Ahead of today's release of the annual Social Security trustees' report, Trudy Lieberman of the Columbia Journalism Review reviewed the failures of the mainstream media in its coverage of Social Security. As Lieberman wrote, "[M]uch of the press has reported only one side of this story using 'facts' that are misleading or flat-out wrong while ignoring others."
A great example of the media's unwillingness to accurately report on Social Security came when Texas Gov. Rick Perry described the program as a “Ponzi scheme.” Most coverage of the incident focused either on its political fallout or presented the issue in a “he said-she said” style -- ignoring the false nature of the “Ponzi” attack.
Social Security is not a Ponzi scheme. People who call it a Ponzi scheme are not “wrong but partially right,” they're not “called wrong by critics” -- they're just wrong.
A Ponzi scheme is a criminal endeavor that involves opaque financial dealings that promise investment returns when none or next to none actually exist. Social Security's finances are crystal clear, and the interest generated by its trust fund is quite real.
A Ponzi scheme eventually collapses. According to last year's report, Social Security can continue as it is, paying full benefits for nearly 25 years, and 77 percent of promised benefits thereafter.
During coverage of Perry's claims, the Los Angeles Times wrote that "[s]upporters of Social Security argue that the program is a general benefit," while "[o]pponents, like Perry, see the program as a robbing of one generation to pay for the older one, a type of cheat akin to a Ponzi scheme." At no point did the article acknowledge that the “Ponzi scheme” attack was incorrect.
Meanwhile, a Politico story focused entirely on reactions to Perry's comments from Republican officials and completely ignored whether or not his comments had any basis in reality. And a Christian Science Monitor article reported that Perry “says he is not backing down from what he said, but the point is to get people's attention and push for ways to reform Social Security so it will endure long enough to help today's youngsters.”
While the Ponzi lie is aided in the news, it is abetted in the opinion pages. Charles Krauthammer of The Washington Post has written that Social Security is “of course” a Ponzi scheme, and in a syndicated column, John Stossel wrote that "[t]o the extent people believe there are trust funds with their names on them, Social Security is absolutely a Ponzi scheme."
The “Ponzi” attack has been around for decades. A search of the Nexis database shows that in 1989, a guest columnist at USA Today applied the term to Social Security, along with Medicare and the federal pension system. In 1992, CNN's Larry King hosted former Reagan budget director Jim Miller, who made the same attack.
The same false attack is likely to continue as long as newspapers insist on publishing “he said-she said” stories alongside conservative columnists intent on undermining Social Security for ideological reasons.