Gold Bull Peter Schiff Calls Social Security An 'Intergenerational Ponzi Scheme' As Debt Default Looms

As the June 1 debt-ceiling deadline set by the Treasury approaches, concerns are mounting among Americans about the potential impact on government payments such as Medicare and Social Security. Renowned economist Peter Schiff took to Twitter to express his thoughts on this apprehension.

What Happened: Schiff argued that the claim made by beneficiaries that they are being deprived of the money they contributed as tax revenue is unfounded. 

According to the economist, “Every penny the government ever collected in Social Security taxes has already been spent.” He explained that the only way to provide them with payment is by using current tax receipts or by increasing debt. 

"No one ‘paid into' Social Security. It's an intergenerational Ponzi scheme,” he said.

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Why It's Important: Schiff’s comment was prompted by a report highlighting Americans’ concerns about the potential delay in Social Security payments due to a possible default. 

If the Social Security checks, scheduled for June 2, 14, 21, and 28, do not arrive on time, millions of beneficiaries would face worries about meeting their basic financial obligations, according to Max Richtman, President and CEO of the National Committee to Preserve Social Security and Medicare. 

The report also featured the perspective of Lynda Fisher, an 80-year-old individual, who voiced her frustration, stating, “I paid into Social Security, and I paid into Medicare. And now they’re trying to take it away. It’s not their money, it’s my money that I paid into.”

Schiff aligns with the Republican viewpoint of cutting spending to address the deficit. He believes that even if the debt ceiling is not raised, the government can prioritize interest payments on Treasuries and reduce other expenditures to manage the situation.

Read Next: What Is The Debt Ceiling — And What Happens If Congress Can’t Raise It In Time?