There was no "surplus" and the money was no more spent on aircraft carriers than on any one of the more then 70 welfare programs. It was supposed to pay out less than paid in so that there was enough for future generations.
Progressives, when Social Security was established, what was the age benefits would begin and what was the average life span? Social Security was supposed to help in the last few years of live, not be retirement for fifteen or twenty years.
The Social Security Trust Fund was established in 1939 to receive monies collected for Social Security through payroll taxes. The monies in this fund are managed by the Department of the Treasury; they are not, nor have they ever been, put into the "general operating fund."
However, the Social Security Act specifies that the monies in the fund may "be invested in securities backed by the full faith and credit of the Federal government," such as treasury bills, treasury notes, and treasury bonds, as well as special issue bonds. So, essentially, the government can "invest" Social Security funds by lending them to itself, then spending that money on programs not related to Social Security (e.g., defense, foreign aid, education). This has always been the case.
During the Johnson administration, Social Security and other Federal programs that operate through trust funds were counted officially in the budget. This did not mean that it was actually part of the general fund, rather that it was finally recorded as part of the budget.
Read more: http://wiki.answers.com/Q/When_was_Social_Security_put_into_the_general_fund#ixzz23UYLDAZl
The government collects Social Security and then lends the money to itself. The "IOU's" pile up in a filing cabinet. Of course, now we no longer take in more than is paid out. We are having to pay back those IOU's, there are only a couple of workers for each person receiving benefits.
Social Security did not start out as a Ponzi Scheme, it ended up that way.