Nothing Was Set Aside

Section 1The question before us

Someone who worked forty-five years will tell you they paid into Social Security and are drawing what they put in. They are describing something that did not happen. The money they paid was spent in the year they paid it, on whatever the government was buying that year. What they have is a statutory promise, revocable by Congress, that somebody else will be taxed later on their behalf.

That is not an accusation against them. Nobody told them otherwise, the program is named to suggest a fund, and the annual statement they receive looks exactly like a balance.

A promise to tax somebody later is not a fund, however carefully it is described as one.

This paper argues that the arrangement should be replaced with one that does what the first is described as doing: money in an account, owned by the person whose name is on it, invested in the productive economy, and beyond the reach of any future appropriation. It also argues that this is enormously expensive to get to, and that anyone proposing it without saying so is not being straight.

1.2   Our own share of the failure

The people who describe Social Security as a Ponzi scheme have voted, decade after decade, for the spending that consumed the money.

That is the honest accounting. Every generation now alive elected governments that spent the payroll receipts on general operations, and most of us would have done the same in their place, because the alternative was visible taxes or visible cuts and nobody wanted either. The retirees drawing benefits today are not a uniquely irresponsible cohort. They are a cohort that behaved the way voters behave.

There is also a tone problem worth naming, because it costs the argument more than it gains. Roughly four in ten seniors rely on Social Security for the majority of their income. An argument made at the expense of a widow living on nineteen hundred dollars a month is a worse argument, whatever its arithmetic. The fallacy is in the description of the program, not in the character of the people receiving it.

1.3   The American way of doing this

What follows is sometimes described as a new social program. It is closer to a very old one.

On January 1, 1863, two things took effect. Abraham Lincoln issued the Emancipation Proclamation, and the Homestead Act became operative — the first claim filed that same day. Six months earlier the Morrill Act had created the land-grant colleges. Eighty-two years later the GI Bill sent a generation to school and gave it the means to buy houses.

In each case the government handed a citizen an asset and then got out of the way. Not a benefit administered forever. Property.

That is the tradition this proposal belongs to, and it is a different one from the programs it replaces. Social Security administers a promise. A homestead, a degree, a deed — those were transfers of ownership, made once, to people who then owned the thing outright and answered to nobody about it afterward.

We should be honest about the record rather than sentimental. A large share of homestead claims failed. Substantial acreage went to speculators and railroads rather than settlers. And the land distributed had been taken from people already living on it, which is not a footnote. The instrument was sound; its administration was flawed and its foundation was in places unjust.

What the instrument got right is what we are borrowing. A country that had land and no capital gave people land. A country that has capital and no land can give people capital.

Section 2What Social Security actually is

Three facts, none of them disputed by anyone who administers the program.

It is pay-as-you-go. Today's workers fund today's retirees. The trust fund holds special-issue Treasury securities, which are the government's obligation to itself — an entry recording that general revenue borrowed from payroll revenue and will have to be repaid out of future taxes. As the Paragon Health Institute puts it in the parallel Medicare context, contrary to widely held belief, workers' taxes do not pre-fund their future benefits.1

There is no property right. In Flemming v. Nestor the Supreme Court held that a worker's contributions create no accrued right to benefits, and that Congress may alter them.2 Whatever else the program is, it is not a contract and it is not an account.

And it is not only retirement. Roughly 8.5 million people receive disability benefits and about 6 million receive survivors' benefits. Those are insurance against events that may never happen, which is a different product from provision for an age everyone reaches, and Section 6 treats them separately for that reason.

Section 3Reform I: An account, seeded at birth

Every American child should receive an account at birth — we use $7,000 as the illustrative figure — invested in a broad, low-cost index fund and inaccessible until retirement age.

The cost is trivial by federal standards. Roughly 3.6 million births a year at $7,000 is about $25 billion annually, against Social Security's $1.5 trillion. This is the cheapest part of the proposal by two orders of magnitude.

