The High Stakes of Economic Disruption: An Examination of Trump’s Authoritarian Policy Gamble

I just came across Tanvi Ratna's (@tanvi_ratna) on "Trump’s new tariffs."

It's in bits on an X thread, but available on her Substack in its entirety. I'd suggest reading it there first and coming back. However, while she offers more attachments on X, it's in one long piece on Substack.

This Tanvi Ratna article contains valuable perspectives. Although it doesn't fully explore Donald Trump's current role in American politics, certainly not his major failings, which I find significant, I believe it's a worthwhile read and a starting point for further analysis.

While Tanvi Ratna’s analysis is sharp as economic modeling, it falls short when you factor in who Trump is, what he’s actually done in power, and where he’s taking the country politically. Here's where the article misses a bigger, much darker picture, although it touches upon it. 

To be fair, that wasn't her purpose in the analysis:

🔻 1. Assumes rational, strategic governance

Tanvi frames the tariffs and refinancing strategy as a deliberate, intelligent economic maneuver. But Trump’s record — especially as a malignant narcissist, convicted felon, and self-proclaimed “King of Debt” — shows he governs through impulse, grievance, and showmanship, not long-term planning. He's not running this show, obviously. His instincts are typically shallow, short-term (that's the Republican in him), autocratic and self-serving. Not technocratic or macroeconomic.

Where the analysis seems to go wrong:

It treats Trump’s economic actions like a well-crafted chess move, rather than the bludgeon of a man more interested in dominance and applause than sustainable policy.

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🔻 2. Somewhat ignores the darker political intent behind economic moves

Trump’s use of tariffs, deficits, and tax cuts isn’t just tools for managing debt — they’re tools to consolidate power, reward loyalists, punish enemies, and hollow out the administrative state. Project 2025, the Heritage Foundation’s playbook he’s backing, makes that clear. When the two meet in his efforts, and something benefits America, all the better for him. But he often does things with no benefit to America, actually detrimental, and yet, he does them anyway. After his POTUS45 stint, he's learned to acquire more "Yesmen" (and women) to surround him.

Where it goes wrong:

It views the economy in isolation, without tying it to Trump’s broader authoritarian project — which includes purging civil servants, politicizing the Fed, and dismantling checks and balances.

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🔻 3. Minimizes the oligarchic shift

The focus is on how tariffs and capital flows could hypothetically create “fiscal room” — but in practice, Trump’s policies overwhelmingly benefit billionaires while wage growth stagnates, unions are attacked, and the middle class foots the inflation bill. This is classic oligarchic capture.

Where it goes wrong:

It underestimates how Trump’s economic “reset” actually feeds into a plutocratic system — concentrating wealth and power at the top under the guise of nationalism.

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🔻 4. Overstates institutional stability

The proposed model depends on key institutions (the Treasury, Fed, Congress, global markets) responding normally to Trump’s maneuvers. But Trump has already shown a willingness to undermine those institutions, and his second-term agenda includes deconstructing the federal government.

Where it goes wrong:

It is forecasting in a vacuum, as if Trump isn’t trying to break the very systems her models rely on.

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🔻 5. Treats debt strategy as smart policy, not financial gaslighting

Trump bragged about using debt as a tool to extract leverage — even suggested the U.S. could default or renegotiate. He’s not trying to stabilize the debt market; he’s using it to game short-term optics while destabilizing long-term fiscal reality.

Where it goes wrong:

It interprets a reckless gamble as a coherent strategy — mistaking chaos for control.

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🧨 Bottom Line:

Tanvi’s thread is an elegant model of economic cause-and-effect — but it fails to acknowledge that the person pulling these levers is Donald J. Trump, not a responsible policymaker. 

That’s like assuming a demolition crew is doing renovation work just because they’re using a hammer.

