Expert turns tables on Dem critics after Musk accuses Social Security of being ‘Ponzi scheme’

Democrats have pushed back after Elon Musk claimed that social security operates like a “Ponzi scheme” as he continues to argue for cuts to the federal bureaucracy, but one expert tells Fox News Digital that Musk is on track with his criticism of the agency.

“Musk’s statement about Social Security being the world’s biggest Ponzi scheme does have validity,” James Agresti, president of the nonprofit research institute Just Facts, told Fox News Digital in response to pushback from Elon Musk’s claim, which included a “false” rating from Politifact. 

“A Ponzi scheme operates by taking money from new investors to pay current investors. That’s the definition given by the SEC, and contrary to popular belief, that’s exactly how Social Security operates.”

Agresti explained to Fox News Digital that Social Security, believed to be a target of Musk’s efforts at DOGE, “doesn’t take our money and save it for us, as many people believe, and then give it to us when we’re older” like many Americans might believe. 

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“What it does is, it transfers money when we are young and working and paying into Social Security taxes,” Agresti said. “That money, the vast bulk of it, goes immediately out the door to people who are currently receiving benefits. Now there is a trust fund, but in 90 years of operation, that trust fund currently has enough money to fund two years of program operations.”

The trust fund only being able to last for two years is not a result of the fund being “looted,” Agresti explained, but rather it was put in place to “put surpluses in it” from money that Social Security collects in taxes that it doesn’t pay out immediately and pays interest on. 

“The interest that’s been paid on that has been higher than the rate of inflation,” Agresti said. “So, the problem isn’t that the trust fund has been looted. The problem is that Social Security operates like a Ponzi scheme.”

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One of the top Social Security criticisms from Republicans, including President Trump, has been a concern that individuals who are dead or listed with an age well over 100 years old are on the rolls and receiving benefits.

Agresti told Fox News Digital that there are legitimate reasons to be concerned about that issue.

“What’s unclear to me at this moment is whether or not the people who are on the books are actually receiving checks,” Agresti said. 

“Back during the Obama administration, there was a stimulus, and the Obama administration sent out stimulus checks via Social Security numbers to 80,000 people who were dead, and about 70,000 of them, the Social Security Administration knew they were dead. So I don’t know if they’ve remedied that situation since then, but clearly the system is not keeping up with the pace of current data, and that provides an opportunity for fraud.”

Democrats have also made the case that Musk is attempting to strip away benefits that senior citizens have rightfully earned. Agresti told Fox News Digital that is not what is happening.

“There’s been a lot of misinformation about that as of late,” Agresti said. “You know, when DOGE came in and suggested that the Social Security Administration cut, I think it was about 10,000 workers, Democrats erupted that this is going to weaken Social Security. But the fact of the matter is that Social Security pays those workers who are for administrative overhead from the Social Security trust fund. So, by cutting out the money that they’re paying them, you actually strengthen the program financially.”

Agresti told Fox News Digital that the current administrative overhead for Social Security is $6.7 billion per year, which is enough to pay more than 300,000 retirees the average old age benefit.

Questions have emerged from critics in recent years as to whether Social Security, in its current form, is even capable of remaining solvent to pay benefits to Americans who have paid in over the past few decades.

Agresti told Fox News Digital that the program will “become insolvent” as soon as 2035 if changes are not made. 

“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 Fox News Digital. 

“I’ll give you another way in which more numbers prove this point. If you retired in 1980, it took about three years of receiving Social Security benefits to get back the value of your payroll taxes plus interest. If you retired in 2000, it took 17 years. If you retired in 2020. it will take 22 years, assuming the program has enough money to pay those benefits, which it won’t without another increase in taxes on another generation of Americans.”