The idea is also live rather than hypothetical. The 2025 tax act created accounts funded at $1,000 per newborn, and comparable proposals have come from both parties.5 The difference here is one of scale and of purpose: those are savings incentives, and this is a replacement for a national pension.

One feature worth noticing. The seed is identical for every child regardless of what their parents earn, which makes it the most progressive element of the design — worth proportionally far more to a child born poor than to one born rich, and the only part of the system that arrives before anyone has done anything to deserve it.

3.1   Who is in which system, and why there are no exceptions

The rule is a bright line with no hybrid cohorts. Anyone who receives the seed is in the new system. Anyone who does not is in the old one, and receives what it promised without reduction.

No blended cohorts, no partial accruals, no formula for the forty-year-old with twenty years behind them and twenty-five ahead. They stay where they are and get what they were told they would get. That is more expensive than a blend and it is the only version nobody can call a bait and switch.

Everyone who works in America contributes to an account and owns it, without exception. An immigrant arriving at thirty contributes from the day they start working and the balance is theirs, on the same terms as anyone else's. They accumulate less than someone who started at twenty-two, because they had eight fewer years of compounding — that is arithmetic, not a rule — and the floor in Section 5 catches them if the balance falls short.

We considered excluding new arrivals from the accounts and rejected it. It would create a permanent two-tier workforce, in which one worker builds an asset they own while the person at the next desk pays the same contribution and accrues nothing. It would also fall hardest on the people whose contributions are financing the transition itself. A reform whose costs are borne most directly by the one group excluded from its benefits does not deserve to pass.

Section 4Reform II: Contributions from earnings, into the same account

From the beginning of working life, a fixed percentage of earnings is contributed to the individual's own account — in place of the payroll tax that currently funds the pay-as-you-go system.

This is the reform. The seed at birth is a headline; the contributions are the system.

4.1   What it produces

The following assumes $7,000 at birth, contributions of ten percent of a $60,000 income from age 22 to 65, returns net of fees, all figures in constant dollars, and a four percent withdrawal in retirement.3

The average Social Security retired-worker benefit is approximately $23,700 a year.

Even at the pessimistic assumption, an account people own delivers roughly seventy percent more than the promise it replaces.

Two observations about the table matter more than the headline figures.

The result survives the pessimistic case. Seven percent is approximately the long-run real return on American equities, and it is also a figure from the century in which the United States became the dominant economy — global equity returns across markets have run closer to five. We have shown five percent deliberately, because a national retirement system should be designed against the assumption that might be wrong rather than the one that flatters it. At five percent it still works.

And the seed is the smaller half. It supplies about 16 percent of the balance at a five percent return and 28 percent at seven. Anyone presenting this reform as "money at birth" has described the garnish rather than the meal.

4.2   Why the account must be genuinely owned

The balance is the individual's property, heritable, and outside the reach of appropriation. That is not a detail, it is the entire distinction from what exists now.

The current system's defining feature is that the money went somewhere else. A replacement that leaves the balances legally reachable by Congress reproduces the original failure with additional paperwork, and the first serious fiscal emergency will find them.

It is tempting to think private ownership settles this. It does not, and the recent record is worse than most Americans know.

Argentina, 2008. The government nationalized roughly $30 billion in private pension accounts. Holders received government bonds, on which Argentina subsequently defaulted.12

Hungary, 2010. Roughly $14 billion. And note the method, because it is the one that matters: the state did not seize the accounts. It offered citizens a choice between transferring their savings and losing eligibility for the public pension while still being required to contribute to it.12

Poland, 2014. About $50 billion — roughly 55 percent of private pension assets, and specifically the government bonds those funds were holding — moved to the state system, converting a 4.8 percent deficit into a projected 4.5 percent surplus in a single year.12

Three democracies emptied private retirement accounts within six years, and Hungary did it in about eight months.

