Of course, it's a Ponzi scheme. A ponzi scheme works until you run out of new investors, and that's pretty much what's happening now. There are less new contributors than there are recipients. They are going to have to cut back benefits. Obama, Romney and Perry have all admitted that we have to cut SSI benefits, because the current system isn't sustainable.
I agree that we have to reform SS but you are misinformed on a few fronts, as are most people using this rhetoric, including Rick Perry. (Didn't he get a C in his Econ101 class?)
First, a Ponzi Scheme by definition means there is no economic basis for the returns promised, and usually the returns promised are extraordinarily high. A Ponzi Scheme promises a (usually high) rate of return that is paid entirely out of those who are giving their money to participate. That does not apply to SS because SS is funded out of taxes derived from the economy. When the economy grows, so do the contributions into the fund. Unlike a Ponzi Scheme, which has no fundamental economic basis to promise the returns, the US government has the power to tax economic activity. Thus the power to fund SS is derived from the growth in the economy. You can - like Reagan - reform SS by taxing people more if that's what we so choose. You cannot fund a Ponzi Scheme in any other way than sucking people into the Scheme.
Also, unlike a Ponzi Scheme which promises people returns of 50% or 100% returns, or even higher - that's how they get people to participate in the scheme - SS is crediting people's accounts at a mix of US government bond interest rates, or about 4% today. You aren't going to get anyone into a Ponzi Scheme by promising them returns of 3.75%.
Also, you are incorrect to characterize that we are "running out of new investors." The population continues to grow. The economy continues to grow. That there are fewer new contributors to total recipients is irrelevant because there are always fewer new contributors to recipients. The ratio of total contributors to recipients is still 3:1-4:1. The reason why we have had a dip in the surplus is not because "its bankrupt" but because of the recession. Unless you think the US is growing to grow at 1% a year for the next 3 decades - which it won't - then we will revert back to trend when the economy resumes its long-term trajectory. SS is funded out the growth in the general economy. As long as the economy is growing, there is no problem funding SS. You may have to reform it - which we do - but it is not in structural decline.
The reason why we have to cut back benefits is not because its a "Ponzi Scheme." It's because we are living longer than we currently thought when we created and reformed the system. This is a graph of population projections at various points in time in the UK, but it is similar to what happened in the US.
My point on running out of new investors is not that we will run out of taxpayers, but there will be less of them and they won't make as much. We have a population of 310 million, but only about 153.6 million of them are in the "labor force". Now, yeah, those not in include the retired, children, the disabled, etc, but the fact is, there are more people in the wagon than pulling it right now.
There are several other problems. You rightly point out that people are living longer on average, and that's the problem. WHich means if you retire at 65, you are going to get back everything you paid in by 72. If the average lifespan is 78, you are drawing purely from investors for six years.
The other half of the problem is the shrinking base. My generation was part of the baby boom. My parents had five kids. My siblings all have two kids each and I don't have any. So essentially, counting spouses, we have 8 people that will be supporting 9 in the previous generation. (Results not typical, but it illustrates the problem.) People are putting off having kids, and having less of them. And when they do get jobs, they won't be the nice union jobs our parents enjoyed, but low paying "McJobs".
(This is where I get a little off the reservation from other republicans, so bear with me.)
So I might be able to enjoy an okay retirement in 20 years. I doubt my neices will. This is what Perry is trying to point out. By the time these kids get ready to retire there won't be enough money coming in to cover it.
Then you have the other part of the problem. The Lock Box that was pretty much left on the counter wide open with a "Steal Me" sign on it. Up until recently, SSI took in more than it paid out. The rest it converted into bonds that are now going to have to be paid back. This will mean more borrowing or more taxes. So in part, it's worse than a Ponzi Scheme.
I agree with everything you wrote until the last paragraph. SS is a poor system and we have to reform it. People should be given the option of investing their own retirement account, and the rest should be run like a real pension fund.
But the reason why SS went into deficit was because of the severe recession, not because of any structural issues. SS is like a defined contribution plan that invests in nothing but government bonds. If you took 6% of your paycheck and your employer matched it, then took those funds and invested entirely in government bonds, you would have the same type of account as you have at SS. But nobody would call your government bond retirement account a "Ponzi Scheme." The difference is that the government runs your account for you, and the securities it invests in are nontradeable.