Ep 109 - The Right’s Long-Game on Social Security
- 6 days ago
- 9 min read
A scam. A Ponzi scheme. A bill of goods. Those are not descriptions coming from anonymous Facebook accounts or fringe political activists. They are increasingly part of the way prominent Republicans talk about Social Security, one of the most successful and widely relied-upon programs the federal government has ever created. Senator Tommy Tuberville has called it a “government-approved Ponzi scheme.” Senator Ron Johnson has used similar language. And behind those insults is a broader conservative argument that Americans could have done better if the government had simply let them invest more of that money themselves.
Here is the uncomfortable part: some of what they are saying is true. Social Security taxes do not go into an individual account with your name on it. Most of the money coming out of workers’ paychecks today is used to pay people receiving Social Security today. And Social Security absolutely faces a long-term financing problem. Those facts deserve to be acknowledged instead of dismissed simply because the people pointing them out are using them to reach conclusions I strongly oppose.
But acknowledging a real problem is not the same thing as accepting a bad diagnosis. Social Security is not a retirement investment account that happens to be managed poorly. It is social insurance. That distinction is the key to this entire debate.
When Social Security taxes come out of your paycheck, you are not simply saving for your own retirement. You are participating in a system that provides retirement benefits, disability protection, survivor benefits for spouses and children, protection against outliving your savings, and benefits that adjust for inflation. That is a very different product from a 401(k), IRA, or brokerage account.
If you judge Social Security only by asking, “Could I have earned more investing this money in the stock market?” then yes, there are plenty of workers who could plausibly answer yes. Over long periods of time, diversified stock investments have historically produced strong returns. Someone with decades to invest could end up with significantly more wealth than the value of his or her Social Security retirement benefit.
But that comparison quietly changes the question. An investment account asks, “How much did my money grow?” Social insurance asks, “What happens if my life goes badly?” What happens if I become disabled at 42? What happens if I die and leave young children? What happens if my spouse dies? What happens if I live until 102? What happens if I retire just as the stock market loses a third of its value?
Those are not investment-return questions. They are insurance questions.
That is also why calling Social Security a Ponzi scheme is more rhetorical than accurate. A Ponzi scheme is fraud. The operator lies about where the money is going, invents investment returns that do not exist, and secretly uses money from new investors to pay earlier ones. The deception is not incidental to a Ponzi scheme. The deception is the scheme.
Social Security’s financing structure is not hidden. The government publishes detailed annual reports showing how much money is coming in, how much is going out, how much remains in the trust funds, and when those reserves are expected to run short. If this is a Ponzi scheme, it may be the first one in history where the supposed scammers publish actuarial reports explaining exactly when they expect to have a cash-flow problem.
And that problem is real. The 2026 Social Security Trustees Report projects that the retirement and survivor trust fund will be able to pay full scheduled benefits until 2032. After that, if Congress does nothing, incoming revenue would still pay most benefits, but not all of them. Social Security does not simply disappear when the trust fund is depleted, but the program cannot indefinitely pay every dollar currently promised without changes.
That is where the legitimate debate should begin. How do we fix it?
One increasingly popular conservative answer is some form of personal investment account. Instead of sending all Social Security payroll taxes into the existing system, workers could divert a portion into accounts invested in stocks and bonds. Importantly, this usually does not mean workers would simply get the cash and spend it however they wanted. Major privatization proposals have generally involved restricted retirement accounts with approved investment options and limits on withdrawals.
In other words, the government would not necessarily stop requiring retirement saving. It would change where some of the mandatory money goes and who carries the risk.
That creates an immediate problem that privatization slogans rarely explain very well. Today’s workers help pay today’s retirees. If part of tomorrow’s payroll taxes goes into private investment accounts instead, today’s retirees do not suddenly need smaller checks. Their benefits still have to be paid.
So where does the replacement money come from?
Borrowing? Higher taxes? Cuts somewhere else? Lower Social Security benefits? Some combination of all of them?
You cannot make that financing hole disappear by giving it a nicer name.
Then there is Ron Johnson’s proposal to make programs such as Social Security and Medicare subject to recurring congressional budget review rather than leaving them under their current mandatory-spending structure. Johnson’s stated argument is that Congress should be forced to confront major spending programs instead of allowing them to operate on “automatic pilot.” There is a legitimate fiscal-accountability argument buried in there.
But Congress already has the power to change Social Security. It can change tax rates, benefits, retirement ages, taxable wages, cost-of-living adjustments, and the benefit formula. So what additional power do lawmakers gain by dragging Social Security into recurring budget fights?
Leverage.