Bolivia and Kazakhstan followed. Ireland raided its reserve fund to recapitalize banks. The pattern is consistent enough to design against.12

4.3   Five protections, and why each is needed

Each of the following answers a specific method that has actually been used.

Legal title vests in the individual. Not a statutory entitlement, not a beneficial interest in a government fund — property, heritable, recorded in their name. Confiscation then becomes a taking requiring just compensation, which removes the fiscal point of doing it. Poland's own employers' association argued expropriation before its Constitutional Tribunal; the protection is real but it has to be built in deliberately.

Custody sits outside the Treasury. Assets are held by private custodians under fiduciary duty, never in an account the government administers. What the state does not hold, it cannot quietly reclassify.

No investment mandate favoring government securities. This is the Polish lever and it is the subtle one. Those funds held sovereign bonds because policy encouraged it; the state then took the bonds. A statute permitting Congress to require accounts to hold Treasuries "for stability" is a nationalization with a delay built in.

No conditioning of any other benefit on the account. This is the Hungarian lever. The state never touched the property; it made keeping the property expensive enough that people surrendered it. Nothing — no benefit, no credit, no eligibility — may be conditioned on transferring, pledging or surrendering an account.

And a supermajority to weaken any of the four. Two-thirds of both houses to reduce these protections; a simple majority to strengthen them. That is the same asymmetry Issue Paper No. 8 proposes for tax preferences, applied here for the same reason: make the thing hard to erode and easy to reinforce.

We would not claim this is proof against a determined government. Nothing is. It raises the cost of a raid from an accounting maneuver to a constitutional confrontation, which is the most any statute can do.

4.4   How the money is invested, and how it is not

Nobody manages this centrally. There is no national fund, no committee allocating capital, and no entity making a buy or sell decision on behalf of the country. The account holder chooses, from a short menu of approved low-cost diversified funds, exactly as a worker chooses within a 401(k).

The American precedent is the Thrift Savings Plan, which federal employees have used for decades: a handful of broad index options, lifecycle funds that shift toward safety as the holder ages, and expenses low enough to be nearly invisible. It is individually directed, it is not centrally managed, and it works.

The guardrails are the price of the mandate. No individual securities, no leverage, no concentrated positions, a hard cap on fees, and an age-appropriate default for anyone who declines to choose. Growth-weighted early, progressively weighted toward fixed income and lower volatility as retirement approaches.

Decentralization is not only a matter of principle here. It solves two of the three problems below by construction: millions of holders in different funds on different schedules cannot be synchronized by a single signal, and no single manager accumulates a controlling bloc of American equity.

Three further rules, and the first exists to prevent a specific catastrophe.

No market-triggered selling, ever. The intuitive protection — sell automatically when the market turns down, buy back when it recovers — has been tried, at scale, and it broke the market.

The strategy was called portfolio insurance. It dynamically sold S&P 500 index futures as prices fell and repurchased as they rose, and by 1987 it covered some $80 billion. The Brady Commission's postmortem on Black Monday traced the feedback loop: futures selling depressed futures prices, which triggered arbitrage selling of stocks, which lowered prices, which triggered further insurance selling. On October 19, three portfolio insurance strategies alone accounted for nearly $2 billion of roughly $21 billion in New York Stock Exchange sales, and insurer sales made up more than 40 percent of futures volume.9

Two details finish the argument. It did not protect the insured — one deeply insured pension fund watched its holdings fall from $3.3 billion to $3.0 billion regardless. And the Commission was careful to call these mechanisms amplifiers of the decline rather than its cause, which is the honest characterization.9

Eighty billion dollars of mechanical selling helped produce a 22.6 percent single-day collapse. A national retirement system on a sell trigger would be hundreds of times larger, and every account would fire at once.

It also loses money in ordinary conditions. Selling after a decline and buying after a recovery is a description of buying high and selling low. In 2020 the market fell 34 percent in thirty-three days and had fully recovered by August; a trigger would have realized the loss and repurchased higher.

