There has been a lot of talk over the years about Social Security being a “Ponzi scheme.” I have addressed this issue many times before, so I don’t want to bore my regular readers with another long dissertation. But since a certain billionaire friend of President Donald Trump brought it up yet again, I will make three quick observations.
One: Social Security is not now and never has been an investment scheme. It is a social insurance program. (After all, the word “social” in Social Security means something!) In addition to providing retired and disabled workers, widows, widowers, and the minor children of a worker who has died with a basic and stable income, it was established to achieve larger goals for our country as a whole. For example, one of those goals is to raise the standard of living of lower-income workers in retirement. This is accomplished with a weighted benefit formula that gives them a higher “replacement rate” (when comparing their average income with their Social Security retirement benefit) than their more well-to-do fellow taxpayers can expect.
