The other day, a number of publications reported that Paul Ryan had called Social Security a Ponzi scheme. “Paul Ryan Supports Rick Perry: Social Security Is A Ponzi Scheme,” read the Huffington Post headline. The Hill reported: “Social Security fits the technical definition of a Ponzi scheme, Rep. Paul Ryan (R-Wis.) told conservative Laura Ingraham on her radio show.” But as Michael Warren pointed out, Ryan never said Social Security is a Ponzi scheme.
“No, no,” Ryan told me today when asked if he said Social Security is a Ponzi scheme. “It’s not a criminal enterprise, which obviously Ponzi and Madoff were. Criminal intent was the basis of those efforts.” Ryan noted there are similarities between pay-as-you go systems and Ponzi schemes, but the distinction appeared lost on some in the media. “From a technical standpoint, pay as-you-go systems where older investors and retirees get a positive rate of return and more recent and younger investors get a negative rate of return, it’s what’s happening in Social Security and what happened in those schemes as well,” Ryan said today. “The point is it’s a popular program that’s critical, it’s going to have across the board benefit cuts that will hit current seniors if nothing is done, and it’s giving the next generation a bankrupt program. So you have to reform it to save it–to fix it.”