The protection is a glide path, not a trigger. Holdings shift from equities toward bonds on a schedule set by the account holder's age, not by the market's direction. A person at sixty de-risks because they are sixty. Everyone is on a different schedule, so no signal synchronizes the population and no protection depends on anyone else's timing.

Diversify beyond the S&P 500. Concentrating a national retirement system in American large-capitalization equities is a single undiversified bet, and it magnifies the second and third problems below. Broad global exposure is the correct default.

And the shares must be voted by their owners. Spreading assets across competing private managers goes most of the way on its own, and the statute should finish the job. At roughly ten percent of a payroll base above $10 trillion, the system takes in on the order of a trillion dollars a year. Within decades it would be among the largest pools of capital ever assembled, and index funds already hold a substantial share of American equities.

A government-chartered entity holding a controlling interest in American corporations is state influence over private enterprise, which is the opposite of what this paper is for. Voting rights should pass through to individual account holders, or the manager should be required to abstain, or the assets should be spread across competing private managers under fiduciary duty. Whichever mechanism is chosen, it must be in the statute and not left to a future administrator.

One further consequence deserves mention because it cuts against our own projections. Compulsory purchasing at that scale bids up asset prices, and higher prices imply lower expected future returns. The program's success would partially erode the return assumption on which Section 4.1 depends. Global diversification reduces the effect and does not eliminate it.

Section 5Reform III: A floor beneath it

No account is sufficient on its own. The graduated schedule proposed in Issue Paper No. 9 sits underneath, catching anyone whose balance falls short — a career of low earnings, years out of the workforce, a market that disappoints, a disability that ends a working life early.

This provision is the difference between the two working examples.

Australia has run compulsory superannuation since 1992 — employer contributions to individual accounts, now around twelve percent of wages, alongside a means-tested age pension that guarantees a floor. It has produced one of the largest pension pools in the world relative to population.4

Chile privatized in 1981 without an adequate floor. Replacement rates came in far below what had been promised, and Chile has spent recent years reforming back toward a public pillar amid mass protest.4

The lesson is not that funded accounts fail. It is that funded accounts with nothing beneath them fail, and that the floor is not a concession to the other side of the argument but a load-bearing part of the design.

Section 6Reform IV: Disability and survivors remain insurance

Disability and survivors' benefits should be preserved as insurance, funded from a pooled premium, and must not be folded into the individual accounts.

The reason is arithmetic. A twenty-five-year-old who is paralyzed has an account balance of almost nothing, because they have contributed for three years. Whatever is owed them cannot come from their own savings, and any system that tries produces the worst outcome for the people with the worst luck.

Roughly 8.5 million disabled workers and 6 million survivors depend on this, and it is the part of Social Security that most resembles what the word insurance actually means. It should be separated out, funded honestly, and left alone.

Section 7Reform V: Stop penalizing work after sixty-five

A retiree who chooses to keep working should keep what they earn. Under the graduated schedule in Issue Paper No. 9, their benefits taper at the same capped rate as everyone else's — never at a rate that makes the additional work pointless.

This is a genuine advantage of the design and it is worth stating explicitly. The current arrangement contains an earnings test and a set of interactions that convince many people the extra shift is not worth it. Under a single capped taper, working after sixty-five always leaves a person better off. Nobody is required to. More people would choose to.

7.1   And a civic observation, offered carefully

Retirement in America is unusually total. A person leaves the workforce and, with it, most of the places where they would encounter someone half their age, someone who arrived in the country last year, or someone whose working life bears no resemblance to the one they finished.

This matters more than it used to, because retired Americans are the most reliable voting bloc in the country. A democracy in which the group with the most electoral weight is also the group furthest from workplaces, classrooms, and the ordinary friction of a changing society is running a risk nobody designed.

We propose no requirement of any kind. And we would caution against the obvious instrument: paying people to volunteer has a documented failure mode, in which extrinsic reward displaces the intrinsic motivation that produced the behavior in the first place. People who would have coached the team for nothing sometimes stop once it becomes a transaction.

