Elon Musk’s Social Security Comments Called Out by Former Administrator

Former Social Security Administration (SSA) Commissioner Martin O’Malley has called out Elon Musk for claiming Social Security is a “Ponzi scheme.”

Why It Matters

O’Malley, who ran the government agency during the latter part of the Biden administration, has been a vocal critic of the Trump administration and Musk for their handling of the SSA in recent weeks.

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 in February.

Musk, who is helming the Department of Government Efficiency (DOGE) on behalf of President Donald Trump, said Social Security is “the biggest Ponzi scheme of all time.”

What to Know

Responding to Musk’s comments, O’Malley said in an interview on MSNBC on Sunday that “if Social Security were a Ponzi scheme, it would not be running for 90 years.”

A Ponzi scheme is a fraudulent investment setup where money from new investors is used to pay existing ones. Social Security payments are financed from a dedicated payroll tax collected from workers. Any excess that is not used is kept in dedicated trust funds: the Old-Age and Survivors Insurance trust fund and the Disability Insurance trust fund.

“Social Security is a pay-as-you-go program, and it is true that the surplus reserve that was built up to last the lifetimes of baby boomers like me, is being depleted sooner than anticipated,” O’Malley explained.

He is correct: 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 by Congress to keep funding ongoing, benefits could automatically be cut by 17 percent.

O’Malley is not the only Democrat to call out Musk for his comments. Senators Bernie Sanders and Chuck Schumer, as well as Representatives Alexandria Ocasio-Cortez and Greg Caser, have all disagreed with the claim.

SSA Staffing Cull

Acknowledging the problem, O’Malley said the issue could be fixed, but also drew attention to recently announced staffing cuts also being a prominent threat to the delivery of the agency’s services.

Last month, the SSA said it would let go of some 7,000 staff members “to reduce the size of its bloated workforce and organizational structure.”

O’Malley has been critical of the plans. He said that due to reductions, it is likely that there could be “intermittent disruptions” of “IT aspects that process the claims,” leading to a “cascading effect that I believe we’ll see manifest itself in an interruption of benefits some time in the next 30 to 90 days.”

Speaking in another interview on MSNBC with host Michael Steele, O’Malley said he believes DOGE is “doing everything they can to break this agency.”

Newsweek has contacted DOGE and the SSA for a response to O’Malley’s comments via email outside of regular working hours.

What People Are Saying

Musk, speaking on the Joe Rogan Experience podcast released on February 21: “There’s our present-day debt, but then there’s our future obligations. So when you look at the future obligations of Social Security, the actual national debt is like double what people think it is because of the future obligations. So basically, people are living way longer than expected and there are fewer babies being born. So you have more people who are retired that live for a long time and get retirement payments. So the future obligation — so however bad the financial situation is right now for the federal government, it will be much worse in the future.”

Senate minority leader Chuck Schumer said following Musk’s comments: “Elon Musk says it’s a Ponzi scheme. The richest man in the world is telling Americans that earned benefits that they depend on and they paid into are a scam. They are not a scam. And if Americans know it.”

Senator Bernie Sanders in a post on X, formerly Twitter: “Musk says there’s massive waste & fraud in Social Security. Not true. Musk says Social Security is a Ponzi scheme. Not true. What is the goal of this disinformation campaign? To privatize the most successful government program in history and give it over to Wall Street.”

In a press release regarding staffing reductions issued by the SSA on February 28: “The agency plans to reduce the size of its bloated workforce and organizational structure, with a significant focus on functions and employees who do not directly provide mission critical services. Social Security recently set a staffing target of 50,000, down from the current level of approximately 57,000 employees. Rumor of a 50 percent reduction is false.”

What’s Next

There are numerous changes taking place at the SSA. Along with staffing reductions, some internal departments and contracts have been canceled, as new rules around repaying overpayments made to beneficiaries were announced over the weekend.