Money  /  Explainer

Social Security Is Not a Ponzi Scheme

Today’s attacks are just the latest form of backlash to the New Deal.

Trump’s excoriations of supposedly outrageous public spending, like the Social-Security-as-Ponzi-scheme line, are nothing new. In “A Time for Choosing,” a speech delivered by Reagan on behalf of Goldwater shortly before the 1964 presidential election, the new Republican convert highlighted “deception” in the Social Security program as a prelude to a broader discussion of waste. In addition to targeting welfare fraud, Reagan described “a million-and-a-half dollar building [in Cleveland] completed only three years ago” that “was destroyed to make way for what government officials call ‘a more compatible use of the land.’ Like Trump, Reagan also emphasized dubious stories about wasteful foreign aid to non-Western countries, with extra scorn reserved for African nations. The United States government, he told his listeners, had “bought a $2 million yacht for Haile Selassie” as well as “extra wives for Kenyan government officials” and “a thousand TV sets for a place where they have no electricity.”

If Reagan’s narrative of absurd government spending was one origin point of Trump’s narrative, it was not the first. Like the critique of Social Security, it comes straight out of the anti–New Deal playbook. In a speech to the United Retail Merchants Association shortly after he received the 1936 Republican Vice Presidential nomination, Frank Knox condemned the New Deal government as constituted by arrogant spendthrifts. He did so by highlighting what he took to be grandiose and wasteful projects, including a federally funded “dog pound in Memphis with marble shower baths” and a “$6,000 product in White Plains to remove ‘efflorescence’ from some bridges.” (It is worth noting that the Acting Mayor of Memphis decried Knox’s description of the dog pound as false; it had, he noted, “no showers of any kind, much less marble showers.”) Government, in Knox’s view, was full of “unnecessary public officials” who too readily greenlighted “useless projects.”

Knox connected all this wasteful spending with the “dubious Social Security measure” passed the previous year, which he saw as far more dangerous than the examples of ridiculous one-off spending he had flagged because it was permanent. In a Trumpian turn of phrase, he claimed to have been “informed that there are now in Washington three separate and independent commissions working at taxpayer’s expense to find out why there are so many unnecessary commissions.” For Knox, these examples of “government extravagance” crystallized the essence of the New Deal: excessive spending on frivolous endeavors, funded by coercive mechanisms. The stories told by Trump and Musk follow the same pattern.