The better lever is removing barriers rather than adding payments. Stop penalizing part-time work. Stop structuring retirement as a cliff. Make it easy to stay in the mix and most people will, without being paid to.

Section 8The transition, which is the whole problem

Everything above is the easy part. This section is the reason no country has converted a mature pay-as-you-go system to a funded one, and we would rather spend four pages on it than one.

8.1   What the baseline already costs

The comparison is not between an expensive reform and a free status quo.

The 2025 Trustees Report projects the Old-Age and Survivors Insurance trust fund depleting in 2033 — when today's fifty-nine-year-olds reach full retirement age — at which point benefits fall automatically by about 23 percent under current law. Combined with the disability fund, depletion moves to 2034 with a 19 percent cut, deepening toward 28 percent by 2099. The seventy-five-year actuarial deficit is 3.82 percent of taxable payroll, or 1.3 percent of GDP — and it worsened from 3.50 percent in a single year. Cash deficits over the coming decade total $3.6 trillion.6

So doing nothing has a price, and it is paid either in higher taxes or in a benefit cut that arrives on a date already circled.

But the transition cost is additional to that shortfall, not instead of it. Starting a system for newborns does not discharge an obligation to current retirees. This reform does not stop the bleeding in the near term. It increases it for decades, and stops it only after the last pay-as-you-go beneficiary has died. Any version of this argument that claims otherwise is selling something, and we would rather say so on this page than have it said to us on somebody else's.

8.2   What the bright line does to the cost profile

The rule in Section 3.1 produces the gentlest transition path available, and this is a genuine advantage over how privatization is usually proposed.

Most such proposals divert current workers' payroll taxes into accounts, which opens an immediate hole in the funding of current retirees. That is what makes them unaffordable on the first day. Ours does not: pre-cutoff workers keep paying and pre-cutoff retirees keep receiving. Only people who never entered the old system are in the new one.

The first two decades are close to free. About $25 billion a year in seed grants, and the existing system untouched — same workers, same contributions, same benefits.

Then the gap opens slowly as new-system cohorts enter the workforce contributing to their own accounts while pre-cutoff workers retire. The payroll base thins one year at a time.

The crunch arrives late — roughly six to nine decades out, when nearly all workers are in the new system and a large old-system retiree population remains, funded almost entirely from general revenue.

Somebody pays twice. The bright line decides who and when, and it puts the weight on the generations best able to see it coming.

And it runs roughly ninety years, not seventy-five. By construction the last child born before the cutoff retires some sixty-five years later and may draw benefits into the decade after that. That is the price of cutting nobody, and the paper should not round it down to sound better.

8.3   Why we do not borrow the liability at the outset

The tempting move is to borrow the whole transition liability on the day of passage, so that no future generation pays for a previous one's spending. We think that is a mistake, for a reason that is simply arithmetic.

Debt service is intergenerational burden-shifting. Borrowing converts "future taxpayers fund benefits" into "future taxpayers fund interest on the money borrowed to fund benefits." Same people, same wallets, different word on the line item. Nobody is spared.

The only way it produces a gain is if the borrowed money earns more than the interest owed on it — a leveraged position in equities financed by Treasury debt. That is the same free lunch discussed in Section 9.2, and it is not one: the equity premium is compensation for bearing risk, not money lying on the ground. If it were, there would be no reason to stop at this liability.

Borrowing is defensible for one narrower purpose — smoothing the peak described in Section 8.2, where the annual cost is concentrated. Bridging a known spike is ordinary public finance. Pre-funding the entire obligation at passage would roughly double outstanding federal debt in a single act, and it would contradict the condition in the next section.

8.4   What it depends on, and where the money comes from

We state this plainly because it constrains the whole proposal. This reform should not be attempted from the present fiscal position.

