“Social Security is the biggest Ponzi Scheme of all time,” Elon Musk told podcaster Joe Rogan on the latter’s podcast. “If you look at the future obligations of Social Security, it far exceeds the tax revenue.”
Cue outrage.
“Billionaires like you to pay the same amount into Social Security as a truck driver,” US Senator Bernie Sanders (I-VT) whined, failing to mention that billionaires like Elon Musk also receive the same maximum monthly Social Security check as that truck driver.
“He’s going after the elderly, the disabled, and orphaned children so he can pocket it in tax cuts for himself,” said US Representative Alexandria Ocasio-Cortez. “It’s disgusting.” AOC apparently thinks people won’t notice that Congress has “borrowed” nearly $3 trillion from the Social Security Trust fund, and that she’s voted for much of that “borrowing.”
For the most part, Musk is correct to refer to Social Security as a Ponzi scheme. It pays out benefits from newer revenues, not by investing Social Security taxes in profitable ventures.
There’s one respect in which it differs from the traditional Ponzi scheme, though.
In the “private sector,” Ponzi scammers try to hide what they’re up to. Investors are led to BELIEVE their money is being used profitably, when in reality their “dividends” come from luring in new investors until the con collapses and the perpetrator either flees with his ill-gotten gains or goes to prison.
Social Security, on the other hand, has transparently operated in a facially Ponzi-like manner for decades — and the US Supreme Court publicly declared, 65 years ago, in its ruling on Flemming v. Nestor, that no one is “entitled to” any payout at all: “The noncontractual interest of an employee covered by the Act cannot be soundly analogized to that of the holder of an annuity, whose right to benefits are based on his contractual premium payments.”
Politicians still pretend that Social Security is retirement “insurance,” but it’s neither actuarially based nor guaranteed to provide any “return” at all.
Nor is it an “investment.” It’s just a tax you and your employer have to pay, loosely linked to the possibility of getting a check in the future … if Congress doesn’t change its mind.
Social Security was a Depression-era welfare program that its primary backer, president Franklin Delano Roosevelt, said in 1935 “ought ultimately to be supplanted by self-supporting annuity plans.”
The distinguishing feature of a Ponzi scheme is that it defrauds presumably unsuspecting victims.
The sad truth that Musk didn’t bring up is that the victims have known — or at least should have known — they were being scammed since at least as early as 1960.
Apparently most Americans would rather remain scammed, and hope for the best, than admit the truth to themselves.
Thomas L. Knapp (X: @thomaslknapp | Bluesky: @knappster.bsky.social | Mastodon: @knappster) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.
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