Throwback Thursday: More Stephen Moore Thoughts on Social Security: “We’ve probably gone too far in providing a safety net for the elderly”, “Essentially was a Ponzi scheme”

April 4, 2019

Trump’s Fed Board Presumptive Nominee Poses Real Threat to Foundation of Americans’ Retirement Security

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WASHINGTON, D.C. – President Trump’s choice to sit on the Federal Reserve Board, discredited cable TV personality Stephen Moore, has done more than his share to keep the right-wing fantasy of abolishing Social Security alive, going as far back as 1992. During an appearance on Lou Dobbs’ CNN show that year, Stephen Moore opined: “Well, we’ve probably gone too far in providing the safety net for the elderly. To a large extent, we’ve started a system in this country where we are taxing struggling middle-class families that are young to provide lavish government benefits for people over 65.”  In 1995, Moore told C-SPAN’s audience the collapse of Social Security was “imminent” and “essentially was a Ponzi Scheme” despite the fact Social Security hadn’t missed a single payment since the 1930s, and still hasn’t in the 24 years since Moore’s prediction.

While there has been no public movement towards Moore on the idea of dismantling Social Security as we know it, he remains as dedicated to the cause as ever. As Allied Progress has noted, just last year Moore encouraged a roomful of young students: “What I want to see from your generation is hundreds of thousands of people your age going to the Capitol and yelling ‘Hey, hey we won’t pay!’ and burning your Social Security cards.”

“Someone who believes the elderly have been living too high on the hog on meager Social Security benefits is too extreme to have his hands on our monetary policy,” said Jeremy Funk, spokesman for Allied Progress. “Considering one-fifth of seniors depend on Social Security for 90 percent of their income, if Moore had his way, many older Americans would have no choice but to work until they die.  No doubt Moore intends to practice what he preaches and reject his nominally-earned Social Security benefits when he comes of age, right?”

Added Funk: “Does Moore – and President Trump for that matter— even know what a ‘Ponzi scheme’ is? Apparently not considering Social Security has delivered guaranteed benefits in full since its inception, no matter whether the economy was in recession or the stock market has been up or down. The same could certainly not be said if Social Security was replaced with a risky privatization scheme on Wall Street, as both Moore and Trump have advocated for. But Moore is the kind of guy who never updates his beliefs no matter how many times they’ve been proven wrong. Again, not a reassuring quality in someone vying to oversee the nation’s monetary policy.”

Stephen Moore Said That Social Security “Essentially Was A Ponzi Scheme.”

In 1995, Stephen Moore Claimed That Social Security “Essentially Was A Ponzi Scheme,” Americans Are Paying For Today. In a 1995 C-SPAN interview, Stephen Moore said, “The New Deal did all of those things. It launched the modern era of big government in America and I think the real legacy of the New Deal is being felt today with the huge amounts of debt that we see in the United States, the imminent collapse of Social Security. Social Security was probably the centerpiece of the New Deal legislation, and in fact, now we’re seeing that system on the verge of collapse. It essentially was a Ponzi scheme that now we’re paying the price for.” [“Stephen Moore – Social Security is a Ponzi Scheme,” C-SPAN, 04/12/95]

Stephen Moore Said The Government Had “Gone Too Far In Providing The Safety Net For The Elderly,” Which He Claimed Included “Lavish Government Benefits For People Over 65.”

During A 1992 CNN Appearance, Stephen Moore Said, “We’ve Probably Gone Too Far In Providing The Safety Net For The Elderly” And “Lavish Government Benefits For People Over 65.” During A 1992 CNN Appearance, Stephen Moore Said,“Well, we’ve probably gone too far in providing the safety net for the elderly. To a large extent, we’ve started a system in this country where we are taxing struggling middle class families that are young to provide lavish government benefits for people over 65.” [“Moneyline with Lou Dobbs,” CNN, 01/30/92]

Donald Trump Pledged To Not Cut Social Security…

In 2015, Donald Trump Said He Would Not “Cut Social Security Like Every Other Republican.” “‘I’m not going to cut Social Security like every other Republican and I’m not going to cut Medicare or Medicaid,’ Donald Trump declared in 2015. ‘Every other Republican’s going to cut, and even if they wouldn’t, they don’t know what to do because they don’t know where the money is. I do. I do.’” [Steve Benen, “It’s not just Medicare: Trump budget eyes Social Security cuts, too,” MSNBC, 03/11/19]

…But Nominated Stephen Moore To The Federal Reserve Board.

President Trump Said He Offered Stephen Moore A Nomination On The Federal Reserve’s Board Of Governors. On March 22, 2018, “President Trump said […] that he had offered a position on the Federal Reserve’s Board of Governors to Stephen Moore, a conservative economic adviser who has become an outspoken critic of the Fed’s interest rate policy.” [Jim Tankersley, “Trump Taps Fed Critic Stephen Moore for Board Seat,” The New York Times, 03/22/19]

Donald Trump Compared Social Security To A Ponzi Scheme In His 2000 Book.