A ninety-year commitment undertaken from a deficit near six percent of GDP, with debt near a hundred percent of it, is not a reform but a wager. Chile financed its transition out of accumulated surpluses and still strained for decades.4 We would begin from the opposite position.

So this paper is explicitly sequenced behind the balanced budget argument this organization has made elsewhere. That is an unusual thing to write into one's own proposal, and it is true.

It is also worth being precise about what balance does and does not do. It does not make the transition cheaper. It forces the country to name where the money comes from — from real revenue or real reductions elsewhere — rather than adding it to a deficit and calling the question settled. The transition is a ninety-year appropriation and should be budgeted like one.

One revenue source deserves specific mention because the evidence on it is unusually strong. The Congressional Budget Office found that the immigration surge of 8.7 million people across 2021 to 2026 will raise GDP by $9 trillion and reduce federal deficits by $0.9 trillion over 2024 to 2034 — $1.2 trillion in additional revenue against $0.3 trillion in additional outlays.7 On this program specifically, the Trustees model it directly: each additional 100,000 in net annual immigration improves the actuarial balance by 0.1 percent of taxable payroll, and the spread between their low and high scenarios is 0.78 points — close to a quarter of the entire shortfall.7

The mechanism that produces this is working-age people paying payroll taxes over decades, which is what the CBO analysis found the surge population to be. It is not produced by selecting entrants on wealth. We considered proposing residency for home purchasers and rejected it: it selects for the wrong ages, it amounts to selling residency, and several countries that tried it have reversed course. More legal working-age immigration is the version the evidence supports.

We decline the housing objection that is usually raised here. Housing supply is capable of meeting demand; where it does not, the impediment is zoning, permitting and land-use restriction rather than any failure of the market. That is the argument Issue Paper No. 9 makes about homelessness and it applies with equal force here. The answer to housing pressure is fewer restrictions on building, not fewer people.

We do not have a costing for the transition and will not invent one. Any serious version of this must be scored by the Congressional Budget Office before anyone votes on it, and a reader who concludes that the cost makes the reform impossible has identified the central objection rather than missed the point.

8.5   Where the money comes from

Three things shrink the problem before we name a single source.

The gap ramps rather than arrives. It is near zero for two decades and peaks six to eight decades out. This is not a bill due next year; it is a fiscal position that must be capable of absorbing a slowly rising commitment.

Part of it is owed regardless. The 1.3 percent of GDP shortfall exists with or without this reform, so the marginal cost over doing nothing is smaller than the gross figure suggests.

And the money is redirected, not destroyed. Workers still contribute the same share of wages — into accounts they own rather than to the Treasury. On the government's books that is a revenue loss. In the economy it is a shift from transfer consumption to saving.

The sources, in rough order of size and all requiring proper scoring:

Retaining part of the tax base broadening. Issue Paper No. 8 proposes eliminating $2.3 trillion in annual tax preferences and returning the revenue as lower rates. Retaining a portion rather than all of it is the largest single source available here, and we say plainly what that means: the tax reform in Issue Paper No. 8 is not revenue-neutral if this reform proceeds. The rate reduction is smaller than a pure swap would deliver. A reader is entitled to know that the same dollar is not being spent in two papers.

Interest savings. Debt that stops compounding stops consuming revenue. Net interest currently approaches a trillion dollars a year.

Slower growth in federal health spending, which is what Issue Paper No. 10 exists to produce and which is the largest driver of long-term spending growth.

Restraint in defense and non-defense discretionary spending. We note the limit honestly: eliminating the entire non-defense discretionary budget would not cover the peak, and halving defense would not either. There is not enough waste in the federal government to fund this, and any paper implying otherwise is not doing arithmetic.

And higher legal working-age immigration, for the reasons in Section 8.4.

Those sources plausibly exceed the peak requirement. But they must first close a deficit near six percent of GDP, and a dollar cannot be spent twice. The honest total is an adjustment on the order of eight to nine percent of GDP — balance first, transition second — against federal revenue of about seventeen percent. That is the number, and we would rather print it than have it computed for us.