OK, so here is her analysis, not so much over-focused on economics, but sharp nonetheless. We as readers have to remember to always keep in the forefront, Trump's illiberal and oligarchic (and kakistrocratic) efforts all along the way. There are several games being played here. I'd suggest reading it there first and coming back.

https://tanviratna.substack.com/p/trumps-tariff-gambit-debt-power-and

While she does say:

"But the risks are equally stark. If inflation spirals, if trade wars escalate uncontrollably, if voters rebel against higher costs, the consequences could be severe: economic instability, political defeats, and a severely weakened global position.

"This is disruption as doctrine: calculated, deliberate, and unafraid of risk. It is quintessential Trump—bold, divisive, strategic. The margin for error is razor-thin, yet the rewards could redefine America’s trajectory for a generation."

While she acknowledges these things, it is too little too late as she ignores Trump's forever dark, under-the-surface, illiberal, at times illegal, and always confidence-grifting intentions. While some Americans who support Trump say that's liberal nonsense, just ask those running other countries who are not liberal (I'm excluding here international criminals and autocrats, and despots who love Trump as much as he does them).

The discussion surrounding Trump's economic policies presents a complex view, heavily centered on potential benefits while often glossing over the associated risks and negative implications. Trump's approach is characterized by an ambitious attempt to reboot America's economic and geopolitical foundations, aiming for an economically resilient and geopolitically stronger nation by the pivotal 2026 elections. This perspective highlights substantial expected gains, such as reduced fiscal burdens and invigorated domestic manufacturing due to tariffs that aim to reshape industrial incentives.

However, this focus on positive outcomes can lead to a skewed representation, as significant risks lurk beneath the surface. These include the repercussions of rising inflation, retaliatory trade actions, and potential political fallout from voters experiencing immediate costs associated with these economic strategies. Critics argue that without tangible short-term results and persuasive communication about the benefits of sacrifices, voters might perceive tariffs as detrimental rather than advantageous.

Moreover, while Trump's strategies are painted as calculated moves to enhance America's position, they inherently carry the risk of economic instability and political vulnerabilities, particularly among sectors that depend on cheap imports. In essence, while the narrative may lean positively towards the ambitious economic outlook, it risks underplaying the substantial uncertainties and potential adverse consequences that accompany such drastic policies. This balance—or lack thereof—may be a point of contention in evaluations of Trump's legacy and intention.

I have no such compunction about remaining neutral about Trump. He is a threat, pure and simple. However, we need to see clearly what is being done, and Tanvi Ratna's assessment, within the scope of what she is detailing, is useful to have a clearer picture of what may, or could, happen.

The provided context does not explicitly address Donald Trump's authoritarian orientation. However, it does discuss his unconventional approach to governance and economic policy, which can intersect with themes of authoritarianism. 

For example, Trump's strategy is characterized by a deliberate disruption of existing norms and a willingness to leverage economic policy as a form of geopolitical power, suggesting a pivot away from traditional democratic engagement in favor of a more assertive stance.

Additionally, the narrative indicates that Trump's policies are designed with the intention of reshaping both domestic and international economic landscapes, often sidestepping established alliances and norms, which can be seen as an authoritarian tendency to assert unilateral control. Furthermore, the urgency of his economic agenda, particularly as it pertains to the upcoming 2026 midterms, suggests a focus on consolidating power within his political base through calculated risks, which aligns with authoritarian tactics that prioritize control over consensus.

While these elements imply a propensity towards an authoritative style in policy implementation, the texts mainly emphasize economic strategies rather than directly critique or define Trump's political orientation as authoritarian. Thus, further context would be necessary to evaluate that aspect more comprehensively. 

Trump's economic policies reflect authoritarian tendencies in his governance style through a deliberate disruption of established norms and an assertive approach to policy implementation. His administration's strategy is characterized by a focused ambition to reboot America's economic and geopolitical frameworks, suggesting a move towards unilateral control in various aspects of governance.

