Sep 21, 2011
Mike Coffman: Social Security is Obviously a Ponzi Scheme
Republican Congressman Mike Coffman (CO-06) has made it clear that he stands with Republican presidential candidate Rick Perry, who called Social Security a Ponzi scheme. On a recent radio show, Coffman plainly said of Social Security, “I think obviously it is a Ponzi scheme.” Just this week, House Budget Chairman Paul Ryan (WI-01) agreed saying “That is how those schemes work.” And House Republican leaders, including NRCC Chairman Pete Sessions and House Republican Conference Chairman Jeb Hensarling, have introduced a new plan to end Social Security as we know it.
“Congressman Coffman’s belief that Social Security works like a Ponzi scheme proves – once and for all – that House Republicans have declared war on seniors,” said Amber Moon, Western Regional Press Secretary. “A Ponzi scheme is Bernie Madoff ripping off Americans – not Social Security benefits that seniors earned and depend on during retirement. After Coffman voted to end Medicare, his Republican leaders continue to push a new plan to end Social Security as we know it. Now they’re lining up behind the radical, dangerous idea that it’s nothing but a Ponzi scheme.”
Background
Coffman said Social Security is “Obviously” a Ponzi Scheme. It was reported on September 20, 2011 that Congressman Mike Coffman told a local radio host, “I am obviously going to support whoever the nominee is. But I have to admit to you philosophically I am closer to Perry…Obviously, I hope he gets better on the debate stuff. I think he did good. I think he did better on Social Security. I think obviously it is a Ponzi scheme, but he has to say he is going to fix it. And he did that in the last debate where he didn’t do that in the first debate. Now I think that was positive.” [Blog, Politico, 9/20/11]
Paul Ryan Called Social Security a Ponzi Scheme. On September 20, 2011, Paul Ryan equated Social Security to a Ponzi scheme. When asked by conservative radio host Laura Ingraham if he agreed with Governor Rick Perry, who earlier compared Social Security to the type of investment fraud, Ryan claimed that he did. “So if you take a look at the technicality of Ponzi—I would—it’s not a criminal enterprise, but it is a pay-as-you-go system where—you know—earlier investors, or say taxpayers, get a positive rate of return and the most recent investors, or taxpayers, get a negative rate of return,” said Ryan. “Your kids and my kids, Laura, they’re the same age are going to get about a negative one percent on their payroll taxes if Social Security and even pay them their benefit, which it can’t. And so, it is obviously, that is how those schemes work.” [Laura Ingraham, 9/20/11]
Securities and Exchange Commission Defined a Ponzi Scheme as a Type of Investment Fraud. According to the Securities and Exchange Commission, “A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.” [Securities and Exchange Commission, accessed 9/20/11]
House Republicans Propose Social Security Opt-Out. “House Republicans on Friday introduced legislation that would allow workers to partially opt out of Social Security immediately, and fully opt out after 15 years.” The measure was introduced by NRCC Chairman Pete Sessions (TX-32) and Republican Conference Chairman Jeb Hensarling (TX-05) among others. [The Hill, 6/6/11]
Dallas Morning News: Dow's Fall Shows Peril of Changing Social Security. “The stock market fell again Friday, marking a six-week slump. That’s bad news for investors — and bad timing for Dallas Rep. Pete Sessions and others who want to transform Social Security by creating investment accounts for workers. Sessions, who runs the Republican congressional campaign effort, has been pushing as long as he’s been in the House to partly privatize Social Security. […] Indeed, after President George W. Bush’s failed push for a similar plan early in his second term, most Republicans backed away from the idea.” [Dallas Morning News, 6/11/11]
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