Fact Check: Is Social Security a 'Ponzi scheme'?
September 13th, 2011
10:00 AM ET
3 years ago

Fact Check: Is Social Security a 'Ponzi scheme'?

(CNN) - The Statement: Texas Gov. Rick Perry said at a September 7 MSNBC presidential debate that "it is a Ponzi scheme to tell our kids that are 25 or 30 years old today, you're paying into a program that's going to be there. Anybody that's for the status quo with Social Security today is involved with a monstrous lie to our kids, and it's not right." The "Ponzi scheme" label was also discussed during Monday night's CNN/Tea Party Republican presidential debate.

The Facts: According to the most recent report from the Social Security Board of Trustees, "projected long-run program costs for ... Social Security are not sustainable under currently scheduled financing, and will require legislative corrections if disruptive consequences for beneficiaries and taxpayers are to be avoided."

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soundoff (14 Responses)
  1. Rich

    Social Security is a Ponzi Scheme, every American knows this. SS takes money in and the general fund takes that money and gives SS an IOU. Perry had the backbone to say the truth. Democrats, Republicans and Independents know that SS is broke, the money is missing. What is the big deal with someone telling it like it really is!
    Are we suppose to pretend that SS is something different then it really is, are we suppose to pretend the money is actually there. SS could be call the Madoff Scheme, the only difference is that Bernie is in jail and our politicians walk free.

    September 13, 2011 10:09 am at 10:09 am |
  2. Rudy NYC

    Republicans have systematically weakened and crippled social security. We used to have a ratio of contributors to recipients of 5.5:1. Today that ratio is roughly 3:1. The drop is due in large part to changes in the upper income limit to pay into SSI, and rising salaries over the past 50 years. In other words, the percentage of American workers who pay into the system based upon their *entire* annual salary has been dropping like a rock.

    September 13, 2011 10:10 am at 10:10 am |
  3. Rick McDaniel

    In my view, it actually is. It uses payments from current taxpayers to pay benefits to retirees, and that is basically the principle behind "Ponzi' schemes.

    Having SS hold the 4th largest segment of US debt, is also atrocious, as that simply means the government is using SS funds for many other things, and not for what they should be used for.

    September 13, 2011 10:29 am at 10:29 am |
  4. Eileen Wright

    I'm 50 years old... just give me back the money I've paid into the system and I will take my chances with my own judgement on rerirement investments.

    September 13, 2011 10:31 am at 10:31 am |
  5. Four and The Door

    The Verdict:
    False. ... Contribution levels will have to be raised in order to avoid future benefit cuts, but it is not a "monstrous lie" to say the program will continue even if nothing is done.
    __________________________________________________________________________________________________
    It's a good thing that Social Security management is not held to the same standards as public companies are according to the Securities and Exchange Commission. People who run it would be brought up on charges. The benefits are not there as advertised for the investors and this is by definition fraud. There is no other reasonable conclusion. It is fraud.

    September 13, 2011 10:35 am at 10:35 am |
  6. bb

    Our middle class is disappearing, the pool of those living in poverty and its level of severity is growing. Boomers are retiring and our workforce is sharply smaller than it was years ago, due to a rapid decline in population and high unemployment of the workers we have. These are the facts. Doesn't take a rocket scientist to see that SS reform is eminent, but throwing the baby out with the bath water has the potential of another crisis in the making. Most of these people can't manage their daily finances much less understand the risks of market-based long term investing. If we go that route, the US government better have a backup plan B in dealing with massive homeless retirees whose finances succumbed to mis-management and greed.