For instance, Trump's use of tariffs is not merely an economic tool but also a geopolitical lever, where the imposition of tariffs is framed as part of a broader agenda to reshape global alliances and trade systems. This approach can reflect authoritarian tendencies as it aims to enforce compliance and reshape international relationships without the traditional diplomatic engagement seen in past administrations.

Moreover, Trump's willingness to "manufacture uncertainty" (as well as fear and intimidation) through sudden economic shifts, such as tariffs, serves as a method to redirect capital and influence market behaviors, which can be interpreted as a tactic of control reminiscent of authoritarian governance. By leveraging economic policies to exert geopolitical power, Trump embodies a style that prioritizes calculated risks and assertive maneuvers over collaborative approaches typical of democratic processes.

I've detailed his emotional, mental, and personality pathologies over time, as have his niece, Mary Trump, a retired psychologist, and many other professionals.

Additionally, the urgency behind his economic agenda, particularly as it aligns with the approaching 2026 midterms, signals a focus on consolidating power within his political base, often at the expense of broader consensus. This reflects an authoritarian inclination to prioritize loyalty and control over inclusive decision-making processes. I've shared blogs just this past week on these issues.

While the context primarily emphasizes economic strategies, these elements imply a governance style that leans towards authoritarianism, as it engages in reshaping both domestic and international landscapes with a focus on power consolidation and disruption of established norms.

Trump's approach to economic policy marked a significant departure from previous administrations in several key ways, particularly in its reliance on disruption as a deliberate strategy. Unlike prior administrations that often adhered to established economic norms and diplomatic engagements, Trump's policies were characterized by a "wholesale reboot" of America's economic and geopolitical foundations. 

This ambitious strategy sought to reshape the global economic landscape, moving away from traditional trade alliances and norms built over decades, effectively dismantling the post-Cold War international order in favor of more unilateral action and negotiation tactics that emphasized leveraging economic policy as a form of geopolitical power.

One major difference was Trump's implementation of sweeping tariffs, which he described not merely as protective measures but as tools for active global negotiations. The intent was to force a fairer global trade system and reshape international relationships, leveraging tariffs as bargaining chips in bilateral talks. This approach contrasts starkly with previous efforts that typically emphasized multilateral negotiations and cooperation, reflecting a tendency towards authoritarianism where unilateral control supersedes collaborative engagement.

Additionally, Trump's aforementioned methods, including "manufacturing uncertainty" through sudden economic shifts, paradoxically could serve as an asset to redirect investment towards U.S. Treasury bonds and away from speculative markets. This tactic underscores a strategic approach that prioritizes controlling economic outcomes rather than fostering democratic consensus or stability, creating a political climate where fear of the unknown becomes a lever for governance.

The implications for democratic governance are profound. By focusing on short-term gains and the consolidation of power within his political base, Trump's economic strategy risks fostering an environment where policy decisions are made without broader consensus, potentially undermining the participatory frameworks essential to democratic governance. 

Voter responses that prioritize immediate economic feelings over abstract theories could further threaten political stability if the short-term pains of policy shifts are not communicated and justified effectively. Thus, Trump's approach not only represents a shift in economic policy but also indicates a potentially transformative impact on the principles of democratic engagement.

As I have contended since Donald Trump first ran for president in the 2016 election, I don't have an issue with "fixing" America; we all want that when we find issues. Rather, I have an issue with the man who is claiming he is the only one who could fix things, or that he has the intellectual or ethical nature to do so.

Donald Trump is a "thug", a bully. Pure and simple. A "Mob" boss. A business-oriented career charlatan, and conman if not a career criminal. A convicted felon. An adjudicated sexual abuser. His lack of moral character has tarnished and damaged America and its citizens, which will last for decades. He's the wrong man for the job, even if it's the right job. 

The damages he has already done will take decades to recover from, and the economic gamble he is utilizing to do all the things mentioned above has the potential to easily tip over the most powerful and richest nation in human history.

