PolitiFact’s Louis Jacobson slapped a “false” label on Elon Musk on Wednesday for his claim that Social Security is a Ponzi scheme. Jacobson’s big argument against Musk was not convincing, as he insisted that because Social Security is legal, it can’t be accurately described as a Ponzi scheme.
The exact quote from Musk is almost a month old and came from a February 28 appearance on The Joe Rogan Expierence, "Social Security is the biggest Ponzi scheme of all time."
Of course, Musk is not the first person to make that argument, as Jacobson notes, “In 2011, PolitiFact evaluated a similar statement from former Texas Gov. Rick Perry. At the time, we noted that a half-dozen left-of-center columnists also called Social Security a Ponzi scheme. However, the statement is inaccurate, as we concluded about Perry’s comment and other times.”
After spending several paragraphs explaining what a Ponzi scheme is and how Social Security works, Jacobson’s hand-picked expert, University of Akron Finance Department Chairman Eric R. Brisker, admitted, “If there are no longer enough workers to provide enough payroll tax contributions to pay out benefits to retired workers, then the system would fail similar to how a Ponzi scheme would fail in the same manner.”
Jacobson further conceded:
This hasn’t happened to Social Security, though the forecast isn’t good. American life expectancy has increased since Social Security’s creation, and so has the number of eligible recipients. As workers of the baby boom generation (born from 1946 to 1964) enter retirement, fewer workers are paying into the system. At the current pace, Social Security’s trust funds won’t be able to pay 100% of benefits by 2035, the 2024 Social Security Trustees Report said. The trustees have issued similar warnings for more than a decade.
However, instead of simply saying Musk was correct or that it was a legitimate opinion akin to saying a politician is acting corruptly or unethically even if he technically hasn’t violated any laws, Jacobson presented six reasons why he felt justified in giving Musk a false rating.
The six reasons boiled down to Social Security is legal and a government program:
- “Social Security is not fraudulent.”
- “Social Security’s operators do not take a cut”
- “Social Security is operated in the open.”
- “Social Security has built-in oversight.”
- “Social Security offers realistic returns.”
- “If financially stressed, Social Security is able to adjust its funding or benefit streams.”
Some of those can be debated. The fact that the system is on pace to not pay 100 percent of benefits might lead some to say it is fraudulent or doesn’t offer realistic returns.
Also relevant for official fact-checking purposes is that when Musk’s critics say something to the effect of “Elon Musk is a Bond villain,” they don’t mean he is literally a character from a James Bond book or movie; they mean he acts like one. Yes, a program written into law and that can be amended through further legislation cannot, by definition, be illegal, but as currently constituted, the lack of political will for reforming Social Security makes it like a Ponzi scheme.
