional.
Another reason Perry is right is that math really isn’t that hard. Anyone who has looked at the data knows that the program is insolvent. The “trust fund” is empty, and monies from general funds are already being paid out by the system. Sure, the government can cash in some of the IOUs it gave itself for the money collected by the system, but the only way to make good on the paper is to either tax more in other areas, borrow more, or print more. None of these is a reasonable option. A saying I heard often in the Navy applies perfectly to the finances of this program: we’re [expletive]ing up at a high rate of speed. Medicare is a bigger part of the problem, but Social Security is not an insignificant factor.
The most significant fault I see in Social Security, however, is its very nature. If the money taken in is not earmarked for those on whose behalf it was taken, then any money received from the program is simply welfare. In the debate Romney said that millions live on Social Security, and Dick Cheney was quoted as saying that it is a program that a great many people depend on. How can any limited government conservative hear those words and not retch? It is not an insurance program. It is a welfare program. Having millions dependent on it is not a reason to save it; rather, it is a reason to kill it, violently. Millions reliant on a government welfare program for their daily existence? In America? How is this program not antithetical to every founding principle of the nation?
Perry is the only adult discussing Social Security, as Mona Cheran points out. It is close enough to a Ponzi scheme to borrow the label. The way it is sold to us is a monstrous lie. It is bankrupting our nation financially. Worse, it has bankrupted our nation ideologically, morally, and spiritually if keeping millions of Americans dependent on this redistributive welfare system is important enough to not even have an honest, adult conversation about it.
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Comments:
Dec '10
Re: What's Wrong With the Truth?
I won't pretend that I invented the concept, but I've been calling Social Security a ponzi scheme for years. The only way that it would NOT be would be if it were some sort of giant savings program - what you put in + any interest it might have gained = what you get to take back out. That concept doesn't even look at the issues of the government pilfering the fund for other uses.
I saw a clip over on Hot Air where Chris Matthews & his gang were pretty much agreeing with Perry, except they were a little squeamish about the fact that ponzi schemes are illegal and didn't want to call Social Security an illegal enterprise.
I was probably leaning towards Perry (out of the declared crop) beforehand, but when he came out with that, I moved to a confirmed Perry supporter.
Apr '11
Re: What's Wrong With the Truth?
I'm in agreement. In fact, we have a lot of harsh truths to face at this point, and many in the Establishment (to steal their word, muahaha) seem desperate to continuing the facade just a little longer.
We're driving towards a cliff, and while some are pointing out that we're going too fast and need to stop now others are saying that if we hit the breaks now, someone will get whiplash so it's better to hit the gas pedal so at least we all feel great for now.
May '10
Re: What's Wrong With the Truth?
Hope this thread takes off, KP (unlike mine, alas).
I'll stick to my analysis that without an accompanying brave, transformative proposal, Perry's been nothing more than a blowhard -- not an adult, as you say, but a grandstander without the courage of his convictions, since something "monstrous" cannot be fixed with mere tinkering.
So far I've seen no evidence that such bravery will be forthcoming; in fact, the first words out of his mouth were to reassure the demographic and fiscal trainwreck known as the boomers ("those approaching retirement," he said) that they will be exempt from sacrifice. That's fundamentally unserious if he intends to undo the "Ponzi scheme."
So unless things change dramatically (and they might), he's executed precisely the worst possible combo: With much bravado he's insulted the most popular program in American history while simultaneously embracing it.
Dec '10
Re: What's Wrong With the Truth?
Well said, Scott. I also hope there will be something bold coming on the SS front. However, not even acknowledging the problem, like everyone else is doing, is even farther from a solution.
Jul '10
Re: What's Wrong With the Truth?
I'd rather have a Ponzi scheme. At least with a Ponzi Scheme You have the choice of whether to participate or not.
Jan '11
Re: What's Wrong With the Truth?
Well, let me throw a curve. It isn't a ponzi scheme. It's an insurance scheme.
You might recoil at the idea that insurance is a scheme, but it is. It's a bet. It's a wager. It's a very good wager when the percentage of payers-in overwhelms the percentage of takers-out. When the program first started, workers kicked in 40 years of contributions, retired at 65, then lived about two years more. All the extra money that they didn't use went to support others. It was a cash cow.
You might think that's a bad bet, so why would they do it? Security. They got security for that money. And the contributions were small enough not to hurt too badly at any one time.
The whole thing worked on percentages. Now, however, the percentages stink. Workers retire and live another 20 years instead of 2. And, as they get older, their medical care gets more expensive. What was once a cash cow is now a terrible bet.
