Social Security cost $1.67 trillion in 2026 while collecting $1.44 trillion in revenue — a $230 billion current-year cash deficit. The worker-to-retiree ratio has collapsed from approximately 42:1 at program launch to 2.8:1 today. The CBO projects OASI trust fund depletion by 2032. When that happens, current law mandates automatic benefit cuts of approximately 28% — reducing the average retiree's income from $2,071/month to roughly $1,491/month. For the 40% of seniors who rely on Social Security as their only source of retirement income — a figure from a 2020 National Institute on Retirement Security study, on the higher end of a range that varies by methodology, but real and commonly cited — that is not a budget line item. It is a humanitarian crisis. The Sunset Party's answer is the American Retirement Security Act — a structural redesign, not a patch.
The Three-Pillar Architecture
ARSA replaces the pay-as-you-go transfer model with a compounding system built on three concurrent pillars:
Pillar 1 — Individual Investment Accounts (IIAs): The worker's own 6.2% payroll contribution flows entirely into a personal, government-managed investment account, compounding over a full career — structured like the federal Thrift Savings Plan, invested in low-cost US-listed index funds. Accounts are locked until retirement and fully transferable to survivors upon death. At age 65½, the IIA begins a mandatory 36-month rolling conversion into a Retirement Distribution Trust, providing guaranteed monthly income for life. For the first time, Social Security creates inheritable wealth.
The 36-month rolling conversion is not just an administrative timeline — it's the market-risk mitigation mechanism. Converting a lump sum to an annuity gradually over three years, rather than all at once on a single date, means a market downturn in any single month affects only the portion of the account converting that month, not the entire retirement balance. Someone whose IIA value drops sharply the week before retirement isn't locked into that price — the conversion process dollar-cost-averages across 36 months of market conditions.
Pillar 2 — General Safety Net Fund: The employer's matching 6.2% funds the collective safety net (90%) and system administration (10%). The Safety Net Fund provides a guaranteed floor benefit, full disability coverage, and survivor benefits. No American retires with nothing.
Pillar 3 — Administrative Operations: 10% of the employer's 6.2% contribution funds SSA operations and program administration — approximately $70–90 billion annually — covering the real cost of running individualized accounts designed for the 21st century.
Age-Tiered Phase-In — No One's Existing Benefit Moves
ARSA doesn't flip a switch on the entire workforce at once. Allocation between the IIA and the Safety Net Fund phases in by age cohort, and every worker's pre-2027 earned benefit — their Primary Insurance Amount already accrued under the current system — is protected regardless of cohort:
Cohort A (age 55+ as of December 31, 2026): remains entirely on the current system. No IIA is established — these workers are too close to retirement for a new compounding account to meaningfully help, and the transition doesn't ask them to bear that risk.
Cohort B (age 40–54): the worker's 6.2% contribution splits 25% to the IIA, 75% to the Safety Net Fund.
Cohort C (age 25–39): the split shifts to 40% IIA, 60% Safety Net Fund.
Cohort D (age 24 and under, and everyone entering the workforce after January 1, 2027): full allocation — 100% of the employee's 6.2% to the IIA, with the employer's 6.2% split 90% Safety Net Fund / 10% Administrative Account, the architecture described above. The younger a worker is, the longer their IIA has to compound, which is why the allocation scales with age instead of applying uniformly.
What This Looks Like in Practice
A minimum-wage worker who starts at 16 and retires at 67, contributing for 51 years, retires with an IIA balance of approximately $2.1 million — based on actual historical S&P 500 returns. The RDT converts that balance into a guaranteed actuarial payment of approximately $8,692/month (net 90% after fee).* This example models a worker entirely in Cohort D (full IIA allocation for a full career) — an older worker phased in partway through a career under Cohort B or C's blended split would see a smaller IIA balance and a correspondingly larger share of retirement income coming from the Safety Net Fund instead, not the IIA alone.
Current SS — Full scheduled benefit$24,852$2,071
Current SS — Post-2032 cut (−28%)$17,893$1,491
ARSA — RDT actuarial payment (net 90%)$104,303$8,692
* The $8,692 figure uses an older mortality table. The SSA 2020 unisex period life table produces approximately $8,035/month — roughly 7.6% lower. The comparison to the current system is significant under either figure.
Unlike the current system, the IIA balance does not disappear at death — it passes to survivors, ending the cycle of each generation starting from zero.
