Explaining Social Security’s financing mechanisms to the average person just isn’t easy. That fact is one reason why conservatives for years have, somewhat successfully, persuaded too many to believe that Social Security is a Ponzi scheme—regardless of the facts. Kudos to Mother Jones
for making yet another run at explaining why Social Security is absolutely not a Ponzi scheme.
We urge our readers to print this one out, learn it, and arm yourself so that you can educate the next person you hear who makes this ridiculous claim.
We’d also suggest you make this an election day litmus test because as we’ve said again
and MJ says so well here:
“anyone who says that Social Security is a Ponzi scheme either misunderstands Social Security, misunderstands Ponzi schemes, is deliberately lying, or some combination of those “
A Venn Diagram for Rick Perry: Social Security Is Not a Ponzi Scheme
On Saturday, Texas Gov. Rick Perry told a group of voters that Social Security is a "Ponzi scheme" and a "monstrous lie" to younger Americans. It's not the first time the GOP presidential candidate has made such claims. The Texas governor also described Social Security as a Ponzi scheme in his 2010 book, "Fed Up!," and has argued the program is unconstitutional and could be handed over to the states.
When politicians make clearly false claims, reporters have an obligation to explain to readers why those claims are false—or at least quote someone who can. I would suggest political scientist Jonathan Bernstein:
Very simple: anyone who says that Social Security is a Ponzi scheme either misunderstands Social Security, misunderstands Ponzi schemes, is deliberately lying, or some combination of those... After all, a Ponzi scheme is a deliberate fraud. Saying that Social Security is financed like a Ponzi scheme is factually wrong, but saying that Social Security is a Ponzi scheme or is like a Ponzi scheme is basically a false accusation of fraud against the US government and the politicians who have supported Social Security over the years.
Andrew Sullivan's readers also have a number of good reasons why Social Security is not a Ponzi scheme. The Social Security Administration also has a good webpage explaining why Social Security is not a Ponzi scheme. But I find that charts often make understanding things easier, so here's a Venn diagram I made that explains some of the differences and similarities between Social Security and a Ponzi scheme:
CATEGORY: [Social Security]
According to the Congressional Budget Office
and Standard and Poor’s
, Medicare spending growth has dropped sharply from an average of 9.7 percent a year from 2000-2009 to less than 4 percent since the passage of health care reform in 2010. Compare that to the fact that spending growth by commercial health insurers climbed by 7.35 percent from May 2010-May 2011 while Medicare claims rose by just 2.6 percent for that same one year span.
Of course, these facts fly in the face of Washington conservatives’ crisis calls claiming we can’t afford Medicare. Their solution is to slash benefits, raise the eligibility age, shift costs to seniors or gut the program entirely to create CouponCare. This same group also wants to repeal healthcare reform before there’s any chance seniors can see the improvements to Medicare that come as a result of the Affordable Care Act
“It is an article of faith, at least among conservatives, that as long as Medicare remains a government program, outlays will rise relentlessly, year after year. Only “the market” could possibly tame Medicare inflation, they say. The fear-mongers argue that unless we either shift costs to seniors; raise the age when they become eligible for Medicare; or turn the whole program over to private sector insurers, Medicare expenditures will bankrupt the country.
Here is the truth: Both Standard & Poor’s (S&P) and the Congressional Budget Office (CBO) now have 18 months of hard data showing that Medicare spending has begun to slow dramatically. Health reform legislation has not yet begun to kick in to pare Medicare payments, but something is changing on the ground. As I pointed out in an earlier post, Medicare spending began to plunge in January of 2010. After levitating by an average of 9.7 percent a year from 2000 to 2009, CBO’s monthly budget reports show that Medicare pay-outs are now rising by less than 4 percent a year.” Maggie Mahar, Taking Note Blog, Century Foundation
Maggie Mahar has written two detailed descriptions
of how and why this is happening, even before full implementation of health care reform in 2014.
“What is striking about the recent dip to 4 percent, is that this time around, there have been no major policy changes in Washington. Over the past 18 months, neither benefits nor payments to providers have been reduced in any significant way. The Affordable Care Act does call for cutting overpayments to Medicare Advantage insurers, while shaving annual increases in payments to hospitals, nursing homes and other institutional providers by 1 percent a year over ten years. But these changes have not yet taken effect.
This slow-down is not a result of Congress cutting Medicare spending. Instead, as former White House health care adviser Dr. Zeke Emanuel pointed out in Part 1 of this post, providers are “anticipating the Affordable Care Act kicking in 2014.” They can’t wait until the end of 2013, he explained: “They have to act today. Everywhere I go,” Emanuel, told me, “medical schools and hospitals are asking me, ‘How can we cut our costs by 10 to 15 percent?’ They know that they must trim their own costs if they are going to lower the bills that they send to Medicare.’" Like Orszag, Emanuel is seeing a “shift toward value in the health sector.”
We must allow Medicare reforms
that focus on improved outcomes while lowering costs and don’t target beneficiaries for severe and debilitating benefit cuts to be given a chance to work before jumping on a deficit bandwagon that directly targets America’s seniors for benefit cuts.
Washington’s new “Super Committee” appears ready to consider many of the destructive proposals pushed by fiscal hawks targeting Medicare beneficiaries to foot the bill for our debt reduction. Rather than targeting beneficiaries, these “Super Committee” members should build on the successes
already seen in health care reform.
CATEGORY: [entitlement reform], [healthcare], [Medicare], [Super Committee]
These days it's hard to surprise us.
Even so, this clip of Presidential Candidate Rick Perry is shocking in it's blatant disregard of the facts and acknowledgement of how little he knows about Social Security
's funding. We highly recommend you read Jed Lewison's entire coverage the event on Daily Kos
CATEGORY: [Medicare], [Presidential Politics], [Social Security]
Join us at 1:00pm (EST) today and we'll take questions from our terrific Facebook
communities on all the latest news from Washington including efforts to target Social Security, Medicare and Medicaid for benefit cuts in the ongoing debt debate.
We'll touch on everything from the newly created "Super Committee" to the numerous proposals being floated in Congress targeting benefits cuts for middle-class Americans. For example, do you know what the Chained CPI will mean to benefits, not just in Social Security? How about means testing, vouchers and caps?
Send us your question on Facebook or Twitter and NCPSSM President/CEO, Max Richtman will provide some desperately needed answers to seniors and their families worried about the future of America's vital safety net programs. You can watch our live broadcast
1:00pm (est) Thursday, 8/18
Max Richtman, NCPSSM President/CEO
Streaming by Ustream
CATEGORY: [Budget], [entitlement reform], [Max Richtman], [Social Security], [Super Committee]
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