Senator Ron Johnson has come under fire after making the statement that Social Security is nothing more than a “legal Ponzi scheme” and extended his support for privatizing the program. Though he made it clear that he supported a privately run organization, he said the public just wasn’t ready for the idea… yet. “Currently, politically, you can’t do it,” Johnson stated while in Oshkosh, Wisconsin on June 3rd. “We’ve got to convince more of our fellow citizens that Social Security really is — and by the way, I was wrong when I said this in 2010, I said it’s a Ponzi scheme, and Ponzi schemes are illegal. So, Social Security is — it’s a legal Ponzi scheme.” This isn’t his first time making such statements, as he called the program a “Ponzi Scheme” when he was first elected to the Senate in 2010.
So why does he believe the myth that the nation’s largest and most popular social insurance system is a fraud? Actually, Social Security is a very transparent program that faithfully extends reports quarterly on its 75-year financial position. Just like national pension systems, Social Security taxes workers to provide benefits for retirees and people with disabilities. There are some years when Social Security takes in more than it pays out, but at that point it invests the excess in U.S. Treasury bonds, guaranteed by the full faith and credit of the U.S. government, and has never been late on a payment to date.
The reason behind Johnson’s statement? Apparently he believes that the government can no longer honor the Treasury bonds in which Social Security’s surplus is invested and “the trust fund has exactly zero in financial value”. Actually, Social Security has a surplus of $2.8 trillion held in Treasury bonds that are no different than the ones held by China and our other creditors.
Regardless, Johnson is right about one thing: privatizing Social Security, which would require Americans to privately invest their money and take on the accompanying risks, remains extremely unpopular and already failed miserably in 2005 when it was previously attempted by President George W. Bush. I think the majority of American’s would agree on one thing: if it ain’t broke, don’t fix it.