Managing Market Risk During Accumulation: The CAPE Valuation Mechanism
The 36-month rolling conversion manages risk at the individual level, at the moment of retirement. It doesn't address a separate, system-wide risk: a mandatory, continuous flow of new IIA contributions into the stock market could itself push equity valuations higher over time, independent of underlying economic fundamentals — the accounts inflating the very prices they depend on.
ARSA addresses this directly during the accumulation phase using the Shiller CAPE ratio (the cyclically-adjusted price-to-earnings ratio for the S&P 500, a standard measure of whether the market is historically expensive or cheap) to cap how much of an IIA's new contributions can go into equities versus short-term Treasury instruments:
Below 20100%0%
20–3085%15%
30–3575%25%
35–4065%35%
Above 4055%45%
The ratio is determined annually — a 12-month average CAPE as of January 1, published by January 15 — so the cap adjusts gradually with sustained valuation trends rather than reacting to single-day market swings. Treasury allocations under this mechanism use short-term instruments (under two years), not long-duration bonds. This cap applies only during the accumulation phase; once a worker's balance begins converting into the RDT at retirement, it's no longer subject to this mechanism.
The Retirement Distribution Trust, in Full
The "net 90%" figure above isn't an arbitrary fee — it's the mechanism that makes the RDT more resilient than a simple annuity. Each RDT splits into two sub-accounts: a Principal Sub-Account, which holds the converted balance and is drawn first, and a Buffer Sub-Account, which receives the 10% withheld from every monthly payment calculation, accumulates untouched at Treasury rates, and remains fully inheritable throughout.
Drawdown happens in three phases. In Phase 1, payments are drawn from the Principal Sub-Account while the Buffer accumulates, untouched, the whole time. In Phase 2 — triggered only if the Principal is exhausted, a rare outcome given how much the Buffer has compounded by that point — payments draw from the Buffer Sub-Account instead, with the Safety Net Fund's floor protection remaining active as a further backstop. In Phase 3, if both sub-accounts are exhausted, the Safety Net Fund floor activates automatically for the remainder of the retiree's life — no application required, and at that point there's no remaining balance left to inherit.
Disability Distribution Trust
Upon a Social Security Administration disability determination (42 U.S.C. § 423), a worker's full IIA balance immediately funds a Disability Distribution Trust, using the same monthly actuarial formula as the RDT. A disability doesn't strand a worker's account until retirement age — it converts immediately into guaranteed income.
Survivor Distribution Trust
Survivor benefits use a materially different structure from the RDT — no buffer, no withholding, the full balance distributed. The actuarial period varies by who's receiving it: to age 67 for a surviving spouse or partner; to age 18 for a minor child (age 22 if enrolled full-time in school); to age 85 for any other eligible beneficiary.
If a surviving spouse remarries before age 60, the Survivor Trust terminates and its remaining balance transfers to the Child Social Investment Fund below; remarriage at or after 60 has no effect on the trust. As with the RDT and Disability Trust, the Safety Net Fund's floor benefit activates automatically upon a Survivor Trust's depletion — no application required.
All three trusts — RDT, Disability, and Survivor — calculate payments from unified, unisex actuarial tables, statutorily required to use no sex-based differentiation, updated at least every five years using NCHS mortality data. Updates are grandfathered: once a beneficiary's distributions begin, a later table update doesn't change their calculation retroactively.
The Child Social Investment Fund
When an IIA holder dies with no eligible beneficiary — or a Survivor Trust terminates through early remarriage, or a beneficiary designation falls outside the authorized categories — the balance doesn't revert to the general fund. It transfers into a permanent Treasury endowment: the Child Social Investment Fund.
The fund is governed by a board (the Secretaries of HHS, Education, and Labor; the OMB Director; and two Senate-confirmed presidential appointees with child welfare, education, or pediatric health experience), capped at a 4% annual distribution rate (based on a 3-year average market value) to preserve principal in perpetuity, and statutorily barred from ever reverting to the general fund. Authorized uses: pediatric and adolescent healthcare access for uninsured children, universal school breakfast and lunch at no cost, pre-K and early childhood education, a federal paid parental leave program (12 weeks, partial income replacement — the first program of its kind for the private sector, since none currently exists), and after-school and summer enrichment in low-income communities. The board reports to Congress annually, by March 31, detailing balance, deposits, distributions, and a 10-year projection.