All to satiate one man's desires and needs. We're better than that. We always have been. But he and the Republican Party, now his Party, lock, stock, and barrel, are proving we no longer are. And it is ruining our relationship with our friends around the world. While cementing his situation with our enemies for now, and after he leaves office. Which he's already indicated he thinks he can get around our strictures of any one president staying longer than he is welcome.

As for this economic policy, let's remember that because Trump was elected in 2016, there was no Republican Party platform, no economic policy. It took him a while, but he has now situated himself in a position where he believes he can do whatever he pleases. And so far, his Party is supporting that.

Only this past week have we seen that facade buckle and begin to break as people become more aware of who and what he really is. Amazing as that is, that anyone in America still has not seen that painfully clearly and reacted strongly against him.

We're not done yet. But neither is he.

Compiled with aid of ChatGPT and MyReader

Trump's ERS Dead in the Water, Like Trump

I'm so bored with clickbait guy in our White House. 

FYI. No. We're not replacing IRS with ERS, External Revenue Service, and tariffs. It's clickbait.

Who the Hell elected this guy? Jesus Wept...Putin Grins...along with Trump oligarchs and apparently a vast and ever growing kakistocracy.

Trump announced his intention to create an "External Revenue Service" (ERS) during his inauguration speech on January 20, 2025. The ERS is intended to collect tariffs, duties, and other revenues from foreign sources, aiming to shift the U.S. revenue system away from income taxes. ​

Following this announcement, Commerce Secretary Howard Lutnick stated that the administration's goal is to abolish the Internal Revenue Service (IRS) and replace federal income taxes with revenue generated from tariffs. ​

Economists have expressed skepticism about the feasibility of this plan, noting that tariffs currently generate a small fraction of federal revenue and that relying solely on tariffs could lead to increased consumer prices and economic challenges. ​

Trump has proposed the creation of the ERS to replace the IRS and eliminate income taxes, but this plan faces significant economic and political obstacles.​

This idea is economically unworkable and largely nonsense. 

Here’s why:

1. Tariffs Cannot Replace Income Tax Revenue – The U.S. federal government collects over $4.5 trillion annually in revenue, with over 50% coming from income taxes. Tariffs currently bring in only about $80 billion per year—a tiny fraction of what would be needed. Raising tariffs high enough to replace income tax would make imported goods unaffordable, hurt American businesses, and spark trade wars.

2. Who Pays Tariffs? – Tariffs are not paid by foreign countries; they are paid by American consumers and businesses that import goods. So, instead of income tax, Americans would just be paying higher prices for everything, making this an indirect tax rather than a true abolition of taxation.

3. Economic Consequences – Eliminating income tax while shifting entirely to tariffs would cripple the economy by:

   • Increasing costs for consumers (inflation).

   • Hurting businesses that rely on imported goods.

   • Causing retaliation from other countries with tariffs on U.S. exports, harming American industries like agriculture and manufacturing.

   • Creating massive budget deficits since tariffs wouldn’t generate nearly enough revenue to fund government services, including the military, Social Security, Medicare, and infrastructure.

4. Political Impossibility – Even if Trump proposed this, it would require Congressional approval, which is extremely unlikely given the chaos it would cause.

This is classic clickbait populism—throwing out a radical-sounding idea that plays well with anti-tax rhetoric but has no basis in economic reality.

Compiled with aid of ChatGPT

What's the Deal With Who Broke Social Security?

If I understand Social Security funding correctly, we contribute to it throughout our working lives, with the expectation of receiving benefits in retirement. However, at some point, Congress began using these funds for other purposes, shifting the system to rely on younger workers to pay for current retirees.

To fix this, we need to stop diverting Social Security funds, accept the financial burden of covering current and soon-to-retire beneficiaries, and transition to a system where each generation's contributions are preserved for their own future benefits. This would make Social Security self-sustaining and potentially even profitable.