All insurance works on that calculation of percentages. If someone proposed Social Security today, no one would buy it. The percentages stink.
Aug '11
Re: What's Wrong With the Truth?
King,
It is worse than you suggest. Those lucky enough to have pensions have their benefits contractually calculated inclusive of SS. Those who are lucky enough to plan for retirement assume SS as a given when determining how to fund their retirement. SS has dug itself into our idea of retirement income like a giant tic, and it, with its sisters medicare and medicaid, is sucking the life out of our economy.
Jan '11
Re: What's Wrong With the Truth?
This kind of honesty deserves support. I'd like to hear more about ideas/positions to transition to a sustainable, largely self-financed system from all candidates but the time has come. I think there is finally a critical mass of voters ready for that 'adult conversation'.
May '10
Re: What's Wrong With the Truth?
Oh, I think most on our side acknowledge the problem, but that voting powerhouse of the boomers is a tough nut to crack.
Our only options for both SS and Medicare, I'm afraid, will have to be Ryan-esque in nature: a pro-growth agenda for the economy and resignation to the fact that these programs are here to stay but need some significant yet incremental reform. And the only way to pull off even that modest goal is to be calm, reasoned, truth-telling but reassuring -- like a doctor with a skilled bedside manner. Bravado is fun, invigorating even, but not wise, and in the end it will make these problems even more difficult to solve.
Personally, I'd like to dump all these programs right in the trashcan, but we have to live in the world as it is, not as we wish it to be.
Dec '10
Re: What's Wrong With the Truth?
My astrophysicist nephew, who also has an interest in politics, economics, finance and investment, and I were just talking about this today. We agree that the 20 and 30 year-olds already understand Social Security will not be there for them.
Now we, especially Rick Perry types, have to convince the boomers and the elderly that it is immoral to have the relatively poorer young people financing the relatively richer older folks' retirement. Scott has a point. Perry shouldn't just slap the Ponzi label on SS and then neglect to articulate the problem. Conservatives have to be persuasive -- for a change.
The other interesting little tidbit my nephew shared was that public employee pension funds have also been converted to IOUs recently, like SS. When the brokest nation in history can no longer pay SS benefits or public employee pensions, we may finally have that majority of voters willing to privatize retirement plans.
And don't think the government isn't coveting our private pensions and 401(k)s as well. Think of all the trillions stashed away just waiting to fund all those shovel-ready projects. This is going to get ugly.
Dec '10
Re: What's Wrong With the Truth?
The new federal system is mostly social security with a small pension and a 401K component. If they raid the contributory system I will really be out of luck if I live long enough to need it.
As far as social security goes, the third point I made is the one that really bothers me. Making a significant portion of society (and one that reliably votes) wholly dependent on government is simply disgusting. Any dependence on government is bad, this is beyond description. That it has become not only acceptable, but desirable, is indicative of a social cancer.
Jul '11
Re: What's Wrong With the Truth?
Western Chauvinist:
And don't think the government isn't coveting our private pensions and 401(k)s as well. Think of all the trillions stashed away just waiting to fund all those shovel-ready projects. This is going to get ugly. ·
This point is not getting nearly enough attention. Early in Obama's administration there were whispers to this effect but they seem to have been squelched because they're so politically explosive. But re-elect Obama in 2012 and let's see how secure everyone's 401k is. Republicans need to hammer him on this and raise awareness that our retirement funds are not nearly as secure as we've been led to believe.
Dec '10
Re: What's Wrong With the Truth?
I think the political consultant types that consider it suicidal to bring this topic haven't freshened their analysis. Look around Tea Party events and you will see plenty of white hair. Moreso everyday, seniors and near seniors are getting their news online and are less prone to believe the assertions of Democrats. Seniors aware of the pronlem and aware of the implications for their kids and grandkids are more flexible about changes.
I don't think any of those running for the executive position need to advance a detailed plan; a broad outline backed with a commitment to that outline should be fine.
Frank Luntz strongly advises avoidance of the use of the word "reform," plus an emphasis on the word "save."
So far, every plan I have heard is essentially Ryan-ian: a small increase in the retirement age for those that are now under 55; and future indexing of the benefits for the better off to the wage database (as Opposed to the Consumer Price Index). Those two changes alone would make an enormous difference in the finances.
Why can't that be boldly proclaimed, deployed with the word save?
Sep '10
Re: What's Wrong With the Truth?