The fiscal significance here is real, not symbolic: at scale, this fund could progressively displace an estimated $233 billion in current annual general-fund appropriations spread across programs that are today means-tested, incomplete, and vulnerable to being re-fought every budget cycle — Children's Medicaid/CHIP ($158B), school nutrition ($37.6B, currently reaching only about 40% of students), Head Start/Pre-K ($12B, currently reaching 716,000 of roughly 4 million eligible children), child care ($13B), child welfare ($12B), and federal paid parental leave for private-sector workers, which currently receives $0. Converting that into a permanently funded entitlement means these programs stop being an annual appropriations fight.
The Domestic Capital Anchor
Individual Investment Accounts are restricted to US-listed equities and bonds only. When 160 million workers directly own US corporate equity through their IIAs, profit-shifting to low-tax jurisdictions directly lowers the stock price held in those accounts. Workers — now the largest unified shareholder bloc in American history — have direct financial incentive to demand profits remain onshore. Corporate boards respond to shareholder pressure in ways they have never responded to abstract tax enforcement.
Companies that remain US-listed gain access to the largest captive, perpetual investment pool ever created — an estimated $700–$900 billion in annual inflows. Companies that invert offshore or delist lose eligibility for this pool. In most cases, the market cap premium from IIA eligibility exceeds the tax savings from avoidance — structurally inverting the financial logic of offshoring without requiring enforcement.
This isn't just an incentive — it's also a hard exclusion. The IIA's approved fund menu statutorily excludes any security issued by a company that, after enactment, either reincorporates outside the United States primarily to reduce federal tax obligations, or converts from a C-corporation to a pass-through structure primarily to avoid corporate income tax — both determinations made by the Treasury Secretary, with implementing regulations due within 18 months of enactment. This is a second, parallel anti-inversion lever alongside the patent-maintenance-fee forfeiture mechanism elsewhere in this platform (see Technology & the Future) — the two work together rather than independently: one closes off a company's ability to keep its US-granted patents after inverting, the other closes off its access to the IIA capital pool.
This also directly answers the standing "won't mandatory inflows just inflate a stock bubble" objection, rather than leaving it unaddressed: IIA inflows during accumulation add an estimated $806 billion annually to US equity markets — a real number, not a hand-wave, and roughly a 35% increase over existing 401(k)/IRA flows. But the system isn't one-directional. At full maturity, annual RDT conversions — an estimated 3.5 million retirees per year at average balances of $1.5–2.5 million — generate an estimated $5–8 trillion in annual equity liquidations as those balances convert to retirement income. Accumulation-phase buying and retirement-phase selling structurally offset each other over time, rather than the system only ever adding one-way pressure to asset prices.
Remove the payroll tax income cap entirely. Currently, Social Security taxes apply only to wages up to $184,500 (2026). A person earning $10 million pays the exact same dollar amount as someone earning $184,500 — making the system regressive at higher incomes. Removing the cap alone generates an estimated $3.2 trillion over 10 years and closes an estimated 73% of the 75-year funding gap — the White Paper itself calls this "the most impactful revenue measure available." The same wage-base-cap elimination applies to self-employment tax, for parity between W-2 and self-employed workers. To prevent a windfall benefit increase on the newly-uncapped earnings, a benefit-formula safeguard caps the marginal Primary Insurance Amount accrual on income above the former cap at 5% — the tax side uncaps, the benefit side doesn't uncap in step with it.
Apply Social Security tax to capital gains and investment income above $400,000. Capital gains, dividends, and investment income are currently entirely exempt from Social Security taxation. Income above $400,000 from these sources becomes subject to the same rate as earned wages — generating approximately $66.5 billion net per year. This is codified as new IRC § 3103: a 12.4% tax, matching the full combined employee-and-employer OASDI rate, on net investment income above the threshold, with revenue allocated directly to the Safety Net Fund.
Raise the corporate tax rate from 21% to 35%, paired with IIA domestic-investment requirements — projected $85–260 billion annually in net revenue. This pairs with two further provisions: a conforming GILTI rate increase to 17.5%, closing an international income-shifting loophole that would otherwise undercut the higher domestic rate; and 100% bonus depreciation specifically for companies that remain IIA-eligible (domestic-listed, non-inverted) — a direct tax reward for staying eligible, layered on top of access to the captive investment pool itself.
A separate, progressive revenue provision not previously reflected here: the share of Social Security benefits counted as taxable income for high earners — combined income above $250,000 — rises to 100% of benefits included in gross income, up from the current 85% maximum.
Safety Net Floor
The General Safety Net Fund guarantees a $2,071/month floor benefit for all qualifying retirees regardless of IIA performance. This benefit is means-tested above $15,000/month in combined income and is CPI-adjusted annually.