In His 2000 Book, Donald Trump Compared Social Security To A Ponzi Scheme: “‘Does The Name Ponzi All Of A Sudden Come To Mind?’” “But when Trump first flirted with running for president in 2000, he wanted to privatize the program and raise the retirement age, and called the program a Ponzi scheme. ‘Fast-forward to 1941,’ writes Trump after a long explanation of the first Ponzi scheme to intro his chapter on ‘Making Social Security Secure Again.’ ‘This is the second year Social Security benefits have been paid,’ he continues, “The first recipients of Social Security, even once inflation was factored in, got the equivalent of a 36.5 percent annual interest rate on their initial contributions into the Social Security Trust Fund. For those retiring in 1956, their inflation-adjusted rate of return was still a respectable 12 percent. Julie Kosterlitz, in the National Journal, compares that figure with this: For those who are working now and looking to retire after 2015, their returns will be below 2 percent. And that’s if they ever get paid at all. Does the name Ponzi all of a sudden come to mind?’” [Andrew Kaczynski, “Trump On Social Security In His 2000 Book: A Ponzi Scheme We Must Privatize,”Buzzfeed News, 09/29/15]

Four In Ten, Or An Estimated 15 Million, Elderly Americans Would Be Living Below The Poverty Line Without Social Security.

Four In Ten, Or An Estimated 15 Million, Elderly Americans Would Be Living Below The Poverty Line Without Social Security.“Without Social Security benefits, about 4 in 10 Americans aged 65 and older would have incomes below the poverty line, all else being equal, according to official estimates based on the 2017 Current Population Survey. Social Security benefits lift more than 15 million elderly Americans out of poverty, these estimates show.” [“Policy Basics: Top Ten Facts about Social Security,” Center On Budget and Policy Priorities, 08/14/18]

Most Elderly Americans Rely On Social Security For At Least Half Of Their Income; It Provides Ninety Percent Of The Income For One In Five Elderly Americans.

A Majority Of Elderly Americans Rely On Social Security For Half Of Their Income And, For One In Five Elderly Americans, Social Security Makes Up Ninety Percent Of Their Income.“Social Security provides the majority of income to most elderly Americans. For about half of seniors, it provides at least 50 percent of their income, and for about 1 in 5 seniors, it provides at least 90 percent of income.” [“Policy Basics: Top Ten Facts about Social Security,” Center On Budget and Policy Priorities, 08/14/18]

Social Security Provides A Stable Source Of Income For Retirees—And Privatization Would Subject Everyone’s Retirements To Market Fluctuations.

“Traditional Social Security Provides A Guaranteed Income,” And Provides More Than Half The Income For Over 60% Of Those Who Receive It. “In contrast to private retirement funds, traditional Social Security provides a guaranteed income, paying benefits every month for life — with increases for inflation. After adjusting for risk, Social Security has a rate of return equal to that of any mix of financial assets in private accounts. With more than 60 percent of beneficiaries relying on Social Security for at least half their income, it makes no sense to gamble Americans’ future Social Security benefits on the roiling forces of the market.” [Max Richtman, “Privatization is really a plan to dismantle Social Security,” CNBC, 03/26/18]

Privatized Social Security “Would Encourage Workers To Gamble” Their Contributions On Private Investments And “Risk Losing Some Or All Of It, Leaving Little Or Nothing For Retirement.” “Instead of providing a secure, defined benefit as Social Security now does, privatizers would encourage workers to gamble a growing percentage of their payroll contributions on private investments. As the proportion of private investment increased, the amount of a worker’s defined Social Security benefit would decrease — until it reached what could only be considered a poverty-level amount. Of course, the worker would reap any gains in the privately invested funds, but would also risk losing some or all of it, leaving little or nothing for retirement.” [Max Richtman, “Privatization is really a plan to dismantle Social Security,” CNBC, 03/26/18]

As A Member Of The Federal Reserve Board, Stephen Moore Will Have A Direct Impact On How Much Money Social Security Earns From The Treasury Bonds In Which It Is Required To Invest.

The Federal Reserve Sets The “Federal Funds Target Rate,” Which “Has The Power To Influence Social Security.” “Traditionally, we think of the Federal Reserve as the entity that monitors the nation’s money supply and oversees the largest banks. It’s also responsible for setting the federal funds target rate, which is the overnight lending rate between banks. It’s this federal funds target rate that has the power to influence Social Security. You see, the federal funds target rate is closely tied to interest rates, such as those you would pay on your credit card, or the yields you’d receive when purchasing a Treasury bond from the U.S. government.” [Sean Williams, “Here’s How the Federal Reserve Can Affect Social Security,” The Motley Fool, 11/29/18]

• Social Security Is Required To Invest All Its Surpluses Back Into Treasury Bonds, Whose Yields Are Directly Determined By The Federal Reserve’s Interest Rates. “By law, the Social Security Administration is required to invest all net cash surpluses — i.e., excess revenue collected, minus program expenditures — in special-issue bonds and, to a lesser extent, certificates of indebtedness. In essence, Social Security is loaning out its excess cash to the federal government in exchange for Treasury bonds that pay a set interest rate over a defined period of time. If the Fed is loosening monetary supply, the yields on these special-issue bonds would be expected to decline, thereby resulting in less interest income being collected by Social Security. On the other hand, if the Fed is tightening monetary supply, the yields on these government bonds would rise, resulting in more interest income.” [Sean Williams, “Here’s How the Federal Reserve Can Affect Social Security,” The Motley Fool, 11/29/18]

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