Ponzi Scheme or Lifeline? Voters vs. Politicians on Social Security

Incredibly enough, Social Security -- long considered a third rail of politics -- has become a ferocious touchstone during this Presidential primary cycle, even with the Iowa Caucus still a half-year away. This internecine squabble was set off nearly a month ago when Matt Yglesias, who took the trouble to read Rick Perry's new book, Fed Up!, found the governor had called Social Security "by far the best example" of a program "violently tossing aside any respect for our founding principles." (A bold position, to some extent, given that at 87 percent of Republican voters do not share it.) Perry has since called Social Security a "Ponzi scheme," betraying a lack of familiarity with genuine Ponzi schemes.

It's an opinion shared, more or less, by each plausible Republican aspirant for President. This includes Mitt Romney and Michele Bachmann, both of whom, it appears, are eager to distance themselves from Perry's position. That won't wash: As Steve Benen notes, contra Rush Limbaugh's claims, Romney hasn't gone so far as to call Social Security as Ponzi scheme. But he has compared it to a fraudulent criminal enterprise, which is no better or less incorrect. Bachmann, for her part, said a year ago that Social Security was "a tremendous fraud" and that, as Yahoo put it, "anyone who ran a business modeled after the program would be 'thrown in jail.'"

Neither the attacks on Social Security, nor its denigration as a Ponzi sceme, are a recent development. Conservative intellectuals and politicians have opposed the federal program for a long time and compared it to the famous confidence trick since at least 1967, when the idea was mainstreamed by Paul Samuelson. Even Ronald Reagan, to whom liberal writers are sometimes wont to attribute views similar to their own, believed this. According to his biographer, Lou Cannon "I have no doubt that he shared the view that Social Security was in fact a Ponzi scheme."

Reagan wanted Social Security payments to be voluntary -- which, as Cannon notes, would have undermined the whole system.

A major reason this hasn't happened is the chasm between the desires of conservative intellectuals and politicians (to get rid of Social Security) and their constituents (to have a secure retirement). Reagan himself learned this the hard way in 1983, when tried to cut benefits for early retirees and was rebuked by a Senate vote of 96-0. Two decades later, at the outset of his second term, President George W. Bush spent his "political capital" on a push to privatize Social Security (he later denied, unconvincingly, this was his intent). Despite a 60-day blitz meant to sell Americans on the merits of the plan, approval for the reform languished at roughly 35 percent and by April of 2005, nearly a third of Republicans were "uneasy" about Bush's approach to the entitlement.

The support to reform Social Security in the manner simply isn't there. If it was, Rick Perry would probably not feel compelled to claim that what he really wants is to "mak[e] [Social Security] more financially sound and sustainable for the long term," a goal shared by many Democrats. If it was, Eric Cantor would not need to moonlight as Perry's translator ("The point the governor was trying to make. . . .")

For now, we can probably assume this kabuki will continue ad infinitum. It's tempting to view this as merely a sideshow to be tolerated every four years -- but not today. Today, via the Census Bureau, we learn that the number of Americans living in poverty is at record highs, and of 46.2 million who aren't even scraping by, 9 percent are age 65 and older.

Social Security is the only reason that number isn't even more appalling.