It is not a Ponzi scheme. It does not meet the criteria.
I am completely willing to have a discussion about whether the SS system is fair, or sustainable, whether one should be able to opt out, etc. All of those questions are completely valid. But it is not a Ponzi scheme.
If one needs to misrepresent something in order to make a point, then it's not a very good point.
Let's look at it then. Let's start with the definition: "
A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator."
Analyzing 'fraudulent' is pretty irrelevant, because the government can call anything legal. It's fraudulent if Charles Ponzi does it, but not if the US Government does it? You could frame it as a Social Insurance system, but then you'd have to change it from what it is today to accurately reflect that. Change it into another welfare system and away from an entitlement program.
My SS benefit is a negligible part of my retirement package. But I paid into it, so I will be entitled to take out of it.
The above quote means that you're an investor that has paid into the program and expect to be paid a return in the future? SS earns no profit, so all that you're entitled to will come from young workers 'investing' their 10-35 years of earnings into the system to be eligible for a return. Sounds like another part of that definition. Check.
The label of it being a Ponzi scheme really hinges on the 'fraudulent' aspect of it. If the US government legalized Ponzi's and Bernie Madoff's plan, would that have made it any less destructive or exploitative to the investors? If anything SS is MORE destructive as it FORCES the majority of Americans to pay 12.4% of their earnings, for their entire lives, into this bad investment. You'd honestly get a better return buying bonds. "
Indeed, even in the worst-case scenario—a low-wage worker who invested entirely in bonds—the benefits from private investment would equal those from traditional Social Security."
http://www.cato.org/publications/policy-analysis/still-better-deal-private-investment-vs-social-security