MW Social Security is on the path to privatization, experts warn, led by Musk's DOGE

By Alessandra Malito

The steps DOGE is taking could diminish consumer confidence and eventually push the government to hand the program over to the private sector, proponents of Social Security say

With Social Security lumbering toward insolvency and the so-called Department of Government Efficiency's eagle-eyed focus on the agency, some program proponents are worried it's on the path to privatization.

The Social Security Administration is in the midst of major reforms triggered by DOGE, including staffing reductions, budget cuts and a transition to online or in-person visits for certain services. These changes, along with more expected to come, could erode customer service, impact benefits and - eventually, experts say - diminish consumer confidence to the point the federal government chooses to hand the program off to the private sector.

"You take them down the road of, 'Why do we have Social Security in the first place? Why don't we have a private system if the government can't do its job?'" said Jason Fichtner, former acting deputy commissioner at the SSA under two presidents, George W. Bush and Barack Obama.

President Trump has said multiple times he will not touch Social Security. But Tesla $(TSLA)$ Chief Executive Elon Musk, who heads the Department of Government Efficiency, has referred to the program as a "Ponzi scheme" and said his group was mining out "fraud, waste and abuse" across the federal government - especially within entitlement programs, a technical term used for mandatory spending programs such as Social Security and Medicare. Although neither President Trump nor Musk have outwardly discussed privatizing the program, the steps Musk and DOGE are taking could put the program's future as a government entity at risk, experts say.

Analysts say Security Security already runs efficiently. It has always paid out benefits, and has an accuracy rate of 99.7%, said Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities, a progressive think tank. A majority of the remaining 0.3% is mistakes, including overpayments, which the program recovers, she said. (The agency just reverted the Biden-era rule of overpayment clawbacks from 10% of beneficiary checks back to 100%.)

The overhead cost of Social Security is around 0.5% of the program, Romig said. Social Security paid out about $1.4 trillion in old-age, survivors and disability insurance benefits last year, according to the SSA, while administration expenses for those parts of the program amounted to a little more than $7 billion, she noted.

Still, the Trump administration is looking for ways to improve, it has said. In the last month and a half, the agency under the lead of DOGE and acting commissioner Leland Dudek announced it was reducing its workforce from 57,000 to 50,000 employees; cutting spending in information technology and non-public-facing real property' downsizing regional and field offices; and moving some telephone services, such as identity verification, to online or in-person visits.

The changes currently in motion are already putting stress on the program, experts say. One of the ways the agency has encouraged workers to leave is through voluntary separation, with buyouts of up to $25,000. About 2,500 of the employees who agreed to that are eligible for the payments, and have a deadline of April 19 to leave. The SSA is also offering workers the option for early retirement, with a deadline at the end of the year.

This overall staff reduction will mean fewer employees available to take calls or meet with claimants in person. The agency also gave workers the opportunity to move within the SSA, from non-mission-critical positions to those in "a local field office, teleservice center, processing center, payment center, workload support unit, or hearing office," which more than 2,200 workers agreed to do. They will receive training, the SSA said.

At the same time, the agency is now requiring beneficiaries to call to make appointments before visiting an office, and wait times and callback times for Social Security's 800-number have been trending upward in recent months (though there was a slight decline from January to February), according to SSA's performance records.

Former Social Security commissioner Martin O'Malley, who served during the Biden administration, has warned beneficiaries all of these changes could result in not just a disruption to customer service, but also possibly benefits. "Most of the actions necessary to create a total system collapse of the Social Security Administration have been taken," O'Malley said during a National Academy of Social Insurance, or NASI, event held earlier this month.

"This is just really going to get worse," said Romig. "It's bad now."

What privatization could look like

This is not the first time there have been talks in Washington to privatize Social Security. Historically, those discussions involved investing the benefits themselves - such as during George W. Bush's administration, when a commission focused on Social Security suggested creating individual accounts with a portion of benefits invested in the stock market. That plan never went through, and it's not currently being discussed.

Instead, the modern form of privatizing Social Security could mean first outsourcing the agency's responsibilities, experts say.

'This is just really going to get worse.'Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities

During a closed-door meeting, acting commissioner Dudek mentioned numerous avenues to alter the agency; one option was to outsource customer service, according to a recording ProPublica obtained.

SSA has used contract workers in the past, as most government agencies do - but not for the most important parts of the program, such as customer service.

Doing so would be difficult, according to Fichtner.

"It takes a long time to train someone," he said. Where outsourcing could make sense, he noted, is in augmenting the program's workforce, such as through automation or other efforts to enhance the system. But, he added: "It is not a replacement."

The agency is at a crossroads, however. While it is in the middle of downsizing its workforce by 12% as well as reducing the number of offices it has, the agency is also shifting some services to online or in-person visits only.

SSA announced in March, for instance, that it was moving identity verification to online and in-person visits, which critics argue will become a burden to the elderly and disabled who do not have internet service or have trouble getting to a physical location. Claimants will be able to start the process on the phone, but it will not be considered complete until they do so through their "My Social Security" account or at an office.