8.6   Adjustments of this size have been done

Canada cut program spending from roughly sixteen to eleven percent of GDP in the mid-1990s and moved from deficit to surplus within about four years. Sweden swung a comparable share across the same decade. Both were undertaken in conditions of recognized crisis, with broad political consent, and both held.10

Nor is the American record what it is usually said to be. Between 1946 and 1974 federal debt fell from 106 percent of GDP to 23 — and while the popular account credits growth, a decomposition of that 83-point fall attributes only 32 points to growth exceeding undistorted interest rates. Seventeen points came from genuine primary surpluses and twenty-eight from interest-rate distortions. The United States ran primary surpluses in 43 of 63 years.11

So sustained fiscal discipline across three decades is not hypothetical. Our grandparents did it, deliberately, while also building Social Security and Medicare over objections that they could not be afforded.

Two honest qualifications. Twenty-eight of those eighty-three points came from surprise inflation and a pegged rate regime that taxed bondholders without their consent — an instrument unavailable in a world of indexed expectations and mobile capital, and one we would not propose. And the same generation built the programs, unfunded and pay-as-you-go on a ratio of sixteen workers per beneficiary, whose promises this paper now exists to make good on with under three. They were not wrong to build them. They could not have seen the demographics, and finishing the work is our part rather than a criticism of theirs.

Section 10What we are not claiming

We are not claiming anyone currently receiving benefits should lose them, or that anyone near retirement should have the arrangement changed under them. The transition in Section 8 is deliberately long for exactly that reason.

We are not claiming this saves money. It costs money — a great deal, for a very long time — and the savings arrive only after the double-funding period ends, which is beyond the working life of anyone voting on it.

We are not claiming that citizens pay more and receive nothing. They receive a great deal: an account they own outright and can leave to their children, a capped marginal rate at every income under Issue Paper No. 9, health and housing support that phases out on one honest schedule, and a retirement floor that does not depend on a future Congress. The government's costs rise during the transition. The citizen's position improves throughout it. Those are different ledgers and we would not propose this if only the first one moved.

We are not claiming markets always rise. Section 9.1 and 9.3 state the two ways this proposition can fail, and both are real.

And we are not claiming the people who built the present system were foolish. In 1935 a funded system would have required a generation to go without while it accumulated, and pay-as-you-go paid benefits immediately to people who had nothing. That was a defensible choice. Ninety years of treating it as though it were a fund is what needs correcting.

Section 11The argument you can carry

The paper compressed to what a person can remember and repeat.

And the one that indicts the argument's own side. The people who describe Social Security as a Ponzi scheme have voted, decade after decade, for the spending that consumed the money. The program did not misplace it. We spent it, on things we wanted, and declined to pay for them at the time.

Section 12Conclusion

In 1935 a country with no pension system and a great many destitute old people had two options. It could accumulate a fund, which would take a generation and pay nobody in the meantime, or it could tax workers and pay retirees immediately. It chose the second, and given the year, that was the right choice.

What has happened since is not that the choice was wrong. It is that ninety years of describing a transfer as a fund has left a country believing it owns something it does not, defended by people who would be furious to learn the truth and are never told it.

A retirement people actually own is available, it is better than what they have even under pessimistic assumptions, and the arithmetic of getting there is brutal. All three of those are true at once, and a paper that gave you only the first two would be doing what the last ninety years have done.

In 1863 a country with more land than capital gave land to anyone who would work it. We are a country with more capital than land. The instrument changed; the idea did not.

The seed at birth costs twenty-five billion a year, which is nothing. The contributions build the account, which is the reform. The floor beneath it is what Chile forgot. Everyone who works here owns one, because a two-tier workforce is not worth the savings. And the transition costs more than anything else this organization has proposed, for ninety years, on top of a shortfall the country already owes — which is why this paper sits behind the balanced budget and not in front of it.