Governance, Fees, and Oversight
The IIA Administrative Authority is established as an independent agency modeled on the federal Thrift Savings Plan Board. A 7-member, Senate-confirmed Board of Directors — 2 members with investment management experience, 2 with retirement policy or actuarial science experience, 1 representing organized labor, 1 with consumer financial protection experience, and the Secretary of Labor ex officio — serves staggered 4-year terms, reappointable once. An Executive Director, appointed by the Board, runs day-to-day operations. Every Board member and staffer is held to the same fiduciary standards as federal trustees under 5 U.S.C. chapter 84 — legally required to act solely in account holders' interest, not the agency's own.
The fund menu is limited to 5–15 low-cost index funds, expense ratio capped at 0.10% annually, selected through competitive public procurement. No administrative fee is ever charged to an individual account holder — the Authority is statutorily barred from it. All administrative costs are instead funded exclusively through the employer's 10% Administrative Operating Account allocation described in the Three-Pillar Architecture above — a real, concrete difference from typical private 401(k) fee structures, not a marketing claim.
Every account holder receives a quarterly statement (electronic, by election) showing current market value, contributions credited, investment returns, current fund allocation, and a projected monthly RDT payment at standard retirement age based on the current actuarial tables — a real, concrete projection of a worker's future benefit, visible throughout their career, not just revealed at retirement.
Two distinct oversight reports run on different clocks and don't substitute for each other: the Comptroller General reports to Congress every 3 years, evaluating administrative performance, investment performance, floor benefit adequacy, domestic capital anchor effects, and retirement income outcomes. Separately, the Board of Trustees of the OASI Trust Fund reports annually, by March 31, on the projected 10-year transition funding gap, the total outstanding Transition Bond balance, the projected self-funding break-even date, and the 75-year actuarial balance of the Safety Net Fund — with any recommended adjustment to contribution allocation rates or the floor benefit requiring an affirmative congressional vote, not automatic implementation. The Authority's administrative structure itself requires congressional reauthorization every 10 years, but a lapse in that reauthorization does not affect the underlying contribution, allocation, and benefit provisions, which continue regardless.
Why It Costs Less Than Doing Nothing
The status quo 40-year cumulative cost — if Congress continues funding full benefits through borrowing while the trust fund depletes — is projected at $64.95 trillion through 2065. ARSA's 40-year transition financing cost is $38.47 trillion — a net saving of $26.48 trillion. After 2058, the system self-funds rather than accelerating deficits.
That transition cost isn't unspecified deficit spending — it's financed through dedicated ARSA Transition Bonds, issued at market rate with 30-to-50-year Treasury maturities. These bonds are retired specifically from Safety Net Fund surpluses generated after the system reaches self-funding break-even, projected at approximately 2060–2061 (roughly 35 years post-enactment) — not from general deficit spending, and not from a separate new tax.
The question is not whether the country bears a large cost. It is whether that cost leaves every American worker with a multi-million dollar account — or $1,491 a month from a fund that ran out of money.
Answering the Objections Directly
"What happens if the market crashes right before I retire?" The Safety Net Fund's $2,071/month floor activates automatically regardless of how the IIA or RDT performs. No historical 40-plus-year period of S&P 500 returns has been negative in real terms. And the CAPE valuation mechanism, the RDT's Principal/Buffer structure, and the forced 36-month RDT conversion schedule work together specifically to prevent the kind of behavioral panic-selling that hurts voluntary individual retirement accounts during a downturn.
"$38.47 trillion is an enormous transition cost." It is — and it's $26.48 trillion less than the $64.95 trillion cost of doing nothing. The real choice isn't between a cost and no cost. It's between which cost, and whether that cost leaves workers with multi-million-dollar accounts or $1,491 a month from a depleted trust fund.
"Won't companies just keep offshoring regardless?" That's correct under the current system, and incorrect under ARSA. The IIA domestic-investment requirement creates an estimated $806 billion a year in captive domestic investment access — a market-cap premium for staying US-listed that, in most cases, exceeds the typical tax savings from inverting.
"Isn't this just Chilean-style privatization, which already failed?" Four structural differences separate ARSA from Chile's system: the Safety Net Fund (90% of the employer's contribution) is robust and mandatory, not a residual afterthought; accounts are government-managed through a TSP-style structure, not sold off to competing private fund managers; the US-listing restriction prevents the domestic capital hollowing-out that accompanied Chilean privatization; and the beneficiary structure, together with the Child Social Investment Fund, ensures no balance ever simply vanishes. Chile's system failed because it abandoned the redistributive function of retirement security entirely — ARSA preserves and extends that function rather than replacing it.
