Gene Epstein starts his latest Barron’s column with an anecdote about the late Nobel Prize-winning economist Paul Samuelson’s assertion in 1967 that Social Security was “a Ponzi scheme that works.” After recounting a counterargument from another Nobel laureate, James Buchanan, Epstein explains how the situation today makes Samuelson’s 46-year-old assertion look like a particularly poor piece of prophecy.

Buchanan didn’t use the term Ponzi, as far as I know. But he warned prophetically that chronic deficits were becoming an institutionalized part of the way government operates. When Samuelson defended Social Security in 1967, other entitlement programs — Medicaid and Medicare — had been enacted just two years before. Tally in 2013 all entitlement programs mandated at the federal level, including the drug benefit signed into law by President George W. Bush and the new health-care legislation of President Obama, and we confront one of the costliest Ponzi schemes ever contrived, passing burdens that look increasingly unsustainable to future generations.

Then assume that all other federal spending grows at its normal historical pace, and add the daunting fact that all the baby boomers will be over 65 by 2029. Result: The burden of accumulated debt could eventually trigger a fiscal crisis not unlike what recently occurred in Greece, accompanied by the risk of a default on promises made to the elderly. …

… The system itself is at fault. Obama’s constituencies are also part of that system, not to mention those his bully-pulpit can persuade. The president’s recent State of the Union address, in which we were assured that the debt problem is “more than halfway” solved, got three-quarters of respondents to a CNN poll to say they agreed or agreed strongly with what he had to say. Kind of scary, isn’t it?