Mitch Daniels: Avoid 'Fiscal Niagara' On Social Security

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Indiana Gov. Mitch Daniels urges a new approach for Social Security in his new book, Keeping the Republic. In the book, Daniels writes that Carlo Ponzi — the con man whose name became synonymous with a swindling scheme — would have been "an ideal Social Security commissioner."

GOP presidential candidate Texas Gov. Rick Perry caused a stir recently by making a similar statement. But Daniels says neither he nor Perry is the first to see elements of a Ponzi scheme in the U.S. Social Security system.

"That comparison's been used for decades," Daniels tells NPR's Steve Inskeep. "Paul Samuelson, the liberal Democratic economist, was using it in the late '60s."

But the comparison is still a valid one, the governor says.

"I do think it's important in pointing out that Social Security is, and always was, a pay-as-you-go system," he says. "It never was, as many Americans were led to believe, an arrangement in which you invested in your own retirement. The money was always going right out the door to the retirees of the day."

Daniels, whose book portrays America — and President Obama — in deep trouble, says that he largely agrees with columnist Charles Krauthammer, who says the Social Security system needs to be adjusted, not abolished, and that the changes can come over time.

Changing the system, Daniels says, "would send a clear and positive message that we do not intend to go over a fiscal Niagara."

"The wisest course would be to say to today's retirees, nothing changes for you, but also to ask them to join in seeing that younger generations who are paying for their retirement today have some protection, too."

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