Social Security — The American Retirement Security Act
Social Security cost $1.67 trillion in 2026 while collecting $1.44 trillion in revenue — a $230 billion current-year cash deficit. The worker-to-retiree ratio has collapsed from approximately 42:1 at program launch to 2.8:1 today. The CBO projects OASI trust fund depletion by 2032. When that happens, current law mandates automatic benefit cuts of approximately 28% — reducing the average retiree's income from $2,071/month to roughly $1,491/month. For the 40% of seniors who rely on Social Security as their only source of retirement income — a figure from a 2020 National Institute on Retirement Security study, on the higher end of a range that varies by methodology, but real and commonly cited — that is not a budget line item. It is a humanitarian crisis. The Sunset Party's answer is the American Retirement Security Act — a structural redesign, not a patch.
The Three-Pillar Architecture
ARSA replaces the pay-as-you-go transfer model with a compounding system built on three concurrent pillars:
Pillar 1 — Individual Investment Accounts (IIAs): The worker's own 6.2% payroll contribution flows entirely into a personal, government-managed investment account, compounding over a full career — structured like the federal Thrift Savings Plan, invested in low-cost US-listed index funds. Accounts are locked until retirement and fully transferable to survivors upon death. At age 65½, the IIA begins a mandatory 36-month rolling conversion into a Retirement Distribution Trust, providing guaranteed monthly income for life. For the first time, Social Security creates inheritable wealth.
The 36-month rolling conversion is not just an administrative timeline — it's the market-risk mitigation mechanism. Converting a lump sum to an annuity gradually over three years, rather than all at once on a single date, means a market downturn in any single month affects only the portion of the account converting that month, not the entire retirement balance. Someone whose IIA value drops sharply the week before retirement isn't locked into that price — the conversion process dollar-cost-averages across 36 months of market conditions.
Pillar 2 — General Safety Net Fund: The employer's matching 6.2% funds the collective safety net (90%) and system administration (10%). The Safety Net Fund provides a guaranteed floor benefit, full disability coverage, and survivor benefits. No American retires with nothing.
Pillar 3 — Administrative Operations: 10% of the employer's 6.2% contribution funds SSA operations and program administration — approximately $70–90 billion annually — covering the real cost of running individualized accounts designed for the 21st century.
Age-Tiered Phase-In — No One's Existing Benefit Moves
ARSA doesn't flip a switch on the entire workforce at once. Allocation between the IIA and the Safety Net Fund phases in by age cohort, and every worker's pre-2027 earned benefit — their Primary Insurance Amount already accrued under the current system — is protected regardless of cohort:
Cohort A (age 55+ as of December 31, 2026): remains entirely on the current system. No IIA is established — these workers are too close to retirement for a new compounding account to meaningfully help, and the transition doesn't ask them to bear that risk.
Cohort B (age 40–54): the worker's 6.2% contribution splits 25% to the IIA, 75% to the Safety Net Fund.
Cohort C (age 25–39): the split shifts to 40% IIA, 60% Safety Net Fund.
Cohort D (age 24 and under, and everyone entering the workforce after January 1, 2027): full allocation — 100% of the employee's 6.2% to the IIA, with the employer's 6.2% split 90% Safety Net Fund / 10% Administrative Account, the architecture described above. The younger a worker is, the longer their IIA has to compound, which is why the allocation scales with age instead of applying uniformly.
What This Looks Like in Practice
A minimum-wage worker who starts at 16 and retires at 67, contributing for 51 years, retires with an IIA balance of approximately $2.1 million — based on actual historical S&P 500 returns. The RDT converts that balance into a guaranteed actuarial payment of approximately $8,692/month (net 90% after fee).* This example models a worker entirely in Cohort D (full IIA allocation for a full career) — an older worker phased in partway through a career under Cohort B or C's blended split would see a smaller IIA balance and a correspondingly larger share of retirement income coming from the Safety Net Fund instead, not the IIA alone.
* The $8,692 figure uses an older mortality table. The SSA 2020 unisex period life table produces approximately $8,035/month — roughly 7.6% lower. The comparison to the current system is significant under either figure.
Unlike the current system, the IIA balance does not disappear at death — it passes to survivors, ending the cycle of each generation starting from zero.