The King Prawn
As far as social security goes, the third point I made is the one that really bothers me. Making a significant portion of society (and one that reliably votes) wholly dependent on government is simply disgusting. Any dependence on government is bad, this is beyond description. That it has become not only acceptable, but desirable, is indicative of a social cancer. · Sep 9 at 11:56pm
This is the only real problem with SS.and the other entitlement programs and the fundamental argument against them. The idea that the government can or will do what the individual should do for himself is corrupting both for the government and individual. The fact that both parties refuse for the most part to acknowledge this speaks of the corruption of the current political system. The real argument for limited government is that it is morally superior to collectivist alternatives. It is shameful that few Republicans are willing to say this and no Republicans are willing to find fault with the ones who refuse too.
Oct '10
Re: What's Wrong With the Truth?
The criticism of Perry here may be terribly short-sighted. Margaret Thatcher once said something to the effect that ‘first you win the argument, then you win votes.’ Romney wants to win votes by avoiding the argument about Social Security. Perry is trying to win the argument. And this involves a certain amount of issue “framing.” Is it a Ponzi scheme or an insurance policy? Well, are there literally “Death Panels” under Obamacare? I don’t think those words appear in the 2800-page legislation. But is that not an effective way of conveying the valid point that under Obamacare your healthcare will be rationed by government bureaucrats even unto death? Is not Social Security a scheme whereby current recipients are paid by current government revenues, much like a Ponzi scheme pays those cashing out with fresh funds from those checking-in, even though (unlike an insurance company’s portfolio) no income-producing investment lies behind it? It’s close enough for issue framing, maybe not a PhD dissertation. This is a serious political battle and it’s no time to get squeamishly picayune or intellectually masturbatory over word choice.
Sep '10
Re: What's Wrong With the Truth?
Couldn't agree with you more. I find no fault with either Ponzi scheme or almost treasonous and I am not a fan of Perry.
Dec '10
Re: What's Wrong With the Truth?
Yes, KP, government dependency is disgusting and corrupting, but tactically, I wonder if it isn't smarter to just point out that the government cannot be trusted with your money. Otherwise, we may be accused of blaming the victim. The moral basis of limited government and capitalism doesn't fit as neatly into a sound bite as "Ponzi" scheme.
Apr '11
Re: What's Wrong With the Truth?
liberal jim
Couldn't agree with you more. I find no fault with either Ponzi scheme or almost treasonous and I am not a fan of Perry. · Sep 10 at 6:13am
I am on board with this as well. Perry specifically said in the debate that he doesn't want to change anything for those already retired or close to retiring, but reform is needed. He is headed to Florida for the straw pole and some heavy campaigning. Rubio won in Florida with a similar message (although he rarely indulged in inflammatory remarks). I will be watching closely to see how he does in Florida, but I like the fact that he is not hiding from the issue.
Feb '11
Re: What's Wrong With the Truth?
Social security is the greatest of the political shell games. People paying FICA are told that they are contributing to their retirement. But we are, at best, paying for other people's retirements, with the balance going to general revenues. That's OK, they say, its an intergenerational arrangement--each generation supports the retirement of the previous generation. But, if you suggest that future social security payments should then be included in total federal debt, they say there is no legal promise to make the future payments.
Object to nearly half of our citizens not paying income taxes, and they'll point out that everyone pays payroll taxes. But FICA stands for Federal Insurance Contributions Act--they won't label it a tax.
The only thing worse than the current facade of the "trust" fund would be the feds actually investing excess payroll taxes. This would just give them another opportunity to pick winners and losers.
But, as others have noted, it's not a Ponzi scheme, because no one can opt out.
May '10
Re: What's Wrong With the Truth?
Think about how long Ryan and his pals have been carefully and methodically inching the party and the country toward reform of entitlements and how hard they've worked constructing a plan that both works and is politically feasible. We're getting there (Ryan's plan has passed the House, afterall, and the Debt Commission embraced many of its ideas), but the biggest obstacle all along has been warding off this fear that "Republicans secretly want to destroy SS and Medicare."
Now comes Perry, the bull in the china shop, with all his bluster but no reassuring, well-thought-out alternative, to risk undermining the years-in-the-making, real progress made by Ryan and others to move the center in our direction.
HVT used the word "masturbatory" and it's a good one, but it applies only to Perry at this point: He "gets off" on the feedback he receives for his "guts" and "straight talkin'" -- the shouts of "he's a hero!" from conservatives, the outrage from liberals -- but without the accompanying seriousness and wisdom and, yes, caution, he'll be the only one satisfied after this episode.