Yes it is! No it isn’t! OK, it is!
Rep. Joe Heck (R-NV) can’t make up his mind about whether Social Security is or is not a pyramid scheme. His latest contention is that it is, indeed, a pyramid scheme that should be privatized, though last week he walked back the same claim.
Last week, the GOP freshman told a group of constituents, “when they first conceived Social Security, they didn’t think they were going to be paying benefits for 13-15 years. That’s one of the reasons why this pyramid scheme isn’t working.”The crowd responded with howls of derision. Under public pressure, and amid growing public unease with Republican plans to phase out existing entitlement programs, Heck swiftly retracted the claim to Nevada’s top political reporter, Joe Ralston.
“Those who have followed my position know that I am fully committed to protecting the promise of Social Security,” he said.
But on Tuesday, Ralston busted Heck making the same claim on talk radio. In response to a caller who criticized Social Security as — again — a pyramid scheme, Heck heartily agreed.
“Yeah, it’s a great question Robert and you’re exactly right,” Heck said.
You know back in 1955 there were nine people paying in for every person collecting. By 1973 that dropped down to three to one. It’s projected that over the next 20 years it will be down to two to one. You know and it’s already said that Social Security is probably going to be insolvent in about 20 years. So we can wait until 20 years from now to take action, or we can take action now. And like you I’ve been paying into Social Security for almost 32 years and want to make sure that there’s a benefit there when I retire. I co-sponsored a bill that would say that Social Security contributions from your paycheck go into a fund that can only be used to pay for Social Security. You know, Congress… previous Congresses have raided the trust fund for other pet projects and to try to balance the budget and use it for other projects. We’ve got to make sure that the money going in goes specifically to those that are expecting a benefit at some point in time. And then we’re going to have to look at a lot of other options to put on the table to make sure that the program remains viable and stable.
Social Security opponents, and those who advocate cutting benefits by raising the retirement age, often argue that increased life expectancy is a major driver of the program’s long-term shortfall. But average life expectancy has increased in the last several decades largely because infant mortality has decreased, and young people in general are more likely to survive until old age. However, the life expectancy for people who are of retirement age has barely increased at all.
Actuaries project Social Security to remain solvent for more than 20 years under current revenue and benefit formulas, and it can be made solvent indefinitely with modest adjustments to benefits or revenues, or a combination of the two. However, high-profile Republicans in the House have recently readopted a plan to divert Social Security revenues into private accounts for workers, to phase out the program’s retirement guarantee over time entirely.