Is Social Security a Ponzi scheme?

by Staff | November 18th, 2011

Social Security could be considered a Ponzi scheme in three major ways, according to

(1) The payment of purported returns to existing investors from funds contributed by new investors’ is the Securities and Exchange Commission’s (SEC) definition of a Ponzi scheme.

Does Social Security fit this definition? It pays benefits from funds contributed by younger workers…

(2) Ponzi schemes “require a consistent flow of money from new investors,” says the SEC.

Does Social Security do the same? Benefits enjoyed by beneficiaries are dependent upon contemporaneous payroll tax revenue.

(3) “In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors,” SEC states.

Supporters of the current structure seek new Social Security taxes on workers earning more than $106,800.

Defenders of Social Security claim that it is not a Ponzi scheme. They say that there are major differences.

(1) Social Security is mandatory, while Ponzi schemes are not.

(2) A Ponzi scheme can not raise taxes if it is about to collapse.

(3) Social Security benefits are taxed.

In our next blog you will find out how to fix Social Security to the benefit of all. Check back in on Monday.

What do you think?

What changes do you think need to be made in Social Security for it to last?

If you need help with your Social Security Disability benefits, contact the Social Security Disability lawyers at Fleschner, Stark, Tanoos & Newlin.

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