That is precisely what worries Social Security advocates. Programs exposed to recurring appropriations fights are more vulnerable to negotiations, shutdown politics, spending caps, deficit-reduction deals, and ideological bargaining. Johnson did not explicitly say, “I want to slash everyone’s Social Security check.” It would be inaccurate to claim that he did. But it is perfectly reasonable to worry about what happens when a retirement guarantee becomes another item Congress can put on the bargaining table.
Then there is Wall Street. And this part should not be waved away as conspiracy theory simply because it makes people uncomfortable.
If enormous amounts of payroll-tax money begin flowing into private investment accounts, somebody has to manage those assets. Somebody administers the accounts. Somebody holds the securities. Somebody provides the funds, advice, custody, and infrastructure. Financial firms have obvious economic interests in any system that creates millions of new investment accounts holding enormous amounts of money.
That does not prove that every Republican supporting privatization is doing so because Wall Street paid him. Motive and incentive are not the same thing. But when an industry stands to gain substantially from a policy, it is not unreasonable to examine its lobbying, political contributions, and historical support for that policy. Following the money is not the same thing as inventing a conspiracy.
There is another political temptation here too. American politicians already have a bad habit of using the stock market as a scoreboard for the entire economy. The Dow rises, therefore America is thriving. The S&P hits a record, therefore families must be doing great. Never mind whether rent is affordable, groceries are eating the paycheck, healthcare is crushing household budgets, or wages are keeping up.
Now imagine funneling enormous new streams of retirement money into financial markets. Asset prices rise. Personal account balances rise. Politicians point at the charts and declare the experiment a success. But more money flowing into Wall Street is not automatically the same thing as more security on Main Street, especially if taxpayers are simultaneously borrowing money to continue paying existing retirees.
And the risk is not evenly distributed. A person with $12 million and a person with $140,000 can both lose 30 percent in a market crash. The percentage is identical. The consequences are not.
The wealthy investor has options. He can wait. He can rebalance. He can draw income from somewhere else. The middle-income retiree may need that money for housing, food, medicine, and utilities next month. A market crash does not care that you happened to turn 67 at an inconvenient time.
Social Security does.
Your Social Security check does not fall 30 percent because Wall Street had a lousy quarter. It does not stop because you lived longer than your investment model expected. That stability is not evidence that Social Security is a lousy investment. It is evidence that Social Security was designed to do something different.
And privatization is not merely something liberal critics have invented as a Republican bogeyman. The idea has a long conservative history, including George W. Bush’s unsuccessful push for partially private Social Security accounts after the 2004 election. More recently, Treasury Secretary Scott Bessent described Trump Accounts as, in his words, a “backdoor for privatizing Social Security,” before later clarifying that they were intended to supplement the existing program.
Then Senator Ted Cruz was even more explicit. Speaking about Trump Accounts in 2026, Cruz said, “Here’s the dirty little secret: Trump accounts are Social Security personal accounts.” He described them as a way to familiarize Americans with personal investment accounts and potentially create support for applying that model to Social Security in the future.
At that point, we are no longer merely speculating about whether personal accounts are part of the conservative vision. Some conservatives are telling us that they are.
My answer to Social Security’s financing problem goes in the opposite direction. Before we cut benefits, raise retirement ages, or shift more risk onto workers, I want to talk about the taxable earnings cap.
In 2026, Social Security tax applies only to the first $184,500 of covered wages. Someone making $60,000 pays Social Security tax on all $60,000. Someone making $100,000 pays it on all $100,000. Someone earning $1 million in wages stops paying the Social Security portion of the payroll tax after reaching $184,500.
So the worker making $60,000 pays Social Security tax on 100 percent of those wages. The worker making $1 million pays it on about 18 percent.
Why?
The standard objection from wealthy earners is predictable: if they are required to pay Social Security tax on all of their wages, they should receive proportionately larger benefits. I disagree, because Social Security is not an individual savings account and never has been. It deliberately pools risk. Some people collect benefits for decades. Some die shortly after retirement. Some become disabled. Some leave spouses and children who receive survivor benefits. Perfect dollar-for-dollar proportionality is not the point of insurance.
And removing or substantially increasing the cap would matter financially. Social Security’s actuaries have estimated that eliminating the taxable maximum and applying the payroll tax to all covered earnings without granting additional benefit credit above the existing cap could close roughly two-thirds of the program’s long-term actuarial shortfall. Giving additional benefit credit would reduce the amount of the shortfall closed, but the improvement would still be substantial.
Would eliminating the cap solve everything forever? No. And I do not need to pretend that it would. There may still be a financing gap to address. Fine. Then we address it.
But before we tell a roofer that he needs to work until 69, before we cut somebody’s retirement benefit, and before we tell ordinary workers that more of their retirement security should ride the stock market, I would like the millionaire to keep paying Social Security tax after February.