Managing Market Risk During Accumulation: The CAPE Valuation Mechanism
The 36-month rolling conversion manages risk at the individual level, at the moment of retirement. It doesn't address a separate, system-wide risk: a mandatory, continuous flow of new IIA contributions into the stock market could itself push equity valuations higher over time, independent of underlying economic fundamentals — the accounts inflating the very prices they depend on.
ARSA addresses this directly during the accumulation phase using the Shiller CAPE ratio (the cyclically-adjusted price-to-earnings ratio for the S&P 500, a standard measure of whether the market is historically expensive or cheap) to cap how much of an IIA's new contributions can go into equities versus short-term Treasury instruments:
The ratio is determined annually — a 12-month average CAPE as of January 1, published by January 15 — so the cap adjusts gradually with sustained valuation trends rather than reacting to single-day market swings. Treasury allocations under this mechanism use short-term instruments (under two years), not long-duration bonds. This cap applies only during the accumulation phase; once a worker's balance begins converting into the RDT at retirement, it's no longer subject to this mechanism.
The Retirement Distribution Trust, in Full
The "net 90%" figure above isn't an arbitrary fee — it's the mechanism that makes the RDT more resilient than a simple annuity. Each RDT splits into two sub-accounts: a Principal Sub-Account, which holds the converted balance and is drawn first, and a Buffer Sub-Account, which receives the 10% withheld from every monthly payment calculation, accumulates untouched at Treasury rates, and remains fully inheritable throughout.
Drawdown happens in three phases. In Phase 1, payments are drawn from the Principal Sub-Account while the Buffer accumulates, untouched, the whole time. In Phase 2 — triggered only if the Principal is exhausted, a rare outcome given how much the Buffer has compounded by that point — payments draw from the Buffer Sub-Account instead, with the Safety Net Fund's floor protection remaining active as a further backstop. In Phase 3, if both sub-accounts are exhausted, the Safety Net Fund floor activates automatically for the remainder of the retiree's life — no application required, and at that point there's no remaining balance left to inherit.
Disability Distribution Trust
Upon a Social Security Administration disability determination (42 U.S.C. § 423), a worker's full IIA balance immediately funds a Disability Distribution Trust, using the same monthly actuarial formula as the RDT. A disability doesn't strand a worker's account until retirement age — it converts immediately into guaranteed income.
Survivor Distribution Trust
Survivor benefits use a materially different structure from the RDT — no buffer, no withholding, the full balance distributed. The actuarial period varies by who's receiving it: to age 67 for a surviving spouse or partner; to age 18 for a minor child (age 22 if enrolled full-time in school); to age 85 for any other eligible beneficiary.
If a surviving spouse remarries before age 60, the Survivor Trust terminates and its remaining balance transfers to the Child Social Investment Fund below; remarriage at or after 60 has no effect on the trust. As with the RDT and Disability Trust, the Safety Net Fund's floor benefit activates automatically upon a Survivor Trust's depletion — no application required.
All three trusts — RDT, Disability, and Survivor — calculate payments from unified, unisex actuarial tables, statutorily required to use no sex-based differentiation, updated at least every five years using NCHS mortality data. Updates are grandfathered: once a beneficiary's distributions begin, a later table update doesn't change their calculation retroactively.
The Child Social Investment Fund
When an IIA holder dies with no eligible beneficiary — or a Survivor Trust terminates through early remarriage, or a beneficiary designation falls outside the authorized categories — the balance doesn't revert to the general fund. It transfers into a permanent Treasury endowment: the Child Social Investment Fund.
The fund is governed by a board (the Secretaries of HHS, Education, and Labor; the OMB Director; and two Senate-confirmed presidential appointees with child welfare, education, or pediatric health experience), capped at a 4% annual distribution rate (based on a 3-year average market value) to preserve principal in perpetuity, and statutorily barred from ever reverting to the general fund. Authorized uses: pediatric and adolescent healthcare access for uninsured children, universal school breakfast and lunch at no cost, pre-K and early childhood education, a federal paid parental leave program (12 weeks, partial income replacement — the first program of its kind for the private sector, since none currently exists), and after-school and summer enrichment in low-income communities. The board reports to Congress annually, by March 31, detailing balance, deposits, distributions, and a 10-year projection.
The fiscal significance here is real, not symbolic: at scale, this fund could progressively displace an estimated $233 billion in current annual general-fund appropriations spread across programs that are today means-tested, incomplete, and vulnerable to being re-fought every budget cycle — Children's Medicaid/CHIP ($158B), school nutrition ($37.6B, currently reaching only about 40% of students), Head Start/Pre-K ($12B, currently reaching 716,000 of roughly 4 million eligible children), child care ($13B), child welfare ($12B), and federal paid parental leave for private-sector workers, which currently receives $0. Converting that into a permanently funded entitlement means these programs stop being an annual appropriations fight.
