Politics 2012: Perry moves away from calling Social Security a Ponzi scheme

NICOLE DEBEVEC, United Press International
Republican presidential candidate Texas Gov. Rick Perry apparently has backed off his assertion that Social Security is a Ponzi scheme, saying now the entitlement program just needs fixing, not scrapping.(UPI Photo/Kevin Dietsch)
Republican presidential candidate Texas Gov. Rick Perry apparently has backed off his assertion that Social Security is a Ponzi scheme, saying now the entitlement program just needs fixing, not scrapping.(UPI Photo/Kevin Dietsch) | License Photo

Republican presidential candidate Texas Gov. Rick Perry apparently has backed off his assertion Social Security is a Ponzi scheme, saying now the entitlement program just needs fixing, not scrapping.

Just like every other Republican -- or Democrat.


In the California debate of GOP presidential candidates earlier this month and in his book before that, Perry charged Social Security is a Ponzi scheme and those who want to maintain the status quo are lying to young workers just starting to pay into the system.

But last week in a USA Today commentary and during a debate in the battleground state of Florida, the governor modified his stance: "We must have a frank, honest national conversation about fixing Social Security to protect benefits for those at or near retirement while keeping faith with younger generations, who are being asked to pay."

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Not exactly sticking to his Ponzi scheme comparison.

Social Security taxes current workers to fund the benefits of current retirees. Retiring baby boomers can begin collecting 75 percent of benefits at age 62 but cannot collect full benefits unless they wait until they hit 66. Currently, the top earners receive a monthly payout of $2,366. Complicating the finances, the disabled become eligible for benefits at any age.


A Ponzi scheme relies on new money to pay off old investors who were promised high returns. During last week's debate in Tampa, Perry refused to rise to the Ponzi bait raised by the moderator.

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After reassuring current and soon-to-be recipients they would still get Social Security payments, Perry said no one's had the courage to say it's "a broken system."

"It has been called a Ponzi scheme by many people long before me," Perry said. "But no one's had the courage to stand up and say, here is how we're going to reform it."

He didn't either, really, except to say a Perry administration would "transform" it for Americans in mid-career ages and "fix it" for young Americans just starting out.

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Former Massachusetts Gov. Mitt Romney challenged Perry's Ponzi scheme remark, but Perry deflected the question, responding in part: "[It's] time for us to get back to the Constitution and a program that's been there 70 or 80 years, obviously we're not going to take that program away. But for people to stand up and support what they did in the '30s or what they're doing in the 2010s is not appropriate for America."


Why the two-step?

Could be, wrote The Christian Science Monitor, that his advisers told Perry bashing Social Security -- not saying it needs to be fixed but that it's a Ponzi scheme -- doesn't play well with the folks he hopes to dance with in November 2012.

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Plus, poll numbers were also against him.

A Pew Research survey in July indicated 87 percent of respondents agreed with the statement, "Over the years, Social Security has been good for the country."

In his Monday commentary, Perry added, "Americans deserve a frank and honest discussion of the dire financial challenges facing the nearly 80-year old program."

RELATED $40M in Social Security paid to deceased

Well, that same Pew survey indicated 77 percent of respondents said the program's financial outlook is "only fair/poor."

The Monitor also cited a Gallup poll that found 78 percent of non-retirees said they think Social Security will be "at least" a minor source of income for them after they stop working, with a third saying it would be a major source of retirement cash, likely because of the effect the recession had on 401(k) programs and other nest eggs.

When Perry traveled to Virginia recently to be the keynote speaker at the Republican Party's Grassroots Luncheon, George Allen's U.S. Senate campaign advisers offered a bit of advice to the Texas governor on his Social Security views, the Richmond Times-Dispatch reported.


As a member of the U.S. Senate, Allen supported an amendment that would give people the option to voluntarily own a portion of their benefits. Allen campaign spokesman Bill Riggs said Allen's views differ greatly from Perry's.

"George Allen believes that we need to work together to protect it for seniors and those nearing retirement and preserve it for future generations," Riggs said. "Social Security is funded by working people and employers and the federal government should keep its promises to retirees. The American people expect leaders to address problems and challenges like these, not just use them for political fodder or the next fundraising effort."

Tim Donner, another GOP Senate contender in Virginia, said on his Facebook page he agreed with Perry that Social Security is a Ponzi scheme -- but wants more information, the Times-Dispatch said.

"My hope is that Gov. Perry will explain more effectively why Social Security is a Ponzi scheme -- because the federal government has raided the Social Security Trust Fund for the unauthorized purpose of reducing the federal deficit every year, which if done in the private sector would result in prison terms," Donner said.

An informal poll by a Washington Post columnist found several Republican governors also are at odds with Perry over his Social Security analysis.


Virginia Gov. Bob McDonnell, frequently mentioned as a potential GOP vice presidential candidate, believes "Social Security must be reformed in order to ensure that it remains sustainable in the decades ahead," his campaign said. "Governor McDonnell strongly supports broad reforms to the system, including raising the eligibility age for future recipients, in order to make certain that future recipients can continue to count on this important federal retirement program. They must be made today, in order to preserve this vital program for the retirees of tomorrow."

New Jersey Gov. Chris Christie was quoted as saying he would let others "have their fight," over the issue, the Post said, "but in general it's incorrect to say that Social Security is a failure. I would disagree with that statement."

Time magazine gave Perry props for calling Social Security a Ponzi scheme, saying it was a strategic move.

"Why would Perry tell such a monstrous lie about a program that he has called a monstrous lie? Make no mistake: It's a calculated move," Time wrote. "Perry wants the attention, yes. But he's also trying to ignite a real discussion about issues that most politicians won't touch."


Economist Peter Morici said in a commentary Perry is right to call Social Security what it is but is wrong to think a privately funded system is the answer.

Social Security, by the findings of Obama's own Social Security Administration, is insolvent and "hence a Ponzi scheme," said Morici, a professor of economics at the University of Maryland's Smith School of Business and former chief economist at the U.S. International Trade Commission.

"Not enough money could be invested on behalf of young contributors, because the government would still have the burden of paying off the present and next generation of retirees, and so not enough of young folks' money could be invested for their old age," Morici said. "The government would still have to provide a subsidy."

If Perry and Romney want to fix the system, "instead of arguing over terminology," they need to address the raising the retirement age to "something close to 70 -- no exceptions but for the truly disabled," Morici said.

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