The Social Security Con Game

Some critics of Social Security have used the analogy of likening it to a Ponzi scheme.  This is as incorrect as the belief that you are getting back from SocSec what you paid in.  Oh, wait, people - especially older people - do believe they are collecting some kind of pension from 'contributions' [yes, the SSA does call them that] to some 'account' [you do have a SS number, right?] that has been held in trust [ah, behold the magic of the Trust Fund] for them.  If you believe the basic (and invalid) premise that you are collecting on what you put in, then SocSec is a LOT like a Ponzi scheme.  Because current payees are not getting back what they put in (plus interest) - they are getting benefits paid out of the 'contributions' of current workers current wages.

SocSec recipients generally do not like the idea that they are actually recipients of an income transfer from current workers.  This was the great lie used to sell America on SocSec - that it was a pension or insurance, and you don't need some right-wing crank to tell you this, you can get it from Kevin Drum at Mother Jones,

It's easy enough to see why people believe this: it was, basically, the way the program was initially sold. And politicians ever since have found it convenient to continue this fiction. Seniors today are all convinced that the money they paid into the program during their working years was somehow saved up for them and now they're getting it back.

So what harm does this little fiction cause?  First off, it ensures that recipients believe they have a reasonable and valid claim to benefits - after all, isn't it what they put in?  It isn't of course, but rarely will any conservator of FDR's legacy ever admit that - because it undermines the popular support for collecting the benefit.  Who really wants to face up to the fact that they are living off someone elses money?

Then things get even more interesting, when progressives defend SocSec despite the incredibly regressive structure - paying benefits to middle and upper income retirees on the backs of poor to middle class workers.  Any discussion of modifying SocSec to reflect the reality of 3 workers (and shrinking toward 2) supporting 1 retiree (as opposed to the 16 to 1 ratio in earlier times) is met with a rock-ribbed conservatism that would make Calvin Coolidge smile.

Just don't call SocSec a Ponzi scheme.  It is much more appropriate to call it a Shell Game.