Ramesh Ponnuru tires of the debate:
Social Security, unlike a Ponzi scheme, is not run for the financial profit of the people who run it; in fact, the government is running it at a loss, and that loss is projected to increase. Participating in Social Security, unlike a Ponzi scheme, is involuntary. And Social Security, unlike a Ponzi scheme, can be reformed so that it becomes a sustainable program. How to do that is probably what we should be talking about, instead of the validity and limits of an analogy.
Social Security is not necessarily a Ponzi scheme but it only generated massive returns in the past because of its Ponzi-like aspects. The Ponzi-like aspects are now over and social security is turning into what is essentially a forced savings/welfare program with, as Krugman recognizes, crummy returns for average workers. Social security is thus a Ponzi scheme which has not gone bust but it has gone flat.