Elon Musk was right — Social Security is a Ponzi scheme

There isn’t much these days that doesn’t fling the Democrats into a frenzy of fainting and pearl-clutching.

Want to cut waste, fraud and abuse from government spending? “Oh dear, how draconian!”

Want to secure the border and stem the flow of deadly fentanyl into our country? “Racist!”

The one sure way to guarantee Democrats will oppose something — anything, no matter how popular — is to have President Trump come out in favor of it. And this Pavlovian reaction was on full display when presidential adviser and multibillionaire Elon Musk recently called Social Security “the biggest Ponzi Scheme of all time.” Because that's what it actually is.

Honest people can take issue with some of the moves of Musk's Department of Government Efficiency. He has himself admitted they make mistakes, which is how you can tell this guy is not a politician. He has also established a track record of correcting its mistakes quickly — another sign that he does not fit in well.

On Social Security, however, Musk is simply correct, and just impolitic enough to say what no one wants to hear.

And liberals did not disappoint with their reaction to defend the program's moribund status quo. An opinion writer at NBC News offered a representative non-sequitur defense of how the program operates, arguing that "Social Security is a highly functioning, universal and exceptionally efficient part of the American social safety net. It’s the opposite of a Ponzi scheme."

But the problem is simple and mathematical. When the program started, there were 40 workers paying benefits for every retiree. Now, thanks to a combination of declining fertility, increased longevity and other factors, there are only 2.8 workers per retiree. And so right now, every penny collected from current workers, plus additional money Congress borrows against its rapidly emptying trust fund, is being funneled to the current retirees.

Does this sound familiar? It should, because this roughly is how Ponzi schemes work. They take new investors' money to pay returns to their earlier investors. For a while, people are happy because they are getting paid. But eventually, the scheme collapses, because there are too many people demanding payouts and not enough new contributors.

So no, Social Security isn't “the opposite of a Ponzi scheme.” It is just a Ponzi scheme whose collapse is still in the future.

Tellingly, the communist “People’s World” agrees with NBC News, writing, “Contrary to right-wing slander Social Security is the most efficient program in the United States and would be solvent for at least 75 more years if its wealthiest recipients paid a fair share of their taxes.”

Of course, Democrats have resisted every attempt to reform Social Security to increase its lifespan. The only solution they are willing to accept is a crippling tax increase. They have opposed means-testing, insisting that this would turn the program into welfare rather than an “investment” by enrollees, even though recipients receive more than they pay into it by quite a bit.

The largest, most serious push to reform the program came when President George W. Bush, proposed allowing younger workers to take a small portion of their Social Security withholdings and invest them in the stock market. It would also have had the added benefit of being heritable for their families. Social Security, aside from its modest survivors' benefits, is just plain gone after your retired loved one passes away.

The idea of investing only 5 percent of their withholdings, with the rest remaining in the traditional program, was denounced by Democrats at too risky and possibly leading to people being woefully short on resources in retirement due to the volatility of the stock market.

When Bush proposed enacting this reform in his second term, the Dow Jones Industrial Average stood at less than 11,000. Now it is north of 41,000, even after the downturn of the last few weeks. Just imagine how much better off the vast majority of participants would be if we had offered a voluntary investment option 20 years ago.

The truth is, Social Security is going broke the same way Ponzi schemes do. It has too many beneficiaries and not enough people paying into the system. Today's young workers risk funding others' retirement through Social Security only to be seriously shortchanged when they retire in 30, 20, or perhaps even just 10 years' time.

Some Democrats have been hoping to stave off the date of this scheme's collapse (and perhaps import a few new voters while they're at it) by throwing open our borders to find new contributors — never mind that this overwhelmed our social safety-net and indiscriminately put tens of thousands of dangerous criminals on our streets. But voters just recently rendered judgment on that plan.

Meanwhile, Republicans have helped the Democrats bring this problem to a crisis point by abandoning the reform position. Even Trump, no respecter of political taboos, has hesitated in the face of this problem. But at least some Republicans did try, at various points, to correct the mistakes of the past and stop the bleeding.

On this issue, the truth is no friend to Democrats, which is why they reacted with such vitriol to Musk's comments. But truth does not depend on anyone’s comfort level with it — it just is. And the truth is, if you ran your company’s retirement program the way the government runs Social Security, you would go to jail.

Derek Hunter is host of the Derek Hunter Podcast and a former staffer for the late Sen. Conrad Burns (R-Mont.).

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