WASHINGTON -- Speaking on conservative radio on Tuesday, Rep. Paul Ryan (R-Wis.) agreed with Texas Gov. Rick Perry's (R) claim that Social Security is a "Ponzi scheme."
When asked by host Laura Ingraham on Tuesday whether the country's social insurance program is a Ponzi scheme, Ryan replied, "That is how those schemes work."
"So if you take a look at the technicality of Ponzi -- I would -- it's not a criminal enterprise," he said, according to a transcript. "But it is a pay-as-you-go system where ... earlier investors or, say, taxpayers, get a positive rate of return and the most recent investors -- or taxpayers -- get a negative rate of return."
Democrats immediately criticized Ryan's comments.
"Republican Budget Committee Chairman Paul Ryan's belief that Social Security works like a Ponzi scheme proves -- once and for all -- that House Republicans have really declared war on seniors," said Jesse Ferguson, a spokesman for the Democratic Congressional Campaign Committee, in a press release. "A Ponzi scheme is Bernie Madoff ripping off Americans -- not Social Security benefits that seniors earned and depend on during retirement."
Ponzi schemes, made famous in 1920 by Charles Ponzi, are predicated on delivering large returns to investors with money received from new investors. The Securities and Exchange Commission definition of a Ponzi scheme is, "an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors."
Since then, some Republicans have come out in support of the governor, including Indiana Gov. Mitch Daniels (R) who said, "As far as it [Social Security] goes, absolutely it is a Ponzi scheme."
Additionally, this past June, Reps. Pete Sessions (R-Texas) and Jeb Hensarling (R-Texas) introduced legislation that would allow workers to partially opt out of Social Security immediately and fully opt out after 15 years.