Rick Santelli nails Thomas Friedman over the Social Security “Ponzi Scheme”

From Ed Morrissey;

My friend Jazz Shaw worries that Rick Perry’s argument that Social Security in its present form is a “Ponzi scheme” leaves him vulnerable in a general election. Rick Santelli gave it a workout on CNBC today against the New York Times’ Thomas Friedman, who ends up sputtering into ad hominems when he can’t counter Santelli’s arguments about the nature of a collective that can’t pay out on its promises — and Santelli responds in kind. The Daily Caller provides the transcript and Greg Hengler provides the clip:

So is Social Security a “Ponzi Scheme”? [My emphasis]

Mug shot of Charles Ponzi (March 3, 1882 – January 18, 1949)

 

Strictly speaking, the metaphor is misleading. A Ponzi scheme, named after Boston conman Charles Ponzi, is a fraudulent investment operation. In its essential design it’s a con. Investors don’t earn interest and instead are paid off by other dupes. Because these schemes require an ever-increasing number of new participants to pay off earlier investors, they inevitably collapse.

Social Security isn’t an individual investment plan. It’s a government insurance plan that offers seniors a predictable income. Retirees do indeed depend on future workers to pay their Social Security benefits, though unlike a Ponzi scheme, nobody pretends otherwise. The notion of this kind of inter-generational transfer is baked into the policy.

So it appears the difference between Social Security and a “Ponzi scheme” is one of definition and legality.

As to “nobody pretending otherwise”, seems a certain Al Gore liked to pretend Social Security was safe in a “lockbox”, which after decades of federal government raiding, it’s obviously not.

And I heart Rick Santelli.

Crossposted to Unified Patriots

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About Erick Brockway

Living in Camarillo, CA, about 45 miles North of LA. I have a son, and two daughters. Working two jobs (welcome to California life), plus a (now retired) reservist in the US Navy Seabees so life is busy!
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One Response to Rick Santelli nails Thomas Friedman over the Social Security “Ponzi Scheme”

  1. pdcasteel says:

    Nice post.
    Yes the metaphor is misleading, but powerful. You don’t hear anyone trying to use the analogy of a large self insured corporation that pools insurance contributions to pay out later claims. That’s a better analogy. When the pool gets too low you have to increase contributions, limit claims, or fund the pool. The problem is that this analogy makes a lousy sound bite and isn’t very scary.

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