Elon Musk recently stirred up controversy after claiming that Social Security functions like a “Ponzi scheme.” His statement has faced criticism, but one expert agrees that Musk’s comparison isn’t entirely off-base.
Expert Supports Musk’s View
James Agresti, president of the nonprofit research institute Just Facts, backed Musk’s claim in an interview with Fox News Digital.
“Musk’s statement about Social Security being the world’s biggest Ponzi scheme does have validity,” Agresti said.
He explained that a Ponzi scheme, as defined by the Securities and Exchange Commission (SEC), relies on using money from new investors to pay earlier investors—similar to how Social Security operates.
How Social Security Really Works?
“Contrary to popular belief, Social Security doesn’t save the money we contribute and return it to us later,” Agresti stated. “Instead, it takes money from those currently working and paying Social Security taxes and gives it to those receiving benefits.”
Agresti added that while there is a trust fund, it only holds enough money to cover about two years of program expenses despite existing for nearly 90 years.
The Truth About the Social Security Trust Fund
Agresti clarified that the trust fund hasn’t been mismanaged or looted—it was created to store surplus funds from Social Security taxes.
These funds have earned interest, typically outpacing inflation.
“The issue isn’t that the trust fund was raided—the problem is that Social Security operates like a Ponzi scheme,” Agresti said.
Social Security’s Current Status and Future Outlook
According to the Social Security Administration’s 2024 Annual Performance Report, the Old Age, Survivors, and Disability Insurance (OASDI) program supported about 66 million people at the end of 2022.
This included 51 million retired workers and their families, 6 million survivors of deceased workers, and 9 million disabled individuals and their dependents.
In 2022, the program’s total cost reached $1.244 trillion, while total income was slightly lower at $1.222 trillion.
Projections indicate that the combined OASI and DI Trust Fund reserves will run out by 2034.
If no changes are made, payroll tax income would only cover around 80% of scheduled benefits after that point.
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