Rick Perry is taking a lot of heat for his refusal to back off on his accusation that Social Security is a Ponzi scheme. But though liberals and some of his Republican rivals are blasting his statement as irresponsible, the Texas governor was far from the first to label the retirement plan in this manner. It turns out that many liberals called it that long before Perry left the farm to run for president.
In National Review, Stanley Kurtz provides a fascinating exploration of the history of the use of the label that ought to defuse some of the hypocritical outrage being directed at Perry. The first person to call Social Security a Ponzi wasn’t an anti-New Deal conservative Republican but Paul Samuelson, a Nobel Prize laureate liberal economist. Samuelson used the term in a 1967 Newsweek column praising the system. He believed an ever-expanding population would make a pyramid scheme of this sort both rational and fiscally sustainable. In the decades that followed, other liberals and Democrats, such as Jonathan Alter, Robert Kuttner, Michael Kinsley and many others have used the same term to describe the system.
While it is true the term Ponzi conjures up the image of an illegal plot–which Social Security is not–there is no denying it is a pyramid scheme and would be considered a scam if any entity other than the government operated it. The main difference is unlike Ponzis operated by criminals, Social Security can never really fail, because it is backed up by the power of the government to confiscate as much of the taxpayer’s money as needed.
The point here is objective observers on both sides of the political aisle have long understood Social Security was unsustainable and needed to be reformed if it was to survive in the long term without crippling tax increases.
Demagoguery aimed at Perry on this issue illustrates a belief Social Security remains a third-rail issue that will destroy any politician who is foolish enough to touch it. But with entitlements threatening to sink both the budget and the U.S. economy in the long run, the atmosphere has changed a bit. It is true no one could run for president on a platform of abolishing Social Security, and Rick Perry has no intention of doing any such thing. But the idea any discussion of reform is still off-limits, especially in a Republican primary, seems to reflect a depressing view of contemporary politics. Even liberal commentators were once unafraid to tell the truth about Social Security. If that has changed and Rick Perry is punished for raising questions about the system, then, as Kurtz says, that “may tell us more than we want to know, not only about Social Security, but also about who we are and what we have become.”