Begich’s “Ponzi scheme” comment on Social Security was taken out of context during show taping

Updated: 1 a minute ago Published: 1 a minute ago

According to a July 2023 recording, political ads claiming that Republican U.S. House candidate Nick Begich called Social Security a “Ponzi scheme” use a quote taken out of context.

The Social Security trust fund, used to pay benefits, invests in U.S. Treasury bonds, a low-risk investment.

Begich criticized this financing approach, saying it amounts to the government buying up its own debt.

“Because we have these huge deficits, we need someone to buy all the debt that we produce,” he concluded. “And you know what? This is you, via your Social Security. This trust fund has been invested in government debt since its inception, and it is a Ponzi scheme designed to prop up the system.”

Begich’s criticism was about the way Social Security is funded, not the benefits the program pays.

He continued that the financing mechanism would not be a problem if there were many workers for every pensioner receiving benefits, but now that the country’s population has aged and the ratio of workers to beneficiaries has fallen, “that will happen. “ a real problem and you can’t continue to borrow at this rate.”

In the state debate last week against incumbent Democratic Rep. Mary Peltola, Begich said he was not an opponent of Social Security.

“I am a 100 percent supporter of Social Security, despite what you may have seen in commercials and on television,” he said. “I am 100% in favor of ensuring that we fulfill the commitments we have made. My earlier comments were taken out of context, and what I actually said is that the federal government took over the Social Security Trust Fund and spent it on ongoing operating expenses. This is a savings account for our senior citizens and is used for deficit spending. This is wrong.”

A pyramid scheme is a type of scam in which the operators of the scheme tell customers that they are going to invest their money. Instead, the scammers pocket the money and pay customers by asking new customers for money. These systems fail when the fraud is discovered.

The 85-year-old Social Security Trust Fund differs from these systems in several ways. These differences include:

• It is not marketed as an opportunity for investors to make a profit, but is intended to provide financial security.

• Fund trustees report transparently on the fund’s finances;

• Social Security administrators do not withdraw money from the trust fund; And

• Borrowing occurred primarily when the program brought in more revenue than it paid in services, which is no longer the case today.

The share of federal debt held by the fund is shrinking. The trust fund is expected to be exhausted in 2035. At this point, Social Security revenue is expected to be 83% of planned benefits unless changes are made to the program.

Originally published by the Alaska Beaconan independent, nonpartisan news organization covering Alaska state government.