Dick Armey calls Social Security ‘corrupt’, a ‘pay-as-you-go Ponzi scheme’
The social safety net that helps millions of retired and disabled Americans remain in their homes and continue purchasing food is really a corrupt “Ponzi scheme” that should be made “voluntary,” according to former Republican House Majority Leader Dick Armey.
Armey, who chairs FreedomWorks — one of the political organizations responsible for bringing a greater Republican identification to the original, Ron Paul-supporting tea party groups — made the comments during a roundtable at the Right Nation 2010 convention in Chicago.
His attack on Social Security is unsurprising, as Armey and other Republican figures have for years led a charge to privatize or otherwise eliminate the generations-old safety net. Though Armey has long insisted that government programs be made voluntary, analysis from the Center for American Progress shows that if Americans were given the choice to opt out of Social Security, it would collapse the system.
“These programs need younger, working people to contribute to them, so letting millions of people opt-out would likely yank retirement benefits from older Americans who paid into the system on the promise that they would be taken care of upon retirement,” they noted.
“Moreover, wealthy people who can afford their own retirement plans would likely opt-out, slashing revenues and leaving less-affluent Americans stuck in underfunded or totally insolvent programs. And as former Vermont Governor Howard Dean […] pointed out, some people who opt-ed out on the expectation that they would make enough money to support themselves in their old age would inevitably be unable to do so, leaving the country with a ‘moral obligation’ to care for them, but with no means of doing so.”
“The government uses the concept of a trust fund to take your money under false pretenses,” Armey told a gathering of bloggers in Chicago. “For years, I wrote about and talked about and taught about what I call ‘corrupt government practices,’ because they’re always so quick to talk about corruption. One of the corrupt government practices is stealing your money under false pretenses.
“I’ll give you a to wit: Social Security. When they had the Alan Greenspan commission, they knowingly raised payroll taxes more than what was necessary to meet the flow of output. Social Security is a pay-as-you-go Ponzi scheme. They knew very well that the extra $250 billion would be spent on their social schemes.”
Privatizing or fundamentally changing Social Security has been at the core of the Republicans’ agenda for years, since they tried and failed to roll the safety net into Wall Street-connected personal retirement savings accounts during the George W. Bush administration.
In the South American nation of Chile, when the US-backed miltiary dictator Augusto Pinochet removed his nation’s Social Security-like system at the prompting of labor minister Jose Piñera, the economy suffered greatly. Pinochet’s policies were largely influenced by famed US economist Milton Freedman, who advocated an extremist view of privatization of nearly all resources, and an elimination of government interference in private markets.
“The [World Bank] found that exorbitant fees and other costs charged by private pension fund managers eat up as much as 15 percent of the contributions made by average Chilean workers, and even more for poorer workers,” Mother Jones noted in 2005. “Investment returns have been far more modest than the hefty 11 percent return claimed by the private managers. The Chilean government’s pension superintendent says actual returns for someone earning Chile’s minimum wage were only 3.7 percent between 1994 and 2000.”
Pinochet’s labor minister, who left Chile to work for the conservative-leaning CATO Institute, went on to be credited as the man who influenced President Bush to side with efforts to privatize America’s safety net.
Despite many Republicans claiming there are none among their ranks who wish to demolish the otherwise very popular program, Armey’s latest resurgence once again highlights the underlying support for a radical right-wing agenda.
“One of the worst ideas is privatization,” Sen. Bernie Sanders (I-VT) opined in a recent op-ed. “After the greed and recklessness of Wall Street caused markets to collapse in 2008, does anyone still seriously believe it would be a good idea to turn the retirement security of millions of Americans over to Wall Street CEOs whose dishonesty and irresponsibility have no end?
“Their administrative fees alone would take a 15 percent bite out of workers’ retirement investments, not to mention the real threat of another stock market collapse. In sharp contrast, administrative costs for Social Security are less than 1 percent of the program’s budget.”
“Most importantly,” he emphasized, “despite economic conditions and the ups and downs of the stock market, Social Security has never failed to pay full benefits to every eligible beneficiary.”
A recent Wall Street Journal poll [PDF link] found that two-thirds of US respondents were uncomfortable with candidates who supported privatization of Social Security.
Other Republicans who’ve spoken out for the demolition of Social Security include Sen. Jim DeMint (R-SC), Rep. Paul Ryan (R-WI) and Rep. Michele Bachmann (R-MN). GOP candidates who’ve supported similar plans include Senate hopefuls Joe Miller, Rand Paul, Ron Johnson, Sharron Angle and Pat Toomey.
By contrast, more than 50 Democrats in the House have added their names to a letter demanding President Obama resist calls to privatize or otherwise cut “the best social safety net program America ever created.”
After this year’s elections, an Obama-appointed “federal deficit commission,” led by Morgan Stanley board member Erskine Bowles, is widely expected to recommend the government cut or privatize Social Security. One of the commission’s members, former Sen. Alan Simpson (R-WY), attracted controversy in late August when he called Social Security “a milk cow with 310 million tits.”
This video is from Think Progress, published Sept. 20, 2010.
Updated from an original version.