Tuesday's New York Times's “Check Point” was the latest liberally slanted fact check of a G.O.P. presidential debate, this time by two liberal reporters, Michael Cooper and Nicholas Confessore, “Perry’s Criticism of Social Security as ‘Ponzi Scheme' Dogs Him in Debate.”
Confessore, who once worked for the liberal journals Washington Monthly and American Prospect, once again staunchly defended Social Security. In a December 2004 post for the Prospect, he praised the Times, the paper he was about to join, for its harsh coverage of President Bush’s attempt at free-market-based Social Security reform.
As Gov. Rick Perry of Texas was assailed by some rivals for the Republican presidential nomination at Monday night’s debate for his exaggerated claim that Social Security is a “Ponzi scheme,” he also seemed to be debating himself at times.
Mr. Perry used the debate to talk about the need to shore up Social Security, which politicians of all stripes agree is needed if the program is to continue paying out full benefits a quarter century from now. In making his case, Mr. Perry adopted a very different tone from what he did in his book “Fed Up” just a year ago, when he described Social Security as a failure that “we have been forced to accept for more than 70 years now.”
While there are some superficial similarities, it is ultimately a misleading exaggeration to describe Social Security as a Ponzi scheme.
Charles Ponzi was a Boston con man who promised investors impossibly high interest rates and who paid off his early investors by taking money from later investors -- a pyramid scheme that can work only if an ever-increasing pool of investors puts in money.
Social Security, by contrast, is a pay-as-you-go retirement system by design. Current workers and employers pay taxes that are used to pay benefits to current retirees. For many years, the program took in more money than it paid out. In 2010, Social Security began paying out more in benefits than it received in taxes. As more baby boomers retire, and the number of new workers does not keep pace, that shortfall is expected to grow.
Cooper and Confessore seem unable to conceive that “Ponzi Scheme” is a (potent) metaphor for the unsustainable state of Social Security’s current financing trajectory (one that liberal MSNBC host Chris Matthews has also recently employed), meaninglessly faulting Perry for his comparison not being an exact match in all particulars.