Texas Governor Rick Perry has been criticized for saying that Social Security is a Ponzi scheme. But he’s absolutely right, and he is hardly the first guy to notice. I figured that out 30 years ago.
A Ponzi scheme is an investment program where there are no real dividends. It is able to make payouts to early investors only as long as there are enough new investors to pump money into it. Once the new investments decline, the payouts decrease, and eventually there are no more payouts.
When a private party sets up something like this and gets caught, we put him in prison (Bernie Madoff, for example).
But when the federal government does it, it’s different. It’s not a crime at all. It’s a “contract” and a sacred obligation. Even so, when the money runs out, “investors” in it should expect to get exactly what the Madoff investors got: screwed.
Rick Perry has simply pointed out the obvious.
Mark Steyn has expended a good deal of time and energy explaining why European socialism is bound to collapse. It’s all about the decrease in babies. The European socialist Ponzi schemes are running out of babies. Likewise, our birthrate is declining and our ratio of retirees to workers is increasing. Moreover, the number of economically productive working-age adults has declined as a result of the recession, which means millions of working-age people aren’t paying FICA or income taxes. Soon, we will be unable to keep our promises to support the elderly, the disabled and the lazy. Ponzi schemes collapse when the number of people paying into them drops.
To make matters worse, FICA contributions have been siphoned off for years to pay other federal obligations, and there is no money in the Social Security “trust fund.” All that’s left are federal IOUs.
I’m 62 years old and I’m planning on retiring sometime in the next few years. Hopefully, I won’t need Social Security money when I retire. If I don’t need it, I shouldn’t get it. If I do need it, it should be there for me. But unless Social Security is reformed, I may well get it even if I don’t need it, at a crushing expense to younger workers.
The many current Social Security recipients I see gambling away my tax dollars when I’m in Biloxi would no doubt be incensed to be deprived of their slot-machine holidays. I think they could buck up and handle it, though. Now would be a good time to take away their gambling money. Actually, 20 years ago would have been a good time to do that.
My girlfriend’s father, age 93, has been drawing Social Security benefits for two and a half decades. Just a thought: Perhaps he could do without it, since he is a multimillionaire. To be fair, he doesn’t gamble it away as some do. He is, by all accounts, pretty prudent with his money. It’s just that he doesn’t need your money in the least.
My girlfriend’s father is one of the last beneficiaries of the Ponzi scheme. Unfortunately, you’ll probably be one of the victims.
Glenn Bogart, J.D., is an independent student aid consultant specializing in federal compliance issues.
