In last night’s CNN/Tea Party Express debate, Rick Perry may have been misleading in remarks about Social Security and his handling of the controversial HPV vaccine program, according to PolitiFact Texas, a joint operation between PolitiFact.com and the Austin-America Statesman.
Last week, Perry made headlines and cable news clips when he called social security a “Ponzi scheme.” During last night’s debate, Perry tried to distance himself from the “Ponzi” label since many commentators and critics, including Mitt Romney, blasted him for it.
“Referring to Social Security as a ‘Ponzi scheme’ has scared seniors,” Romney said during the debate.
Nonetheless, Perry stuck to his claim by blaming others for using the label when he said, “It has been called a Ponzi scheme by many people before me."
So how fair is it to use the term “Ponzi scheme” when describing social security?
In a 2009 article on CNN Money, Mitchell Zuckoff, a Boston University journalism professor who has written a book on Charles Ponzi, said there are three distinct differences between Social Security and a Ponzi scheme, which by definition is both fraudulent and unsustainable, that make the association misleading.
“First, in the case of Social Security, no one is being misled,” Zuckoff writes. “Social Security is exactly what it claims to be: A mandatory transfer payment system under which current workers are taxed on their incomes to pay benefits, with no promises of huge returns.
Indeed, the average monthly social security payout for a retired worker is $1,177, according to the Social Security Administration. http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/13/~/average-monthly-social-security-benefit-for-a-retired-worker Therefore, if a “huge return” is not what people are expecting from their social security payouts, social security does not fit Zuckoff’s first Ponzi scheme criterion.
The second difference between Social Security and a Ponzi scheme is sustainability; a Ponzi scheme eventually runs out because it is designed to do so. But Social Security can be maintained through policy and, what many people fear, higher taxes.
“Social Security isn't automatically doomed to fail,” Zuckoff says. “Played out to its logical conclusion, a Ponzi scheme is unsustainable because the number of potential investors is eventually exhausted… It's true that Social Security faces a huge burden -- and a significant, long-term financing problem -- in light of retiring Baby Boomers. (The latest projections anticipate Social Security tax revenues to fall below costs in 2017 and the Social Security Trust Funds to be exhausted in 2041.) But Social Security can be, and has been, tweaked and modified to reflect changes in the size of the taxpaying workforce and the number of beneficiaries. It would take great political will, but the government could change benefit formulas or take other steps, like increasing taxes, to keep the system from failing.”
The third difference is not economic or technical, but moral.
“Social Security is morally the polar opposite of a Ponzi scheme… At the height of the Great Depression, our society (see "Social") resolved to create a safety net (see "Security") in the form of a social insurance policy that would pay modest benefits to retirees, the disabled and the survivors of deceased workers,” Zuckoff writes. “By design, that means a certain amount of wealth transfer, with richer workers subsidizing poorer ones. That might rankle, but it's not fraud.”
A commenter on a similar debate in the New York Times said, “By Perry's calculation, buying stock is a ‘Ponzi scheme’. When I buy a share of GE, I'm paying someone who already owns it. When I eventually sell it, I will be paid by a "greater fool", in the Ponzi sense. All investments are to be paid in the future by someone else. What is Perry talking about?”
Based on the differences between Social Security and a Ponzi scheme that Zuckoff notes, PolitiFact Texas rated Perry’s association of the two as rated it as "False."
Perry also took a lot of heat in last night’s debate for issuing a mandate in 2007 that required young girls to take HPV vaccines, which drew criticism from liberals and conservatives at the time, and provided fodder for Perry’s opponents during the debate last night.
“This is an issue that could have gone before the Legislature,” Bachmann said. “The governor chose by himself unilaterally to sign an executive order to put through the requirement that all innocent little 12-year-old girls or 11-year-old girls in state of Texas would be forced by the government to take an injection of what potentially could be a very dangerous drug.”
However, Perry said that he only wanted to prevent girls from getting cancer and that the vaccine was optional and parents could choose to “opt-out” if they choose.
In order to opt-out of the HPV vaccine, parents have to obtain a conscientious objection affidavit form and renew it every two years, according to the Texas Department of State Health Services.
But aside from the likely scenario that most parents simply would not have had the time to request and fill out the form or the knowledge of how controversial the vaccine was to base their decision on, PolitiFact Texas found that private schools did not have to accept the opt-out form.
According to a 2006 Texas Attorney General's opinion, "A private school that does not accept state tax funds is not required to accept for enrollment a child who has received an exemption from the immunizations required by the Texas Health and Safety Code."
Therefore, if a private school required that students must have all state-mandated vaccinations, the student would be forced to take the HPV vaccine. But because attending a private school is a choice, PolitiFact Texas could not rate Perry’ claim as “False,” so it rated it as rated it as "Barely True."
Conservative columnist Devvy Kidd said that if Perry's HPV vaccine mandate was truly optional, the state of Texas would have offered an "opt-in" option rather than an "opt-out."
"The promoters and advocates are counting on not enough of the affected citizens will know their right to opt out and get snared," Kidd wrote in 2007, shortly after the HPV mandate was passed. "If Gov. Perry made this executive order an opt in, no doubt larger numbers of parents would never opt in and his scheme would fail. By making it an opt out option and using propaganda to sell this poison, too many unsuspecting parents who don't get the message will be mislead."
Now on the presidential campaign trail and taking heavy criticism for his handling of the HPV vaccine program, Perry told a New Hampshire crowd he wishes he made the vaccine a opt-in rather than an opt-out, according to the Texas Tribune.
"What we should of done was a program that frankly allowed them to opt in or some type of program like that," he said.