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By Aliss Higham
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Several Democratic lawmakers have accused Elon Musk of spreading disinformation about Social Security after he called the benefits program a "Ponzi scheme."
Why It Matters
Musk criticized Social Security, which pays retirement, survivor and disability benefits to tens of millions of Americans every month, during a podcast interview with Joe Rogan released on Friday.
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The SpaceX CEO said Social Security is "the biggest Ponzi scheme of all time."
A Ponzi scheme, in short, is a fraudulent investment scheme where new investors are used to pay existing ones. He has also previously made incorrect claims that millions of dead people are being paid retirement benefits.
Newsweek contacted the Social Security Administration (SSA) for comment via email and Musk via SpaceX outside of regular working hours.
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What To Know
Writing on X, formerly Twitter, Vermont Senator Bernie Sanders, an independent, wrote: "Musk says there's massive waste & fraud in Social Security. Not true. Musk says Social Security is a Ponzi scheme. Not true."
He continued: "What is the goal of this disinformation campaign? To privatize the most successful government program in history and give it over to Wall Street."
Democratic Washington Senator Patty Murray also defended the program. "Social Security is not a Ponzi scheme," she wrote on X. "It's a promise that every American pays into so they can retire with dignity."
Social Security Funding
When asked to explain his comments, Musk told Rogan: "Well, people pay into Social Security and the money goes out of Social Security immediately, but the obligation for Social Security is your entire retirement career. If you look at the future obligations of Social Security, it far exceeds the tax revenue."
Social Security payments are financed from a dedicated payroll tax collected from workers. Any excess that is not used is kept in a dedicated trust funds: the Old-Age and Survivors Insurance trust fund and the Disability Insurance trust fund.
Beginning in 2021, Social Security started using trust fund reserves to help cover benefit payments. The combined funds are expected to remain solvent until approximately 2035, when, if no solution is found, benefits could automatically be cut by 17 percent.
While there is still time to solve the lingering issue, lawmakers on both sides of Congress have differing views on how to fix the problem.
Democrats have argued that the program's funds can be shored up by eliminating the cap on Social Security taxes for high earners, making them pay proportionately more. Some Republicans have argued for raising the retirement age for full Social Security benefits to 69, up from 67.
The SSA, by its own admission, will also be contending with making higher payments to more beneficiaries with fewer workers paying into the system, something Musk also addressed during the interview. He said that due to fewer babies being born and people living longer, the financial standing of the SSA will get worse over time.
The SSA itself is aware that it will be paying out more in the future. According to the government agency, in 2005, 12 percent of the total population was aged 65 or older, "but by 2080, it will be 23 percent."
In its 2023 Trustees Report, the SSA reiterated the facts, saying that the number of retired workers would grow rapidly as baby boomers continued to retire in larger numbers, with the figure projected to double in about 50 years. People are also living longer, it said, and the birth rate is low."
What People Are Saying
Senator Patty Murray on X: "Social Security is not a Ponzi scheme it's a promise that every American pays into so they can retire with dignity. Get loud and tell Elon Musk to keep his hands OFF social security."
Texas Democrat Greg Casar said on X: "A guy who makes $8 million a day off the government thinks seniors getting $65 a day they worked their whole lives to earn is a 'Ponzi scheme.' Protect Social Security. Fire Elon Musk."
The Center for Budget and Policy Priorities in an explanation of Social Security funding from July 2024: "Few budgetary concepts generate as much unintended confusion and deliberate misinformation as the Social Security trust funds. The trust funds are invested in Treasury securities that are just as sound as all other U.S. government securities, held by investors around the globe and regarded as being among the world's safest investments."
What's Next
While future SSA funding remains an uncertainty, the agency is undergoing considerable changes under President Donald Trump's new administration.
The SSA announced last week that it would be undertaking workforce reductions, as well as operational changes, including the closure of field offices and internal departments.
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