Sounds good, but let's look at that more closely, as there are a few clarifications and nuances to consider:

1. How Social Security is Funded:

   • Workers pay into Social Security via payroll taxes (FICA), which are split between employees and employers.
   • These funds go into the Social Security Trust Fund, which is used to pay current beneficiaries.
   • Originally, the program operated on a "pay-as-you-go" system, meaning today's workers fund today's retirees.

2. Congress and the Trust Fund:

   • In years when Social Security collected more than it paid out, the surplus was placed in the Social Security Trust Fund, which was legally required to be invested in U.S. Treasury bonds (essentially loaning money to the federal government).
   • Congress has indeed spent this money on other government expenses, but Social Security still holds Treasury bonds as IOUs that the government is obligated to repay.

3. The Current Problem:

   • With an aging population, fewer workers are paying in compared to the number of retirees collecting benefits.
   • The Trust Fund is projected to be depleted around the 2030s, at which point Social Security will only be able to pay out what it collects from current workers, leading to an estimated 20-25% cut in benefits unless changes are made.

4. Proposed Fix & Challenges:

   • Stop using Social Security funds elsewhere: This would require Congress to change how surplus funds are handled (e.g., investing them differently or keeping them separate from general government spending).
   • Continue paying current retirees: This means we still have to cover benefits for those who paid in under the old system. That could require raising taxes, cutting benefits, or using other government funds to bridge the gap.
   • Phase into a self-sustaining system: If we ensure that every worker's contributions stay within the system and are not used elsewhere, it could eventually become fully self-funding—but this transition period would be financially painful.

5. Alternative Fixes Being Considered:

   • Raising or eliminating the payroll tax cap (currently, only income up to ~$168,600 is taxed for Social Security).
   • Gradually increasing the retirement age.
   • Adjusting benefit formulas to reduce payments for wealthier retirees.
   • Creating new sources of revenue (e.g., taxing investment income for Social Security).

In short, Social Security could become self-sustaining again, but getting there would require either temporary sacrifices (higher taxes, lower benefits, or both) or major restructuring of how it's funded and invested.

So it's correct in that the money was mismanaged by Congress and it can indeed be made a functional payout system if it's not abused.

Congress has used Social Security funds for other government expenses by requiring the surplus to be invested in U.S. Treasury bonds rather than keeping it separate. This means that while Social Security technically has its own trust fund, the money has been loaned to the government, which must pay it back with interest. Some see this as mismanagement because it allows Congress to use Social Security funds for other budgetary needs instead of ensuring they remain exclusively for future retirees.

And yes, if Social Security funds were protected from being used elsewhere and properly managed, it could function as a self-sustaining system—especially if adjustments were made to address demographic changes (like fewer workers per retiree). The challenge is getting Congress to make those changes instead of continuing to use Social Security as a stopgap for other spending.

This doesn't seem complicated. Fixing what was broken does.

The concept is simple: stop raiding the Social Security Trust Fund, ensure contributions are used only for their intended purpose, and adjust for demographic shifts.

The hard part is fixing the damage already done:

• Paying back the money that was "borrowed" through Treasury bonds.
• Covering the gap as fewer workers support more retirees.
• Overcoming political gridlock, since no one wants to be the politician who raises taxes or cuts benefits.

If the system had been managed properly from the start, we wouldn’t be facing a crisis. Now, fixing it requires tough choices—ones that politicians have been kicking down the road for decades.

Elon Musk has labeled Social Security as "the biggest Ponzi scheme of all time," suggesting that it is unsustainable and fraught with fraud and waste.

Regarding his role with the Department of Government Efficiency (DOGE), Musk has been granted significant authority by President Trump to streamline federal operations and reduce waste. This includes targeting entitlement programs like Social Security for potential cuts.

However, this concentration of power has raised concerns. A federal judge recently ordered the urgent release of DOGE records, citing "unprecedented" authority and "unusual secrecy" within the department.

