A Plan to Save Social Security

Although there have been calculations made that the ability of the Social Security trust fund to fully fund the present level of benefits ends in the 2030’s, absent any changes in the sources of revenue, the approach postulated in this paper seeks to preserve all benefits through the unique path of opening up a new source of inflow into the trust fund.

??????????? The augmentation of the inflow is designed to have the least impact on individual taxpayers and on the growth path of the U.S. economy.? It’s implementation is simple, avoiding negative impact from significant increase of bureaucracy or governmental oversight.? This paper will first present the concept, then evaluate the immediate and long-term impact on inflow into the trust fund (“Trust Fund”), and then address the impact on the sources of the funding.

??????????? The concept:?? For each corporation headquartered in the United States that passes $1T in market value (or a multiple of $1T) for the following ten months the corporation will issue shares in the corporation totaling 1/10th of 1% to the Trust Fund.? For each existing corporation that exceeds $1T in value the corporation will issue shares in the corporation totaling 1/10th of 1% to the Trust Fund for consecutive 10-month periods corresponding to the whole number of trillions of dollars in value. For example, if at the time of the effective date of the enabling legislation Nvidia had a market value of $3.6T, then for 30 months Nvidia would issue shares in the corporation totaling 1/10th of 1% to the Trust Fund. Each time a corporation passes a new $1T milestone an additional 1/10th of 1% for ten months will be added at the end of any current non-fulfilled term.? Or if the corporation is passing a $1T milestone for the first time or has already satisfied all prior issuing requirements, then the issuance of 1/10th of 1% of its shares will commence on the following month.

??????????? The immediate impact (calculated based on the number and market value of corporations as of 11/16/2024 for example purposes):

??????????? Nvidia – $3.62 Trillion – 30 months or $3.62B per month (total over that period 3% or $108B)

??????????? Apple – $3.43 Trillion – 30 months or $3.43B per month (total over that period 3% or $103B)

??????????? Microsoft – $3.14 Trillion – 30 months or $3.14B per month (total over that period 3% or $94B)

??????????? Alphabet - $2.2 Trillion – 20 months or $2.2B per month (total over that period 2% or $44B)

??????????? Meta -? $1.48 Trillion – 10 months or $1.48B per month (total over that period 1% or $15B)

??????????? Tesla - $1.02 Trillion – 10 months or $1.02B per month (total over that period 1% or $10B)

??????????? Assuming the market value of these companies does not change for the first 30 months and no additional $1T thresholds are crossed, the net total inflow into the Trust Fund would be $418.7B.? That would represent 15% of the total estimated Social Security Trust Fund of $2.8T at the end of June 2024.? To put this in perspective, the total decline of the Trust Fund from the end of 2020 to June 2024 was approximately $100B.? This inflow is sufficient to resolve concerns regarding the funding of Social Security for the interim.

??????????? The long-term impact:? As of March 31, 2019, there were no U.S. companies with a market capitalization of $1T or more. https://tinyurl.com/46aa3zjr Therefore, in less than five years there were 15 $1T thresholds crossed by U.S. companies (3 each for Nvidia, Apple, and Microsoft; 2 each for Google and Alphabet; and 1 each for Meta and Tesla). ?The average value of the companies passing thresholds at the end of the period was $2.136T.? If a $3T company crosses the $4T threshold that results in a $40B increase in the Trust Fund.? Assuming that two $1T thresholds are crossed each year and the average company passing a threshold has a market value of $2.136T, an additional $80B would be added to the Trust Fund each year. Although there would likely be years in which no company crossed a $1T milestone, the average over the past five years has been three per year. Also, as the largest companies become larger and larger, the impact of crossing a threshold is increased (1% of $4T is four times as impactful as 1% of $1T).? The $1T club is likely to grow as time passes, further supporting the Trust Fund’s liquidity.

??????????? The author believes the impact of this funding could be so large as to avoid future increases in FICA assessments . . . and perhaps even a reasonable roll-back at some point in the future.

??????????? Assessment of Impact on Companies Exceeding $1T in Market Value:? Only the most massive companies in the world, headquartered in the U.S., are impacted by this program. Because only 1/10th of one percent of the stock of these companies is issued each month, the impact on the company, the market, and individual shareholders is miniscule. Although any issued shares should not be held for long in the Trust Fund, it would be appropriate to limit the amount of shares that could be sold in one day to 1/280th of one percent.

??????????? The author does not view the burden on the most successful companies in the world as punishment to those companies. Rather, the author views the issuance of these shares to the Trust Fund as an honor to all the citizens of the U.S., recognizing that this country has provided each of these companies a forum for achieving goals hardly imagined possible a mere decade ago.

- Kirk W. Watkins, 11/16/2024