The Third Repair: Make the books honest and give everyone a stake

The debt cannot grow faster than the country does. Judge the rule over a rolling period of years, not a single one, so a recession does not force cuts at the worst moment, and have an independent body score it: CBO keeps the official count, GAO audits the process. Break the limit, and Congress must vote on a correction, on the record, by name. Leave real room to borrow in a war, a crash, or a pandemic, but make that authority expire automatically after two years. Any extension requires a new recorded supermajority vote, and the excess debt returns to the normal rule on a published ten-year path, so an emergency ceiling cannot become the new floor.²²

Tax the same income at the same rate. A dollar should not get a lower rate because it arrives as a capital gain or carried interest instead of a paycheck. And income should not escape tax forever because someone borrows against stock rather than selling it. The design for that is specific: once a person’s borrowing against appreciated financial assets passes a high cumulative threshold, the untaxed gain behind it becomes taxable, with ordinary mortgages and genuine business credit untouched, a credit when the asset is later sold so nothing is taxed twice, and the remaining gain settled at death with protection for spouses, charities, and continuing family businesses and farms.²³

An investment account for every American, beginning at birth. Put it by default in a low-cost, diversified fund whose risk adjusts automatically with age and funded status. Fund the seed with new money, never by diverting the payroll taxes paying current retirees. Roughly 3.6 million births a year at $10,000 each costs about $36 billion a year; $10,000 left alone for sixty-five years becomes something like $800,000 at historical market returns, and that figure is an assumption about the future, not a promise.²⁴

The default is a rule, not a bet. The default portfolio shifts from growth toward safety as a person ages and as the balance becomes large enough to finance the insured floor. The rebalancing schedule is published in advance and designed not to dump assets mechanically after a crash. People remain free to depart from it. The government simply does not insure the extra loss created by that choice.

The floor is limited insurance, not a second retirement system. If low lifetime earnings or poor markets under the default path still leave a full-career worker below a defined minimum, the government fills only that gap: a floor of about $1,700 a month in today’s terms, with years of caregiving, military service, and disability counting toward the career.²⁵ The guarantee is tested against what the default path would have produced, not against a riskier portfolio a person chose. Take more risk and win, the upside is yours; take more risk and lose, the extra loss is yours too. Disability and survivor insurance remain, because they cover risks no account balance solves. And let me be precise about the principle, because it is easy to caricature: the goal is not to expose anyone to the market and wish them luck. The goal is broad ownership, with limited insurance underneath it and a protected transition into it. Ownership is the engine. The floor guarantees the engine is never the whole story.

And a transition that breaks no promises. Everyone 45 or older when the law takes effect keeps full Social Security exactly as scheduled. Workers under 45 receive a catch-up investment account, funded by new appropriation, alongside a Social Security share scaled to their age: the younger the worker, the more the account carries; the older, the larger the retained share. The two together are guaranteed to at least equal what current law promises, so nobody’s retirement goes down. The old program’s funding gap is closed inside this transition by lifting the payroll cap so that high earners pay the retirement tax on all of their wages, the way everyone else already does. And the retirement age does not rise, because life-expectancy gains have gone mostly to the well-off; a uniform age increase lands hardest on people with physically demanding work and shorter lives.²⁶

This is honest arithmetic, not free money, and the reckoning at the end of this pamphlet prices it: the transition is a real bill, published rather than promised, and it is a bill that ends. The system we have now sends a bill that never does. Once the transition completes, each generation arrives at retirement holding assets it owns rather than a claim on the paychecks of the generation behind it, and the cost of a full retirement falls to a seed paid once, at birth.