In summary, while Musk's characterization of Social Security as a Ponzi scheme reflects his critical stance, his expanded role under the current administration has sparked debates about transparency and the potential impact on essential social programs.

No, Social Security is not a Ponzi scheme in the classic sense. A Ponzi scheme is a fraudulent investment scam where returns are paid to earlier investors using money from new investors, rather than from actual profits. The scheme collapses when there aren't enough new investors to pay the older ones.

Social Security, on the other hand, is a pay-as-you-go system where current workers fund the benefits of current retirees. While it shares some characteristics with a Ponzi scheme—relying on new participants to sustain payouts—it is not fraudulent, as it's a government program designed to be transparent and structured for long-term sustainability (even if mismanaged at times).

The real issue isn't fraud but demographics—fewer workers per retiree and longer life expectancies, which strain the system. Fixing it requires adjustments, not scrapping it altogether.

The best way to fix Social Security without harming retirees or workers requires a balanced approach that spreads the burden fairly. A mix of these solutions could restore long-term stability:

1. Stop Using Social Security Funds Elsewhere

• Ensure payroll taxes go only to Social Security, not other government spending.
• Invest surplus funds in higher-yield but safe assets instead of just U.S. Treasury bonds.

2. Gradually Adjust Payroll Taxes (Without Overburdening Workers)

• Raise or eliminate the payroll tax cap (currently ~$168,600). Wealthier individuals would contribute more.
• Slightly increase payroll tax rates (e.g., by 1% over time) to strengthen funding without major financial strain.

3. Small, Gradual Adjustments to Benefits

• Protect lower-income retirees from cuts.
• Slightly adjust the benefit formula for higher earners so they receive proportionally less.
• Raise full retirement age gradually (e.g., by a few months per year), but not so much that it harms those in physically demanding jobs.

4. Expand the Revenue Base

• Tax investment income for Social Security (e.g., capital gains or dividends above a certain threshold).
• Implement a Social Security surtax on very high earners to help close the funding gap.

5. Phase in Changes Over Time

• Any tax or benefit adjustments should be gradual, preventing financial shocks to current retirees or workers.

By combining these steps without drastic cuts or sudden tax hikes, Social Security can return to sustainability while ensuring that people get the benefits they paid for.

President Trump's appointment of Elon Musk to lead the Department of Government Efficiency (DOGE) has sparked both support and criticism. Supporters argue that Musk's innovative approach could streamline federal operations and reduce waste. Critics, however, express concerns over the concentration of power and potential lack of transparency in DOGE's operations.

Additionally, Musk's recent comments labeling Social Security as "the biggest Ponzi scheme of all time" have intensified debates about his suitability for this role, given the sensitivity surrounding entitlement programs.

In summary, while Musk's appointment aligns with Trump's agenda to overhaul federal efficiency, it raises valid concerns about transparency, accountability, and the potential impact on essential social programs

Compiled with aid from ChatGPT

Social Security Shortfall: Decades of Neglect, Borrowed Funds, & Political Inaction

DOGE wants to cut $1 trillion this year. But it's not looking at big spending drivers

One thing can be sure, the Trump administration will do what they can to make this more difficule than it needs to be. Cutting "21% within 6-8 years for those currently on Social Seucirity" will be devestating for millions of reitred Americans who did nothing wrong and do not deserve this.

It's very important to be aware of what the Ambassador is saying here in this video, it's not long, excuse the stupid ad for a minute at the beginning...Conservatives inspired by Hungary should "dig into the facts," Fmr US Ambassador to Hungary Pressman says, a Trump administration position now still empty.

So. It appears that the 21% reduction in Social Security benefits refers to projections indicating that, without legislative action, the Social Security Trust Funds are expected to be depleted by 2033. At that point, beneficiaries could face an automatic 21% cut in benefits.

 
npr.org This situation underscores the urgency for policymakers to implement reforms to ensure the program's long-term solvency.

