Privatizing Social Security is Dangerous

By Michael Bond on March 10, 2025

While Trump says he will not touch social security with the exception of fraud which they always claim to find, Elon is bringing in private equity to do what? Private equity makes no sense as an advisor unless you are hoping to fulfil the Republican financial elites dream of privatizing it.

I think their thought process is, we divert all those payroll taxes into buying stocks and bonds at the top so the fat cats can exit. Heck they will probably talk about loading the trust fund up with imaginary money called crypto coins.

But here is the thing. There is no trust fund, never has been. There’s simply an IOU to the trust fund since they raked higher payroll taxes on the working class to balance federal cash flow from their big corporate tax cuts in the 1980s.

Now who owes the IOU to the trust fund? In my world, corporations. But they are still cutting corporate rates. They need more offsetting cash flow – enter the tariff fantasy. If tariffs don’t hack it – they won’t, then expect calls for raising payroll tax rates again. They need more revenue, but they would never offer to raise the payroll tax threshold so the wealthy can contribute.

Important note: In 1980, 95% of wages paid payroll taxes. Today only 80% do because income inequality far outran CPI hikes of the threshold. Eliminating the threshold would raise so much revenue, they could lower the payroll tax rate and stimulate the economy.

Since there is no trust fund, there is nothing to turn over to private equity to manage. And Social Security is paying out more than it is taking in today reducing the imaginary trust fund. So what’s the play.

There is not one.

We either increase tax revenue, increase the deficit, or cut benefits. Cutting benefits to those who spend all of it immediately is austerity with a multiplier effect of $3 of lost economy for every $1 dollar of benefit cuts. It would be stupid policy.

Since the top 0.1% of our population are paying a lower TOTAL tax rate than the other 99% of working Americans, my solution is easy with little downside economic impact.

Tax the filthy rich,

Michael Bond