Perry Is Right: Social Security Is a Lot Like a Ponzi Scheme

FDR wasn't Bernie Madoff, but his program's severe structural flaws cause it to resemble that of a fraudulent hedge fund

Now that it is beginning to look like Texas Gov. Rick Perry has a serious shot at nabbing the Republican presidential nomination, his critics have begun dissecting his political views. One particularly controversial one is his claim that Social Security is a Ponzi scheme. As you might guess, progressive groups are particularly disturbed by this assertion, since it implies that he is against entitlements. Although he may be technically wrong, he's basically right.
Why Social Security Is Like a Ponzi Scheme
Zaid Jilani at Think Progress argues that Perry doesn't know what he's talking about:

A Ponzi scheme is an economic arrangement where the money paid into the system by later entrants is paid right back out as benefits to earlier entrants. None of these social insurance programs that Perry mentioned fit this definition. They benefit those who pay into them with guaranteed benefits.

Wait -- what? Social Security fits that precise definition. It was created during the Great Depression by President Franklin D. Roosevelt. Retirees began receiving benefits immediately, without having paid into the program themselves. Those benefits were paid by taxing current workers. So, in fact, Social Security is technically identical to the definition of a Ponzi scheme that Jilani provides.

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