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
Related articles
- Rick Santelli And Thomas Friedman Call Each Other ‘Idiotic’ In Heated Social Security Exchange (mediaite.com)
- Rick Santelli Tells Arch Globalization Advocate Friedman He Is An Idiot (zerohedge.com)
- Santelli, Friedman duke it out over “Ponzi scheme” (hotair.com)
- Meet the man behind the Ponzi scheme (csmonitor.com)
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.
pdcasteel
September 9, 2011 at 10:02 am