The Domestic Capital Anchor
Individual Investment Accounts are restricted to US-listed equities and bonds only. When 160 million workers directly own US corporate equity through their IIAs, profit-shifting to low-tax jurisdictions directly lowers the stock price held in those accounts. Workers — now the largest unified shareholder bloc in American history — have direct financial incentive to demand profits remain onshore. Corporate boards respond to shareholder pressure in ways they have never responded to abstract tax enforcement.
Companies that remain US-listed gain access to the largest captive, perpetual investment pool ever created — an estimated $700–$900 billion in annual inflows. Companies that invert offshore or delist lose eligibility for this pool. In most cases, the market cap premium from IIA eligibility exceeds the tax savings from avoidance — structurally inverting the financial logic of offshoring without requiring enforcement.
This isn't just an incentive — it's also a hard exclusion. The IIA's approved fund menu statutorily excludes any security issued by a company that, after enactment, either reincorporates outside the United States primarily to reduce federal tax obligations, or converts from a C-corporation to a pass-through structure primarily to avoid corporate income tax — both determinations made by the Treasury Secretary, with implementing regulations due within 18 months of enactment. This is a second, parallel anti-inversion lever alongside the patent-maintenance-fee forfeiture mechanism elsewhere in this platform (see Technology & the Future) — the two work together rather than independently: one closes off a company's ability to keep its US-granted patents after inverting, the other closes off its access to the IIA capital pool.
This also directly answers the standing "won't mandatory inflows just inflate a stock bubble" objection, rather than leaving it unaddressed: IIA inflows during accumulation add an estimated $806 billion annually to US equity markets — a real number, not a hand-wave, and roughly a 35% increase over existing 401(k)/IRA flows. But the system isn't one-directional. At full maturity, annual RDT conversions — an estimated 3.5 million retirees per year at average balances of $1.5–2.5 million — generate an estimated $5–8 trillion in annual equity liquidations as those balances convert to retirement income. Accumulation-phase buying and retirement-phase selling structurally offset each other over time, rather than the system only ever adding one-way pressure to asset prices.
Revenue Reform
Remove the payroll tax income cap entirely. Currently, Social Security taxes apply only to wages up to $184,500 (2026). A person earning $10 million pays the exact same dollar amount as someone earning $184,500 — making the system regressive at higher incomes. Removing the cap alone generates an estimated $3.2 trillion over 10 years and closes an estimated 73% of the 75-year funding gap — the White Paper itself calls this "the most impactful revenue measure available." The same wage-base-cap elimination applies to self-employment tax, for parity between W-2 and self-employed workers. To prevent a windfall benefit increase on the newly-uncapped earnings, a benefit-formula safeguard caps the marginal Primary Insurance Amount accrual on income above the former cap at 5% — the tax side uncaps, the benefit side doesn't uncap in step with it.
Apply Social Security tax to capital gains and investment income above $400,000. Capital gains, dividends, and investment income are currently entirely exempt from Social Security taxation. Income above $400,000 from these sources becomes subject to the same rate as earned wages — generating approximately $66.5 billion net per year. This is codified as new IRC § 3103: a 12.4% tax, matching the full combined employee-and-employer OASDI rate, on net investment income above the threshold, with revenue allocated directly to the Safety Net Fund.
Raise the corporate tax rate from 21% to 35%, paired with IIA domestic-investment requirements — projected $85–260 billion annually in net revenue. This pairs with two further provisions: a conforming GILTI rate increase to 17.5%, closing an international income-shifting loophole that would otherwise undercut the higher domestic rate; and 100% bonus depreciation specifically for companies that remain IIA-eligible (domestic-listed, non-inverted) — a direct tax reward for staying eligible, layered on top of access to the captive investment pool itself.
A separate, progressive revenue provision not previously reflected here: the share of Social Security benefits counted as taxable income for high earners — combined income above $250,000 — rises to 100% of benefits included in gross income, up from the current 85% maximum.
Safety Net Floor
The General Safety Net Fund guarantees a $2,071/month floor benefit for all qualifying retirees regardless of IIA performance. This benefit is means-tested above $15,000/month in combined income and is CPI-adjusted annually.