While President Trump has publicly committed to preserving Social Security benefits, his administration's budget proposals have included significant cuts to related programs, such as Social Security Disability Insurance, Medicare, and Medicaid.
en.wikipedia.org These proposed reductions have raised concerns about the future of Social Security and the potential for benefit cuts if the program's financial challenges are not addressed.

In summary, the mentioned 21% cut reflects projected automatic reductions in Social Security benefits anticipated to occur by 2033 if no corrective measures are taken. While the Trump administration has not explicitly proposed such a cut, its budgetary actions have sparked discussions about the program's sustainability and the need for legislative intervention to prevent future benefit reductions.

The projected depletion of the Social Security Trust Fund by 2033 isn't due to a single administration’s mismanagement, but rather decades of systemic issues, demographic shifts, and policy decisions. Here are some key factors:

1. Demographic Shifts

• The Baby Boomer generation is retiring in large numbers, significantly increasing the number of beneficiaries.
• At the same time, birth rates have declined, leading to fewer workers paying into the system.
• People are living longer, meaning they collect benefits for more years than originally anticipated when Social Security was designed.

2. Payroll Tax Shortfalls

• Social Security is primarily funded by payroll taxes (FICA).
• The Reagan administration raised payroll taxes in 1983 to pre-fund the system for Boomers, but that surplus is now running out.
• Wages have not kept pace with inflation, meaning payroll tax revenue hasn’t grown fast enough.
• The payroll tax cap (currently $168,600) means high earners stop paying into Social Security beyond a certain income level.

3. Policy Decisions

• Bush Tax Cuts (2001, 2003): These cuts reduced overall revenue but were not offset by spending cuts or tax increases elsewhere.
• Obama Payroll Tax Holiday (2011-2012): Temporarily lowered payroll tax rates to boost the economy but slightly reduced Social Security revenues.
• Trump Payroll Tax Deferral (2020): Allowed employers to delay payroll taxes during COVID-19, impacting Social Security revenue.

4. Congressional Inaction

• Congress has known about Social Security’s financial challenges for decades but has failed to act.
• Past fixes (Reagan-era reforms) extended solvency but didn’t make permanent structural changes.
• Proposals to raise the payroll tax cap, adjust benefit formulas, or increase retirement ages have been debated but not implemented due to political gridlock.

Bottom Line

No single president or party is solely responsible. The issue has been decades in the making, with demographic changes, wage stagnation, and policy decisions all playing a role. Without reforms, automatic benefit cuts (~21%) will occur around 2033 when the trust fund runs dry, leaving only payroll tax revenue to sustain payments.

The financial instability of Social Security is primarily due to a combination of government mismanagement, demographic shifts, and a failure to make necessary adjustments over time. Here’s a breakdown of where the fault lies and why the system is in its current state.

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Who’s Most Responsible for the Shortfall?

1. Congress (Both Parties) - Kicking the Can Down the Road

   • Lawmakers have known for decades that Social Security would face funding issues, yet they’ve avoided making politically difficult decisions to fix it.
   • Since the 1983 reforms under Reagan, Congress has made few major adjustments, despite clear warnings from the Social Security trustees.
   • Both Democrats and Republicans have refused to take decisive action, fearing voter backlash.

2. Presidents and Tax Policies That Reduced Revenue

   • The Bush Tax Cuts (2001, 2003) significantly reduced government revenue without offsetting spending cuts or other sources of funding.
   • The Trump-era payroll tax deferral (2020) allowed businesses to delay payments, impacting Social Security’s revenue stream.
   • Payroll tax holidays (Obama, 2011-2012) also reduced short-term funding for Social Security.

3. The Payroll Tax Structure Itself

   • Social Security is primarily funded by current workers paying for retirees (a pay-as-you-go system), rather than individual savings accounts.
   • The cap on taxable earnings (currently $168,600) means high earners stop contributing after a certain point, limiting revenue.
   • Wages have not kept up with inflation, meaning contributions have not increased as much as necessary.

