Letter to Rep. Coffman on Social Security Comments

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Written by Dean Baker   
Thursday, 22 September 2011 14:50

The Honorable Mike Coffman
1222 Longworth House Office Building
United States House of Representatives
Washington, DC 20515

Dear Representative Coffman,

During a recent radio interview, you agreed with Governor Rick Perry’s assertion that Social Security is a “Ponzi Scheme.” This comparison has little basis in fact.

At its most basic level, Ponzi schemes are based upon the deceptive premise that for a small investment, investors will receive enormous returns. The real outcome with such schemes is often no return at all.

This is clearly not the case with Social Security.

Social Security is not based on any deception. You can find all the information you want about the program’s past, current and projected future finances in great detail in the annual Social Security trustees report. You will never find this sort of transparency with a Ponzi scheme.

Social Security has provided substantial benefits for retirees since its inception. Moreover, even if Congress makes no changes at all to the program, the latest CBO projections show that Social Security will remain fully solvent through 2038 and would pay about 80 percent of full scheduled benefits from then on, indefinitely. A program that will continue to provide retirement security for millions of people for years to come hardly fits the description of a Ponzi scheme.

As the discussion over Social Security continues, I hope that you will be careful to present the situation more accurately in future public statements. If you would like any additional background on the program, I would be happy to assist you.