Governance, Fees, and Oversight
The IIA Administrative Authority is established as an independent agency modeled on the federal Thrift Savings Plan Board. A 7-member, Senate-confirmed Board of Directors — 2 members with investment management experience, 2 with retirement policy or actuarial science experience, 1 representing organized labor, 1 with consumer financial protection experience, and the Secretary of Labor ex officio — serves staggered 4-year terms, reappointable once. An Executive Director, appointed by the Board, runs day-to-day operations. Every Board member and staffer is held to the same fiduciary standards as federal trustees under 5 U.S.C. chapter 84 — legally required to act solely in account holders' interest, not the agency's own.
The fund menu is limited to 5–15 low-cost index funds, expense ratio capped at 0.10% annually, selected through competitive public procurement. No administrative fee is ever charged to an individual account holder — the Authority is statutorily barred from it. All administrative costs are instead funded exclusively through the employer's 10% Administrative Operating Account allocation described in the Three-Pillar Architecture above — a real, concrete difference from typical private 401(k) fee structures, not a marketing claim.
Every account holder receives a quarterly statement (electronic, by election) showing current market value, contributions credited, investment returns, current fund allocation, and a projected monthly RDT payment at standard retirement age based on the current actuarial tables — a real, concrete projection of a worker's future benefit, visible throughout their career, not just revealed at retirement.
Two distinct oversight reports run on different clocks and don't substitute for each other: the Comptroller General reports to Congress every 3 years, evaluating administrative performance, investment performance, floor benefit adequacy, domestic capital anchor effects, and retirement income outcomes. Separately, the Board of Trustees of the OASI Trust Fund reports annually, by March 31, on the projected 10-year transition funding gap, the total outstanding Transition Bond balance, the projected self-funding break-even date, and the 75-year actuarial balance of the Safety Net Fund — with any recommended adjustment to contribution allocation rates or the floor benefit requiring an affirmative congressional vote, not automatic implementation. The Authority's administrative structure itself requires congressional reauthorization every 10 years, but a lapse in that reauthorization does not affect the underlying contribution, allocation, and benefit provisions, which continue regardless.
Why It Costs Less Than Doing Nothing
The status quo 40-year cumulative cost — if Congress continues funding full benefits through borrowing while the trust fund depletes — is projected at $64.95 trillion through 2065. ARSA's 40-year transition financing cost is $38.47 trillion — a net saving of $26.48 trillion. After 2058, the system self-funds rather than accelerating deficits.
That transition cost isn't unspecified deficit spending — it's financed through dedicated ARSA Transition Bonds, issued at market rate with 30-to-50-year Treasury maturities. These bonds are retired specifically from Safety Net Fund surpluses generated after the system reaches self-funding break-even, projected at approximately 2060–2061 (roughly 35 years post-enactment) — not from general deficit spending, and not from a separate new tax.
The question is not whether the country bears a large cost. It is whether that cost leaves every American worker with a multi-million dollar account — or $1,491 a month from a fund that ran out of money.
Answering the Objections Directly
"What happens if the market crashes right before I retire?" The Safety Net Fund's $2,071/month floor activates automatically regardless of how the IIA or RDT performs. No historical 40-plus-year period of S&P 500 returns has been negative in real terms. And the CAPE valuation mechanism, the RDT's Principal/Buffer structure, and the forced 36-month RDT conversion schedule work together specifically to prevent the kind of behavioral panic-selling that hurts voluntary individual retirement accounts during a downturn.
"$38.47 trillion is an enormous transition cost." It is — and it's $26.48 trillion less than the $64.95 trillion cost of doing nothing. The real choice isn't between a cost and no cost. It's between which cost, and whether that cost leaves workers with multi-million-dollar accounts or $1,491 a month from a depleted trust fund.
"Won't companies just keep offshoring regardless?" That's correct under the current system, and incorrect under ARSA. The IIA domestic-investment requirement creates an estimated $806 billion a year in captive domestic investment access — a market-cap premium for staying US-listed that, in most cases, exceeds the typical tax savings from inverting.
"Isn't this just Chilean-style privatization, which already failed?" Four structural differences separate ARSA from Chile's system: the Safety Net Fund (90% of the employer's contribution) is robust and mandatory, not a residual afterthought; accounts are government-managed through a TSP-style structure, not sold off to competing private fund managers; the US-listing restriction prevents the domestic capital hollowing-out that accompanied Chilean privatization; and the beneficiary structure, together with the Child Social Investment Fund, ensures no balance ever simply vanishes. Chile's system failed because it abandoned the redistributive function of retirement security entirely — ARSA preserves and extends that function rather than replacing it.