Five Things Elon Musk Doesn’t Want You to Know About Social Security

Elon Musk’s DOGE has taken a particularly keen interest in Social Security – and not in a good way. Musk called the program  a Ponzi Scheme and has made wildly false allegations about fraud. Nonetheless, DOGE is actively working inside the Social Security Administration, to the deep frustration of current and former staffers.

According to recent media reports, Social Security will no longer allow certain banking changes to be made over the phone, and will require some beneficiaries to visit regional offices – while the administration also seeks to cut jobs and close some field offices.

It goes without saying that Musk’s misleading rhetoric is alarming. But it’s even more alarming that someone purveying such blatant misinformation is effectively in charge of Social Security’s day-to-day operations.

WIth that in mind, here are five things that Musk hopes you don’t already know about Social Security.

1. There is No Serious ‘Fraud’ Problem with Social Security

To put it plainly – millions of dead people aren’t getting Social Security checks. This Musk claim was easily debunked; unfortunately, that did not prevent Donald Trump from repeating it on numerous occasions.

Beyond this falsehood, there is no other evidence that the system has a substantial problem with fraud. In 2024, an inspector general report found that there had been $71 billion in improper payments over a seven-year-period; about one-third of those payments were recovered. This amounts to roughly 0.3 percent of the total benefits paid out, which is an extremely high rate of accuracy – you can visit the Annual Improper Payments Dashboard to see how it compares to other government agencies, many of which have drawn no interest from DOGE.

2. Social Security is Not Going Bankrupt

Musk’s claim that Social Security is a Ponzi Scheme is nothing new; privatizers have been making the same claim for decades, trying to convince people (especially younger workers) that they’ll never see any of the money they’ve paid into the program. While it is true that Social Security is dependent on people paying their taxes to the government, that is also true for the repayment of government bonds – and no one calls government bonds a Ponzi Scheme.

What has happened to Social Security is fairly well understood. In order to account for the retirement of Baby Boomers, Social Security built up a massive surplus. The rhetoric about a ‘crisis’ is rooted in the process of using up that surplus. Even after those funds are exhausted, the program would be able to pay the majority of scheduled benefits. If political leaders were to make changes to the program now – raising the income tax to generate more revenue from the very wealthy, for instance – Social Security would be strengthened for the long term.

3. Social Security is Remarkably Efficient

Since the “E” in DOGE stands for Efficiency, you would think they might be able to spot an efficiently managed program. That is precisely how Social Security operates. The administrative costs associated with Social Security are less than 0.4 percent of benefits paid per year – far less than the typical 401(k) retirement plan, where administrative costs can add up to 20 percent or more of the benefits that are actually paid. Given that Social Security pays out close to $1.4 trillion in benefits every year, this is a remarkably lean and efficient program.

4. Privatization is a Terrible Idea

One of the most common claims about Social Security is that we would all make more money if we simply invested our money on our own. This idea came back recently during a retirement industry summit held by the giant investment firm BlackRock.

There’s no mystery why investment firms advocate for some form of privatization (though they tend to avoid using that word): They would earn billions of dollars in fees for managing these accounts. The idea of a stronger return from a privatized approach is especially attractive when the stock market is booming. Of course, things look very differently when the market goes down – as it inevitably does.

There are a host of other unanswered questions about how to even manage a privatized system. Policies would need to be crafted to regulate the plans, manage the efficient withdrawal of funds, and plan for the possible need for government bailouts. There is also the issue of how privatization would impact current retirees whose benefits are supported by current workers.

And, perhaps most importantly, private accounts would require benefit cuts. The privatization proposals under the second Bush administration included deep benefit cuts for all retirees, which was one of the main reasons the plan was so deeply unpopular. People were not enthusiastic about the idea that they’d get less in guaranteed benefits in order to place bets in the stock market. But on some level, this is what would be required under any privatization plan.

5. Social Security is an Incredibly Effective Anti-Poverty Program

The bogus arguments over fraud and long term funding projections can serve to obscure the overwhelming success of Social Security. There is no doubt that it remains one of the most effective anti-poverty programs in the nation’s history, lifting millions of Americans out of poverty. It is also structured to be highly progressive – lower wage workers will receive a higher share of their wages in benefits.

More fundamentally, the whole point of a nearly universal social insurance program like Social Security is to reinforce the idea that we are all in this together. Retirees and other beneficiaries do not need to manage an investment portfolio or worry about being defrauded by unscrupulous actors. And a program that touches almost every aspect of society makes it politically durable and overwhelmingly popular.

This first appeared on Dean Baker’s Beat the Press blog.