Editorial: Social Security far from a 'Ponzi scheme'

All of which makes Texas Gov. Rick Perry's views on Social Security both curious and troubling. At last Wednesday's debate among Republican presidential candidates, he reiterated his view that the program is a "Ponzi scheme" and "monstrous lie." In previous appearances and in his writings, Perry — who is leading recent polls of Republican voters — has also called Social Security a failure and suggested it runs contrary to important constitutional principles.

A Ponzi scheme? A failure? A lie? Really?

Yes, Social Security has major funding problems. It pays out more in benefits than it takes in, and the gap will grow steadily worse as Baby Boomers retire. To that extent, Perry has a point. Congress, under both Republican and Democratic control, has been negligent in making necessary adjustments to bolster Social Security's balance sheet for the long term. But the program's problems are largely the result of people living longer, and therefore collecting more in benefits, rather than some inherent structural shortcoming or constitutional failing.

Social Security is most certainly not a Ponzi scheme, which is an undertaking designed to swindle people out of their money by using incoming revenue to produce bogus investment returns to attract more money (see Ponzi, Charles and Madoff, Bernard).

Ponzi schemes have two salient features. First, they are criminal enterprises, which Social Security is not. Second, they work only until people get wind of what is going on, at which point they inevitably collapse. Social Security's finances are plainly visible for all to see. The imbalances emerging now are a surprise to no one, and modest adjustments in tax rates, benefit formulas and the retirement age can ensure the program's viability for generations to come.

Perry is playing to fears among younger voters that Social Security won't be around for them; polls have shown that more than 60% over those under 30 don't expect to collect. But even if nothing is done, the program could still pay about three-quarters of promised benefits at mid-century.

Perry has not made clear what he'd do with Social Security if elected president. Perhaps we'll hear more at tonight's Republican debate in Florida, a hotbed of support for the program. In the past, Perry has pointed to some kind of state or local opt-out, at least for government workers. But, like the other major contenders, he has not fleshed out a comprehensive plan.

Whatever changes he does propose, be they modest or dramatic, overheated rhetoric only cast Perry as one more loud, stubborn voice — obviously not the cure for what ails Washington. By contrast, former president George W. Bush put forth solidly Republican ideas on Social Security overhaul while showing a healthy respect for the program and the problems that it solved.

If Perry or another GOP candidate prevails in 2012, it will be more from President Obama's inability to lift the economy out of the doldrums than to some supposed desire on the part of the American public to rethink the long-standing national consensus on Social Security. The rethinking that needs to take place is in the governor's campaign headquarters.