4. Funds Being ‘Borrowed’ from Social Security

   • The Social Security Trust Fund was not "raided" in the sense of money being stolen, but its surplus has been borrowed by the federal government for decades and replaced with Treasury bonds.
   • This means Social Security holds IOUs from the government, and when it needs money, the government has to find funds elsewhere to repay those bonds.

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Where Did the Money Go?

1. It’s in U.S. Government Bonds

   • The Social Security Trust Fund has been loaned to the federal government in exchange for Treasury bonds, which have to be repaid from general revenue.
   • This allowed Congress to use Social Security surpluses to fund other government programs without raising taxes or cutting spending elsewhere.

2. Wars, Tax Cuts, and Other Spending Priorities

   • The surplus was used to fund wars (Iraq, Afghanistan), tax cuts, and other spending priorities instead of being saved strictly for Social Security.
   • This wasn’t technically “theft,” but rather a way for the government to finance operations without raising taxes or borrowing from external sources.

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Why Do Today’s Workers Fund Retirees?

Social Security was never designed as an individual retirement account where your contributions are saved for you. Instead, it’s a pay-as-you-go system, where current workers pay for today’s retirees.

• When the program started in 1935, there were 16 workers per retiree—plenty of contributions to sustain the system.
• Today, that ratio is about 2.7 workers per retiree and shrinking.
• Because Baby Boomers are retiring in massive numbers, the amount being paid out is exceeding what’s being collected.

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How Could This Have Been Avoided?

1. Gradual Adjustments Over Time

   • Raising the payroll tax cap (so higher earners contribute more) decades ago could have kept the system stable.
   • Small increases in the payroll tax rate over time could have built a larger reserve.

2. Keeping Social Security Funds Separate from General Government Spending

   • Had the government not borrowed from Social Security, the trust fund would be in a stronger position today.

3. Investing Surplus Funds More Effectively

   • Some argue that allowing Social Security to invest in the stock market (like private pensions do) could have generated more revenue.

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Bottom Line: Who’s to Blame the Most?

• Congress (Both Parties) for failing to act despite decades of warnings.
• Presidents who supported tax cuts and policies that reduced Social Security revenue.
• The structure of the system itself, which relies on a shrinking workforce supporting a growing retiree population.

Had lawmakers made modest adjustments decades ago, we wouldn’t be facing the prospect of automatic benefit cuts today. Instead, political fear and short-term thinking have left us in a position where drastic measures will be needed to maintain Social Security's solvency.

The confusion caused by Elon Musk's DOGE team regarding Social Security data stems from a misinterpretation of how the SSA's antiquated computer systems handle birth dates. The SSA's database, which still relies on COBOL-based systems, sometimes uses placeholder or default birth dates when actual birth records are missing or improperly formatted.

For example, if a person’s birthdate is unknown or was never properly entered, the system might assign a default date like January 1, 1900, or even January 1, 1800 in older records. This can create the illusion that there are beneficiaries listed as being over 150 years old when, in reality, these are simply clerical placeholders rather than actual living recipients.

Musk’s DOGE team allegedly found these entries and misinterpreted them as proof that deceased individuals were still receiving benefits. They then exaggerated the scale of the issue, claiming that over a million Social Security beneficiaries were between 150 and 159 years old. This led to unfounded accusations of fraud and waste.

Former SSA commissioner Martin O'Malley later debunked these claims, clarifying that these were just database anomalies rather than evidence of widespread fraud. The SSA does have mechanisms to verify whether beneficiaries are still alive, including cross-referencing with death reports from hospitals, funeral homes, and Medicare data.

In summary, the issue was a mix of outdated database practices, placeholder birth dates, and a lack of understanding of how government computer systems work, which led to misleading accusations about fraudulent Social Security payments.

Compiled with aid of ChatGPT