One expert told AWN Digital that Musk is correct in his critique of the agency, despite Democratic pushback following Elon Musk’s claims that social security functions like a “Ponzi scheme” and his continued arguments for changes to the federal bureaucracy.
James Agresti, head of the nonprofit research group Just Facts, told AWN Digital that “Musk’s statement about Social Security being the world’s biggest Ponzi scheme does have validity.” This was in reaction to criticism of Elon Musk’s assertion, which had received a “false” rating from Politifact.
Money from new investors is used to pay off existing investors in a Ponzi scheme. Contrary to common assumption, it is precisely how Social Security functions, and that is the definition provided by the SEC.
Despite the belief that Social Security is Musk’s DOGE goal, Agresti told AWN Digital that the program “doesn’t take our money and save it for us, as many people believe, and then give it to us when we’re older”—a misconception that many Americans may have.
“What it does is, it transfers money when we are young and working and paying into Social Security taxes,” explained Agresti. People who are already getting benefits take the lion’s share of that money. While there is a trust fund in place, its present balance is only sufficient to cover program operations for two years after 90 years of operation.
The fact that the trust fund may only endure for two years is not due to the funds being “looted,” as Agresti clarified; rather, it was established to “put surpluses in it” from the taxes collected by Social Security that are not immediately disbursed but accrue interest.
“The interest that’s been paid on that has been higher than the rate of inflation,” added Agresti. The theft from the trust money is not the problem, then. The issue is that the way Social Security is run is reminiscent of a Ponzi scheme.
The fact that people who are either no longer alive or whose ages are represented as being well over 100 are still getting benefits is a major source of worry for Republicans, including President Trump, when it comes to Social Security.
There are good grounds to be worried about it, Agresti told AWN Digital.
“What’s unclear to me at this moment is whether or not the people who are on the books are actually receiving checks,” said Agresti.
In the past, there was a stimulus program under Obama’s administration. Unfortunately, 80,000 of those recipients were already deceased when the stimulus cheques were paid out using their Social Security numbers. For around 70,000 of those recipients, the Social Security Administration had prior knowledge that they had passed away. It is evident that the system is unable to handle the rapid speed of current data, which opens the door to potential fraud. However, it is unclear whether this issue has been resolved since then.
Another argument put forward by Democrats is that Musk is trying to take away benefits that seniors have earned. According to Agresti’s statement to AWN Digital, such is not the case.
“There’s been a lot of misinformation about that as of late,” added Agresti. Democrats went into a frenzy over fears that DOGE’s proposal to remove 10,000 staff from the Social Security Administration would undermine the program. The truth, however, is that the Social Security trust fund is what really pays the administrative overhead for those workers. You can really boost the program financially by taking off the money they’re paying them.
In an interview with AWN Digital, Agresti revealed that the annual administrative costs of Social Security amount to $6.7 billion—enough to provide the average old-age payment for almost 300,000 retirees.
In recent years, skeptics have raised doubts about Social Security’s ability to continue paying payments to Americans who have paid into the system for decades.
The program would “become insolvent” by 2035 according to Agresti, who spoke with AWN Digital.
“To give you a feel of how disconnected Social Security is from a fully funded pension plan, if to keep the program solvent and put it on the same firm financial footing as a real pension plan, it would require an extra $272,000 in additional payroll taxes from every person paying payroll taxes right now,” Agresti told the news outlet.
I’ll show you another method that further statistics demonstrate this. To recoup the amount of payroll taxes plus interest, if you retired in 1980 and began collecting Social Security payments, it took around three years. It takes seventeen years if you retired in the year 2000. Assuming the program has sufficient funds to pay those benefits, which it will not have without imposing yet another tax hike on yet another generation of Americans, it will take 22 years if you retire in 2020.
