DAYS OF PONZI! The Post and the Times don't react!

All week long, we'll examine the press corps' reaction to Rick Perry's "Ponzi scheme" foofaw.

MONDAY, SEPTEMBER 12, 2011

The Post and the Times take a hike: Last Wednesday night, the future prospects of Social Security seemed to come center stage in our political discourse. At that evening’s GOP debate, Rick Perry shot his mouth off good about the venerable program.

Social Security is nothing put “a Ponzi scheme,” the fiery orator memorably said. He also said the venerable program is “a monstrous lie.”

These were Perry's basic remarks. They drew a lot of attention:

PERRY (9/7/11): People who are on Social Security today, men and women who are receiving those benefits today, or individuals at my age that are in line pretty quick to get them, they don’t need to worry about anything. But I think the Republican candidates are talking about ways to transition this program, and it is a monstrous lie.

It is a Ponzi scheme to tell our kids that are 25 or 30 years old today, you’re paying into a program that’s going to be there. Anybody that’s for the status quo with Social Security today is involved with a monstrous lie to our kids, and it’s not right.

[...]

If Vice President Cheney or anyone else says that the program that we have in place today, and young people who are paying into that, expect that program to be sound, and for them to receive benefits when they reach retirement age, that is just a lie. And I don’t care what anyone says. We know that, the American people know that, but more importantly, those 25-and-30-year-olds know that.

Perry used some fiery language, helping conservatives see how bold he is. Moving beyond the fiery rhetoric, he seemed to assert that people in their 20s today will not “receive benefits when they reach retirement age.” And he said these young people know it.

In fairness, Perry’s remarks were a bit imprecise. But between his eye-catching "Ponzi scheme" hook and the clear language of his second statement, he seemed to say that younger people will receive no benefits from Social Security when they retire.

Telling them different is “a monstrous lie,” Perry seemed to assert.

Conservatives have been making such statements and insinuations for decades, of course. Their various propaganda campaigns have been very effective; surveys have repeatedly shown that large numbers of people are heavily dis- and misinformed about this venerable program. To wit:

As far back as 1994, the Associated Press reported a famous survey of voters aged 18 to 34. Even at that early date, those younger voters seemed thoroughly clueless about the program’s future financial prospects. “Young Americans find it easier to believe in UFOs than the likelihood Social Security will be around when they retire,” the AP reported. Among respondents to the new survey, 46 percent said they believed in UFOs. Only 28 percent said they believed that Social Security would still exist by the time they retire.

In fairness, those younger voters were asked to make a prediction; any prediction can turn out to be accurate. That said, there was no sound basis for the gloomy view those disinformed youngsters expressed. For the most part, those younger voters had been misled by decades of dis- and misinformation.

How ubiquitous was the dis- and misinformation at that time? Even the AP report describing the survey gave a thoroughly bungled account of Social Security’s future prospects! This account, by the AP’s Jennifer Dixon, was baldly misleading, like a great deal of mainstream reporting:

DIXON (9/26/94): "Despite their faith in UFOs, young people know that the solution to the Social Security funding crisis—and the national debt crisis—will not fall from the sky," said Richard Thau, Third Millennium executive director.

Indeed, a new draft report by the Congressional Budget Office concludes that "no easy fixes to the funding problems of the Social Security system exist."

Right now, the Social Security trust funds take in more than they spend. This year alone, CBO estimates that Social Security will collect about $58 billion more than it will pay in benefits.

But during the retirement years of the baby boomers, the generation of people born between 1946 and 1964, annual benefits will exceed receipts and the trust funds will be exhausted by 2029, unless changes are made.

Under current arrangements, “the trust funds will be exhausted by 2029,” Dixon reported. That was an accurate account of the forecasts as they existed at that time. But Dixon made no attempt to explain what would happen to Social Security after the trust funds were exhausted. In particular, she failed to explain the large, reliable funding stream which would still exist.

Almost surely, many readers were misled by Dixon’s inept report. Indeed, some newspapers ended Dixon’s report right there, with that gloomy statement. (For one example, click here.) A reader would get the plain impression that Social Security would have no funds at all after 2029! That impression would have been utterly bogus, of course. But the bogus impression was plainly lodged in Dixon’s hapless report, even if you read every word she wrote.

Reporting like that, down through the years, has confused, misled and misinformed tens of millions of voters. Some of this bogus reporting has been deliberate. Presumably, much of it has simply reflected the haplessness of our “press corps.”

Today, as then, large numbers of voters don’t understand the way this program works. They don’t understand the way it's funded; they don’t understand the way it will continue to be funded after the “trust fund” runs out. These voters believe the day is coming when Social Security will go belly-up. They believe what Perry seemed to say: That they will not receive any benefits. They believe that any claim to the contrary is a monstrous lie!

Candidate Perry seemed to put this topic center stage. He used some very colorful language; he made some fiery claims. If you lived in a rational world—if you lived in a world with an actual press corps—you would have read some competent, coherent accounts of the way this program works.

If you lived in a rational world, the Washington Post and the New York Times would have leaped into action. The great newspapers would analyzed the various things Perry said. But you don’t live in a rational world. And your country rather plainly does not have an actual “press corps.”

When it came to the substance of what Perry said, the Washington Post and the New York Times utterly failed to react.

Tomorrow: The Post and the Times, playing Ponzi