A Social Security Trust Fund that grows with the stock market
Summary
Part 2 is the capital leg: large public companies issue new non-voting shares equal to 2.5 percent of their market value each year to a pooled Social Security Trust Fund, held by banks as custodians. The levy stops while the fund owns a third of the U.S. market, and holdings above 30 percent are sold into foreign stocks. From 2036 the fund pays into the payment fund.
Key findings
- No cash changes hands: existing owners are diluted 2.5 percent a year and the public becomes a large, non-voting minority owner.
- A 33 percent ownership cap, with sales above 30 percent into foreign stocks, keeps the domestic share between the two lines; without a cap the share keeps rising past half.
- The fund pays 1 percent of its value a year from 2036, rising to 3 percent by 2046. Today's Social Security bond fund is projected to be depleted in 2034.
The proposal
Today's Social Security Trust Fund holds only Treasury bonds, about $2.56 trillion of them, and the Trustees say it runs dry in 2034. Let it own stocks instead. Every large company delivers 2.5 percent of its market value a year to the fund as new non-voting shares, held by banks as custodians. The fund grows with the market, stops taking shares at a third of it, sells anything above 30 percent into foreign assets, and starts paying into the Direct Payment Fund in 2036. If machines do the work, the public should own a share of the machines.
Analysis
No cash changes hands. Companies issue new shares; existing owners are diluted 2.5 percent a year; the public becomes a large, quiet minority owner of the economy it lives in.
Try the cap at 100 percent to see the drift the design rejects. Try a 4 percent return to see the downside.
How it works
Each year, every large public company issues new non-voting shares equal to 2.5 percent of its market value and delivers them to the Social Security Trust Fund. Banks hold them as custodians, the way they hold shares for any client, so the fund needs no trading floor and no company deals with a government shareholder directly. Private companies above a size threshold owe the same in cash or shares. The fund collects dividends and holds; it does not vote and does not sit on boards.
The levy stops while the fund owns 33 percent of the U.S. market, and anything above 30 percent is sold into foreign stocks, so the domestic share settles between the two lines. Children's trust deposits (proposal 1) go into the same pool. From 2036 the fund pays into the Direct Payment Fund: 1 percent of its value a year, rising to 3 percent by 2046. The fund is pooled: no individual accounts, no statements, no inheritance. A share of it is a right of citizenship, like a vote, not an asset to borrow against or lose.
Why the cap
Without a cap the fund keeps growing as a share of the market; set the cap slider to 100 and watch the share climb past half and keep going. A fund that owns most of the economy is the state owning most of the economy, whatever the shares are called. The cap keeps the public a large minority owner, and the foreign valve lets the fund keep growing (and diversify) without the domestic share creeping up.
What could go wrong
Announcing a permanent 2.5 percent dilution will reprice the U.S. market on the day it is announced; the model's market path does not include that drop, so early levies would be smaller than shown. Foreign governments may object to a U.S. public fund buying their companies. And 7 percent real returns are a long-run average, not a promise: the return slider is there because a decade of 4 percent would push every date in this series back.
Assumptions and limitations
- Results depend on the assumed real stock return; the 4 percent scenario shows the downside.
- Effects of dilution on share prices and capital formation are not modeled.
- Valuing private companies for the cash-or-shares rule is unresolved.
The model computes every figure from the assumptions shown; change them and the figures change. It is not a forecast.
Sources
- Congressional Research Service. Social Security: Selected Findings of the 2026 Annual Report (IF13256). Link. combined OASDI reserves about $2.56 trillion at the end of 2025, depleted in the third quarter of 2034; OASI alone in late 2032. Not yet locked.
- Social Security Administration, Office of the Chief Actuary. Trust Fund data: investment holdings. Link. the funds hold interest-bearing Treasury securities only. Not yet locked.
- SIFMA. U.S. equity market capitalization, Research Quarterly. Link. about $75 trillion in mid-2026. Not yet locked.
- Norges Bank Investment Management. Government Pension Fund Global. Link. the largest public fund that owns stocks for its citizens; a precedent for a pooled, non-voting-in-practice holder. Not yet locked.
- Alaska Permanent Fund Corporation. Alaska Permanent Fund Dividend. Link. a public fund paying every resident from its returns. Not yet locked.
Numbered references in the text point to this list.
How to cite
Places I Never Heard Of LLC (2026). A Social Security Trust Fund that grows with the stock market. Policy Lab working paper, version 1.0, November 4, 2026. https://policylab.placesineverheardof.com/uss-2-a-trust-fund-that-owns-stocks/