Social Security: Too Shady To Be Called a Ponzi Scheme

Recently Republican presidential candidate Mitt Romney criticized fellow contender Rick Perry for labeling Social Security a Ponzi scheme. Romney extolled the virtues of the soon-to-be-bankrupt program and vowed to support its continuance unconditionally if elected.

A Ponzi scheme, so named after white-collar criminal Charles Ponzi, involves a huckster collecting money from numerous investors who are promised a high or reliable return on their investment, but in which payments are made by future investors lured in by similar promises of financial gain. The scheme is unsustainable, because dividends received are not actually invested, and are not equaled by the dividends promised to investors. Earlier investors fare better than later investors, who lose their money once the scheme collapses.

Sound familiar?

Social Security, signed into law by Franklin Delano Roosevelt, involves the federal government collecting money from all working citizens, who are promised a reliable pension when they retire, but in which payments are made by subsequent generations dragged into the program. The system is unsustainable because, due to slowing population increases and politicians raiding the Trust Fund, most payroll taxes received are not actually invested and are not equaled by the payments promised to retirees. Earlier generations fare better than later generations, who will not receive benefits once the system collapses.

The history of Social Security's establishment and implementation reveal that Governor Perry is wrong about the program's being a Ponzi scheme. It is much worse.

Social Security is bigger, by many orders of magnitude, than any Ponzi scheme ever enacted in human history. It is the largest government program in the world, and the biggest component of U.S. federal expenditures. It is to the average Ponzi scheme what the Great Pyramid of Giza is to a traffic cone.

Social Security is involuntary, whereas Ponzi schemes are at least voluntary. Though applying is not technically mandatory to live and work in the U.S., the Internal Revenue Service and other agencies require it, which forces everyone to participate in the program, or makes their lives very difficult if they don't.

Social Security is better disguised than a Ponzi scheme, and thus more insidious. Unlike a Ponzi scheme, its true nature is hidden in broad daylight, which lulls ordinary citizens into thinking it couldn't possibly be as unsustainable as it is.

Social Security is longer-lasting than any real-life Ponzi scheme. Whereas most Ponzi schemes are lucky to survive a few months, Social Security has continued for over 75 years.

Social Security's insolvency won't affect young, naïve, retrainable investors, but rather elderly people at the potentially neediest and most vulnerable stage of their lives.

All of the above negative consequences of Social Security are a direct result of its being administered by the federal government.

Government has access to billions of participants, trillions of dollars in capital, and decades of time to continue the ruse.

Government forces all citizens to participate, even if they'd rather keep their money, invest as they choose, and take their chances later in life.

Government gives Social Security its imprimatur-whatever that's worth these days. Most members of both major political parties approve of continuing it more or less as is. The program is referred to as the "third rail" of politics, meaning that if you touch it, you die politically. It is as though Bernard Madoff were a major donor to both parties, and Congress refused to question his actions because his investment scheme were considered the "third rail" of politics.

Government designed Social Security to increase its ability to control the populace, by forcing them to pay in when they're young and healthy and then meting out or scaling back benefits when they're old and infirm. The Supreme Court actually ruled, in Flemming v. Nestor (1960), that the Social Security Administration is not legally required to pay benefits to retirees who have contributed to the system their whole lives, if it finds itself in a pinch: "To engraft upon the Social Security System a concept of 'accrued property rights' would deprive it of the flexibility and boldness in adjustment to ever-changing conditions which it demands..." Would that everyday businesses were afforded the same "flexibility" and "boldness" to decide not to honor their contracts in order to better adjust to "ever-changing conditions."

Supporters of Social Security only wish it had the air of respectability of a garden-variety Ponzi scheme.

Instead, we're saddled for eternity with the mother of all entitlement programs, the granddaddy of confidence games, the oldest relic of the Seven Bureaucratic Wonders of the Modern World. Even supposedly conservative presidential candidates-including, sadly, Rick Perry-are now duking it out to show how badly they want to preserve it.

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Flight 93: Who Would You Have Called To Say Goodbye?

As I have been following the overflowing descriptions and commentaries to the national tragedy of 9/11, I have asked myself the question: If I had been on Flight 93 that crashed in Pennsylvania, who would I have called to say goodbye? Who are the most important people in my life, and what would I want to tell them before the end came? We have all read about the heroism of the passengers on ill-fated Flight 93 on 9/11. Some of the men on board planned and carried out a counter-attack against the Muslim terrorists (Todd Beamer's phrase "Let's Roll" has become part of our national memory and vocabulary), And we now know that some of the cabin attendants were boiling water which they poured on the terrorists to paralyze them and stop them. All of these plans were heroic, even though the enemy prevailed and they all died.

We also know that many phone calls were made by passengers on Flight 93, final calls to those they loved. Some of these calls included valuable information on what the terrorists were planning and what their Arabic conversations revealed about who they were and where they came from. Some of the conversations were to office-mates, supervisors and bosses, to review projects for the last time. Jeremy Glick, a salesman for an Internet services company, also managed to phone. In a long conversation with his wife, Lyz, Glick said the hijackers had "put on these red headbands. They said they had a bomb...they looked Iranian." The "bomb" was in a red box, he said. The couple told each other how much they loved each other. Glick said, "I don't want to die," and his wife assured him that he would not. She urged him to keep a picture of her and their 11-week-old daughter in his head, to think good thoughts. But by far, the most emotional phone conversations on Flight 93 that day were the ones to spouses and family members. Public relations man Mark Bingham got through to his aunt's home in California. "This is Mark," he began. "I want to let you guys know that I love you, in case I don't see you again." Then, "I'm on United Airlines, Flight 93. It's being hijacked."

We listened in on these and other conversations, as it were, as we read the transcriptions and listened in to their actual words, and our hearts were filled with pain and suffering as we realized that this was the last phone call that they would make: between husbands and wives, parents and their kids, adults and their own parents, lovers and friends. Most said goodbye, and spoke of their love for each other. Some talked about being together one day in Heaven, others shared poignant moments of shared memories. It was hard for me and for you not to cry, as the words and the emotions were so loving, and so raw, as to almost overcome us. They have gone from us, even as someday we will be gone from those we love. Perhaps we should spend more time with our own loved ones before we have to make the "final phone call." When will that time come? No one knows, that is why we must make every moment count.

Find Rabbi Mel Glazer at http://www.yourgriefmatters.com/ and http://www.andgodcreatedhope.com/. After spending over thirty years as a Rabbi and Grief Specialist, Mel Glazer is now a recognized expert in the areas of grief, loss and hope. He is widely published, and his award-winning book "And God Created Hope: Finding Your Way Through Grief With Lessons From Early Biblical Stories," follows in the footsteps of Elizabeth Kubler-Ross in helping grievers journey "from mourning to morning." He has lectured nationally to religious organizations, philanthropic groups and public and private schools to convey to them the importance of accepting the reality of death and loss. Mel lives with his wife Ellen in Colorado Springs, CO, where he is the Rabbi of Temple Shalom and the Board Co-Chair of the Center for Christian-Jewish Dialogue.

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