    September 13, 2011 10:45 am at 10:45 am |
  7. LR Bryan

    Republicans are responsible for the payer ratio dropping from 5.5/1 to 3/1?
    When started the ratio was over 15 to 1 and the life expectancy was less than 65 years.
    It's much more likely that the problem has been caused by Democrats that push SS retirement and disability payments for immigrants and others that never paid into the system.
    If you want to fix SS you'd do the following:
    Lockbox SS payments, no more IOUs
    No retirement benefits below the age of 65(currently 62)
    You may draw benefits only after paying into the system for 47 years or at age 70, whichever comes first
    Move the SS cap from 120k to 200k

    September 13, 2011 10:49 am at 10:49 am |
  8. Lynda/Minnesota

    "I'm 50 years old... just give me back the money I've paid into the system and I will take my chances with my own judgement on rerirement investments"

    Any thoughts on what to do with the generation ahead of you who are now dependent on receiving their current Social Security funding from YOUR payments? They, too, worked and paid into the system. Unfortunately for them, their funding went to the generation before them.

    September 13, 2011 10:59 am at 10:59 am |
  9. malabar

    Social security is a ponzi scheme

    September 13, 2011 11:00 am at 11:00 am |
  10. Rudy NYC

    Four wrote:
    People who run it would be brought up on charges.
    -------------
    They would be brought up on charges of embezzlement for dipping into the fund and putting into their pockets. The SSI fund works like any savings bank does. If SSI is a fraud than all savings institutions are a fraud. It is fraudulent to put deposits into your pocket and walk away with them, which is exactly what Bush did to partially fund his wars. President Obama stopped the practice, and now the costs of the wars are actually "on the books." That's part of the "increase in spending" that you love to complain about so much.

    You are seeing the actual costs of the wars. Bush should have raised taxes to pay for the wars, not cut them. Twice.

    September 13, 2011 11:20 am at 11:20 am |
  11. rs

    No, Social Security is not a Ponzi scheme. However, Rick Perry is an anti-American traitor. That Republicans consider him their most popular candidate against Obama speaks volumes about the hate Republicans have for anyone but the super rich.

    September 13, 2011 11:22 am at 11:22 am |
  12. Sniffit

    Your "debunking" of whether it is a "Ponzi Scheme" is entirely lacking and I fear CNN has done so on purpose so that the myth and misinformation can survive. The reason it's not a "Ponzi Scheme" is not simply some purposefull vague and fluffy nonsense about it being a legitimate gov't program (which it is, don't get me wrong). There are myriad SUBSTANTIVE and SYSTEMIC differences between SS and a "Ponzi Scheme." One HUGE one is that the gov't has the power, authority and capability of raising its revenue to account for any shortfall in the moneys owed to "investors." THAT, more than anything, is the biggest difference that everyone who makes this idiotic claim that it's a "Ponzi Scheme," including CNN and other "news" outlets that want to perpetuate that controversial brain-fartery, are trying to avoid talking about, because guess how much CNN's high-paid upper echelon management and executives want to talk about their taxes getting raised to fix it.

    September 13, 2011 11:23 am at 11:23 am |
  13. Rudy NYC

    LR Bryan wrote:
    Republicans are responsible for the payer ratio dropping from 5.5/1 to 3/1?
    When started the ratio was over 15 to 1 and the life expectancy was less than 65 years.
    It's much more likely that the problem has been caused by Democrats that push SS retirement and disability payments for immigrants and others that never paid into the system.
    -------------
    Actually, it was Republicans who pushed for illegals to recieve entitlements in an attempt to bankrupt them, and to support a cheap labor force to break unions. As for your suggestions to fix SS, go do your homework. Republicans oppose all of those ideas, most especially raising the cap.

    September 13, 2011 11:24 am at 11:24 am |
  14. rs

    LR Bryan So tell me what government program, or action we should would to reduce the problem of poverty in the elderly as well as Social Security has? Make them work until 73?! Pay in for 47 years?! You've just made the most compelling argument for Socialism ever. Why in the world should the vast majority of good and patriotic Americans settle for a standard of living far, far worse that that of any other First-World nation?
    Maybe Republicans would like a Soylent Green solution for poverty in America instead (applied only to the poor and middle class ofcourse).

    September 13, 2011 11:29 am at 11:29 am |