That seems like a reasonable place to begin.
And ultimately, that is what this debate is really about. Not whether investing is good. Investing is good. We already have 401(k)s, IRAs, brokerage accounts, pensions, and other vehicles for building wealth. Markets have a role in retirement, and they should.
But not every part of retirement security should depend on investment performance.
Social Security needs repair. It does not need to stop being Social Security.
We already have plenty of ways to gamble on growth. Social Security should remain the part of retirement Americans do not have to gamble.
SOURCES
Social Security Administration — 2026 Trustees Report and current projections for trust-fund depletion and payable benefits — https://www.ssa.gov/oact/TR/2026/
Social Security Administration — Summary of the 2026 Trustees Report, including the 2032 OASI depletion date and projected 78% payable benefits — https://www.ssa.gov/news/en/press/releases/2026-06-09.html
Social Security Administration — How Social Security trust funds work and how excess funds are invested in Treasury securities — https://www.ssa.gov/OACT/ProgData/fundFAQ.html
Social Security Administration — Explanation of the separate Old-Age and Survivors Insurance and Disability Insurance trust funds — https://www.ssa.gov/faqs/en/questions/KA-02513.html
Social Security Administration — Historical ratio of covered workers to Social Security beneficiaries — https://www.ssa.gov/history/ratios.html
Social Security Administration — 2026 Social Security taxable earnings maximum of $184,500 — https://www.ssa.gov/faqs/en/questions/KA-02387.html
Social Security Administration — Actuarial estimates for eliminating or changing the taxable earnings cap, including estimates that eliminating the cap could close roughly 48% to 67% of the long-term shortfall depending on benefit treatment — https://www.ssa.gov/oact/solvency/provisions/summary.html
Sen. Tommy Tuberville — Remarks describing Social Security as a “Ponzi scheme” and arguing workers could have earned more through private investment — https://www.tuberville.senate.gov/newsroom/press-releases/tuberville-calls-out-joe-biden-for-voting-to-tax-social-security/
Sen. Tommy Tuberville — Remarks calling Social Security a “scam” and arguing that payroll-tax money could have earned substantially more in the stock market — https://www.tuberville.senate.gov/newsroom/press-releases/tuberville-rails-against-double-taxing-americans-on-social-security/
PolitiFact — Examination of Sen. Ron Johnson’s proposal to make Social Security and Medicare subject to recurring congressional budget approval — https://www.politifact.com/factchecks/2022/sep/26/joe-biden/biden-mostly-track-ron-johnson-wants-annual-approv/
Axios — Ted Cruz says Trump Accounts are “Social Security personal accounts” and describes them as a potential path toward Social Security privatization — https://www.axios.com/2026/05/08/cruz-trump-accounts-social-security
Washington Post — Treasury Secretary Scott Bessent describes Trump Accounts as a “back door for privatizing Social Security,” followed by administration clarification — https://www.washingtonpost.com/business/2025/07/30/trump-accounts-social-security-bessent/
Politico — White House clarification after Scott Bessent’s comments about Trump Accounts and Social Security privatization — https://www.politico.com/news/2025/07/31/trump-social-security-privatization-00487186
U.S. Treasury Department — Investment options selected for Trump Accounts, including funds managed by State Street, BlackRock/iShares, and Vanguard — https://home.treasury.gov/news/press-releases/sb0551
George W. Bush White House Archives — Bush administration explanation of proposed Social Security personal retirement accounts — https://georgewbush-whitehouse.archives.gov/news/releases/2005/02/20050203-13.html
George W. Bush White House Archives — Details of the Bush personal-account proposal and proposed investment structure — https://georgewbush-whitehouse.archives.gov/news/releases/2005/02/20050210-1.html
George W. Bush White House Archives — Bush administration discussion of investment risk and protections proposed for Social Security personal accounts — https://georgewbush-whitehouse.archives.gov/news/releases/2005/04/20050421.html
FactCheck.org — Examination of claims about Wall Street profits and fees under the Bush Social Security privatization proposal — https://www.factcheck.org/2005/03/false-attacks-over-windfalls-to-wall-street/
Washington Post — Reporting on Wall Street and financial-industry interest in Social Security privatization during the Bush administration — https://www.washingtonpost.com/archive/business/2005/01/19/labor-presses-case-against-privatizing-social-security/f1a69e3e-0478-4ba7-a520-de46c767616c/
Washington Post — Reporting on financial firms positioned to benefit from private Social Security investment accounts during the 2005 privatization debate — https://www.washingtonpost.com/archive/business/2005/03/08/unions-muffle-wall-street-support-of-private-accounts/be75c773-96b5-4d69-8258-b7c0b30e21c7/ (Social Security Administration)
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