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Hornberger's Blog is a daily libertarian blog written by Jacob G. Hornberger, founder and president of FFF.
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Why Save an Immoral, Illegal, Fraudulent Program?


GOP president candidate Rick Perry says that Social Security is a Ponzi scheme, a monstrous lie, and unconstitutional. His GOP opponent, an ardent supporter of Social Security and, for that matter, socialized medicine, Mitt Romney, says that Perry can’t be trusted because he wants to kill Social Security.

Kill Social Security? Where did Romney get that? Perry has made it quite clear that, like every other conservative, he wants to save and fix Social Security. It’s only libertarians who want to kill Social Security and now rather than later.

In fact, Perry’s position is very strange, especially given that he’s a devout Christian. Here is man who clearly recognizes that Social Security is an immoral, fraudulent program. After all, what does a Ponzi scheme connote if not fraud? And wouldn’t a fraudulent scheme be considered something immoral, especially one that is based on a monstrous lie?

Then, how can Perry, as a Christian, support the continuation of any such program? How does he reconcile that with his conscience and with God? Does he say to himself and to God, “Well, I know it’s immoral, fraudulent, unconstitutional, and based a monstrous lie but I have no choice but to support it because otherwise I’ll lose votes from seniors”?

What other reason would Perry have for supporting the continuation of what he himself acknowledges is an immoral program? Isn’t his fear of losing votes the only reason for his wanting to continue such a program?

Romney is in a different position. As a conservative statist, he makes no bones about it: He believes in socialism and thus will do everything he can to make sure that such socialist programs as Social Security, Medicare, education grants, farm subsidies, and, well, the entire welfare state will be continued under his administration.

In other words, the same old statist junk that we’ve been having to endure for almost a century. A Romney administration would essentially be Barack Obama’s second term, just as the Obama administration has been George W. Bush’s third term. Not a dime’s worth of difference, given the joint allegiance that Republicans and Democrats have to the welfare state (and the warfare state).

During the last presidential debate, GOP candidate Rick Santorum said that he trusts the American people.


Well, I didn’t hear him calling for the immediate repeal of Social Security. I guess what he meant to say was, “I trust the American people … but not when it comes to managing their own retirement and to deciding whether to honor their mother and father on a voluntary basis.”

This is where the socialism of public schooling meets the socialism of Social Security. I’d estimate that at least 80 percent of Americans attend public schools. So, here you have 3 generations of Americans, most of whom have spent 12 years under government control, who cannot be trusted to handle their own retirement and to make their own choices with respect to charity. Some success story!

In fact, not to digress too much, but isn’t it interesting that notwithstanding all those public school graduates, there are so many adults on drugs that the 40-year drug war must continue to be waged. I can’t help but wonder whether we have causation, not coincidence, here. In any event, some success story!

Indeed, whenever libertarians call for the separation of school and state, statists respond by saying that parents can’t be trusted with the educational decisions of their children. I ask: Why not? Aren’t most of them graduates of public schools? Some success story!

Anyway, back to Social Security. From a technical standpoint, there really isn’t any fraud involved. FDR and his statist cronies were very careful in how they phrased the Social Security law. They made sure that the law, as crafted, wasn’t creating a retirement program, an insurance program, or a contractual relationship.

The Social Security law created a welfare program. That’s it. Just a welfare program, just like food stamps, farm subsides, or foreign aid to dictators.

To fund it, the government could have cut spending elsewhere, or raised income taxes, or imposed some sort of consumption tax. Instead, it created a tax on payroll and called it a Social Security tax. But the tax was never part and parcel of the program. It was simply a way to raise taxes. The Social Security tax could be repealed today and the Social Security welfare program would remain intact.

What the feds then did was to create the illusion of a trust fund. As the government was spending the Social Security tax revenue on welfare spending and military spending, it was writing IOU’s to itself saying, in effect, “We owe the Social Security trust fund the sum of $1,000,000.”

Imagine if Bernie Madoff had announced after getting caught defrauding customers with his Ponzi scheme, “I haven’t defrauded anyone. Go look in my safe and you’ll find millions of dollars in IOUs in which I promise to pay back the money.”

Well, that’s what the feds have been doing — and with the intention of misleading people into thinking that they have been “putting their money into the fund, year after year.”

And sure enough, it’s worked. To this day, countless seniors exclaim, “I put it in and have a right to get it back.” They simply block out of their minds that they haven’t put any money into anything. They were taxed and the tax monies were spent. If they had read the law or consulted with a lawyer, they would have seen that Social Security was nothing more than a welfare program, one that future generations have the right to repeal whenever they want. Ignorance of the law is no excuse.

Rick Perry is right: Social Security is an immoral, illegal, fraudulent Ponzi scheme, one that places no trust in the American people. But Perry is also wrong. The only right approach, especially for a Christian, to such a program, is to end it without delay, not save, reform, or continue it.

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.