Governor Rick Perry has been known to unleash some fairly flamboyant rhetoric at times. If you like a guy who puts the teleprompter away and actual says what he believes in non-calibrated English, Governor Perry offers us excitement. If people don’t like what he’s saying, he scares the BahhhJeebus out of them. Calling Social Security a Ponzi Scheme is just the sort of thing that fulfills both of the two sentences written above. Thus, we should approach Governor Perry’s rhetorical flourish with the care and perspicacity of a good EOD team. Let’s find out if calling Social Security a Ponzi Scheme is really all that germane.
We begin by actually defining what constitutes a Ponzi Scheme. The SEC offers the following legal definition which it uses for regulatory compliance enforcement.A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.So Perry claims SS is a Ponzi Scheme. The program depends on new revenues to pay current investors. Check. The investment activity consists of the government writing itself IOME’s, as the revenues from the payroll taxes supporting Social Security go directly The US Treasury’s General Fund. Once this money goes there, it is then fungible. It could just as easily be spent on new Tomahawk Missiles or highway construction. The mythical Social Security Lock-Box, of Al Gore fame; exists in the same room as Puff the Magic Dragon.
Social Security is also significantly different form Ponzi Schemes in several ways. The government makes people pay into it. They recruit you in the same way British press gangs recruited sailors for Her Majesty’s Royal Navy. At least with Social Security, they limit themselves to shanghaiing a portion of your paycheck. So unlike Bernie Madoff’s iniquitous scheme, there really is another sucker born every minute. Once any US citizen or worker employed legally in the US gets to payday; they will enjoy their dhimmitude.
The IOME’s supporting the mythical Social Security Puff the Magic Dragon Trust Fund, are government debt obligations that must be redeemed before other bills can be paid. In 2005, President George W. Bush described the Social Security Trust Fund as he saw it.
Read more here: Truth, BS, SS And Ponzi Schemes | RedState