CNBC Video - Santelli Battles Friedman - Sep. 8, 2011
Great clip from this morning's Squawk Box. Runs 1 minute.
In terms of unfunded liabilities, Medicare is 6X the black hole that is social security, which can be solvent for 50 years with a few tweaks, but Santelli speaks through the lens of his 19 year-old daughter (as he often does), and channels the anger of today's typical college student, which to me at least, is completely understandable.
The correct answer is to cut war spending by 50% over the next 5 years, and use the savings to fund Social Security (without changes). Medicare, on the other hand, and it's completely unpaid-for, and incredibly irresponsible Prescription Drug Benefit (Part D), is going to need a substantial overhaul to survive, the majority of which will need to come from means testing of the wealthy.
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Transcript
SANTELLI: I’d just like to know – you know, I was watching that debate last night, although it really wasn’t a debate,” Santelli said. “It was like a weird press conference. But I would like to know – does Mr. Friedman think Social Security is a Ponzi scheme?
FRIEDMAN: No, I don’t think it’s a Ponzi scheme.
SANTELLI: Earlier in the show you said that we’re putting the burden on our kids that’s unsustainable. What’s the definition of a Ponzi scheme?
FRIEDMAN: It’s a program that made promises that it cannot keep in full and it needs to be fixed and reformed.
SANTELLI: Isn’t that exactly what a Ponzi pyramid is?
FRIEDMAN: I don’t think it is a Ponzi scheme as a criminal endeavor.
SANTELLI: No, no – forget the criminal side. You need more people to perpetuate a myth because if the people stop the myth is known to all. That’s my definition of a Ponzi scheme. Let’s call at it chain letter, a pyramid scheme. Isn’t that by definition what Social Security is? Take the legalities and fraud out.
STEVE LIESMAN: Why is it a Ponzi scheme, Rick?
FRIEDMAN: It is pay as we go. Ronald Reagan fixed it. Why can’t we fix it?
SANTELLI: What does Ronald Reagan have to do with my question?
FRIEDMAN: What does your question have to do with reality?
MICHELLE CARUSO CABRERA: We brought it up.
SANTELLI: You can’t decide that more people is the only thing made Social Security work. We have a real issue because many people in government seem to like to read your work.
FRIEDMAN: What makes Social Security work is fixing Social Security in terms of the population demands.
SANTELLI: I didn’t ask if we should fix it or not. I asked if it’s a pyramid scheme.
FRIEDMAN: Your question is idiotic. That’s what you asked.
SANTELLI: You’re idiotic. I’m done. I feel good.
FRIEDMAN: So do I.