Krugman to the Rescue!

Email Print
FacebookTwitterShare

In 1956, my father got Pearl-Harbored (one might say he was almost Hiroshima’d) for suggesting on his popular radio show that Social Security was a “Ponzi Scheme.” He told the story of Ponzi’s arrest, incarceration, and ultimate deportation to Italy — and then made some poignant observations about the Social Security program:

“Ironically, Ponzi was hardly out of the country before the same federal government that had imprisoned him for fraud proceeded to adopt the Ponzi “get rich easy” scheme as its very own. Ponzi had represented his financial jackpot as a “securities exchange.” The federal government proceeded to call it “Social Security.”

The federal government was able to add some important features to this bizarre shell-game that were unavailable to Ponzi. First of all, the federal government cannot be prosecuted for fraud. But more important than that is the exclusive governmental feature of compulsory participation.”

Today,  54 years later, Paul Krugman exonerates the Federal Ponzis, insisting that “cruel attacks” on its solvency are baseless because “Social Security has been running surpluses for the last quarter-century, banking those surpluses in a special account, the so-called trust fund.” But just in case — how could the Compassionate Krugman resist?—- he one-ups Ponzi with his usual bromide: tax the rich.

In the mid-1980’s, a stalwart senate staff colleague of mine decided to find this “Social Security Trust Fund.” She finally found it, literally, in the desk drawer of a mid-level federal bureaucrat somewhere in West Virginia — handwritten numbers representing the “value” of the “trust fund” for each passing year. Of course, the “bank account” had no money in it:  Congress had already spent every penny.

7:28 am on August 16, 2010