"The updated measures will further safeguard Social Security records and benefits against fraudulent activity," the Social Security Administration said in its announcement.

Making it more difficult for beneficiaries to conduct routine business will lead to frustration, and eventually that will "undermine public support for this agency," said Maria Freese, senior Social Security expert at the National Committee to Preserve Social Security and Medicare. "Step two is that the Republicans can come in - those in particular who for decades have argued it be privatized - and say, 'Obviously the public sector doesn't work, we have to privatize all the functions of the agency and then privatize the benefits too. Why not put it in the stock market anyway - you'd be better off.'"

DOGE did not respond to a request for comment regarding outsourcing, the state of the program, or critics' concerns about a plan to privatize.

Others say a more careful analysis of the administration's moves suggest they are not meant to create a pathway toward privatization. Trump's pledge not to cut Social Security benefits is an "unusual position for a Republican," said Andrew Biggs, senior fellow at the American Enterprise Institute, a right-leaning think tank.

Republican policymakers have in the past made proposals such as raising the retirement age, but the president has not made any efforts to do that. "Secretly trying to privatize Social Security, when he's going out of his way to do the opposite of that, is not very plausible," Biggs said.

Deteriorating consumer confidence

Social Security's trust funds, which the agency relies on to pay benefits, are currently on a trajectory to run out of money sometime in the next decade - at which point beneficiaries would see around a 20% cut to their checks. These latest changes won't improve the solvency issue for Social Security, Biggs said, but "it doesn't mean you don't want to run the program efficiently, and I suspect there are efficiencies to be had within the agency."

Congress has never let the program falter, but it has come close in the past - such as in the early 1980s, right before sweeping changes that implemented what is now the last major reform Social Security has seen.

Since President Franklin D. Roosevelt signed Social Security into law 90 years ago, workers - especially the youngest of the workforce - have wondered if they'd receive any benefits when they retired, yet the program has remained. With enough changes that could weaken the agency, however, Americans will question the federal government's ability to continue maintaining a program that pays out benefits to approximately 69 million retirees, dependents and disabled individuals, experts say.

MW Social Security is on the path to privatization, experts warn, led by Musk's DOGE

By Alessandra Malito

The steps DOGE is taking could diminish consumer confidence and eventually push the government to hand the program over to the private sector, proponents of Social Security say

With Social Security lumbering toward insolvency and the so-called Department of Government Efficiency's eagle-eyed focus on the agency, some program proponents are worried it's on the path to privatization.

The Social Security Administration is in the midst of major reforms triggered by DOGE, including staffing reductions, budget cuts and a transition to online or in-person visits for certain services. These changes, along with more expected to come, could erode customer service, impact benefits and - eventually, experts say - diminish consumer confidence to the point the federal government chooses to hand the program off to the private sector.

"You take them down the road of, 'Why do we have Social Security in the first place? Why don't we have a private system if the government can't do its job?'" said Jason Fichtner, former acting deputy commissioner at the SSA under two presidents, George W. Bush and Barack Obama.

President Trump has said multiple times he will not touch Social Security. But Tesla $(TSLA.UK)$ Chief Executive Elon Musk, who heads the Department of Government Efficiency, has referred to the program as a "Ponzi scheme" and said his group was mining out "fraud, waste and abuse" across the federal government - especially within entitlement programs, a technical term used for mandatory spending programs such as Social Security and Medicare. Although neither President Trump nor Musk have outwardly discussed privatizing the program, the steps Musk and DOGE are taking could put the program's future as a government entity at risk, experts say.

Analysts say Security Security already runs efficiently. It has always paid out benefits, and has an accuracy rate of 99.7%, said Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities, a progressive think tank. A majority of the remaining 0.3% is mistakes, including overpayments, which the program recovers, she said. (The agency just reverted the Biden-era rule of overpayment clawbacks from 10% of beneficiary checks back to 100%.)

The overhead cost of Social Security is around 0.5% of the program, Romig said. Social Security paid out about $1.4 trillion in old-age, survivors and disability insurance benefits last year, according to the SSA, while administration expenses for those parts of the program amounted to a little more than $7 billion, she noted.

Still, the Trump administration is looking for ways to improve, it has said. In the last month and a half, the agency under the lead of DOGE and acting commissioner Leland Dudek announced it was reducing its workforce from 57,000 to 50,000 employees; cutting spending in information technology and non-public-facing real property' downsizing regional and field offices; and moving some telephone services, such as identity verification, to online or in-person visits.

The changes currently in motion are already putting stress on the program, experts say. One of the ways the agency has encouraged workers to leave is through voluntary separation, with buyouts of up to $25,000. About 2,500 of the employees who agreed to that are eligible for the payments, and have a deadline of April 19 to leave. The SSA is also offering workers the option for early retirement, with a deadline at the end of the year.

This overall staff reduction will mean fewer employees available to take calls or meet with claimants in person. The agency also gave workers the opportunity to move within the SSA, from non-mission-critical positions to those in "a local field office, teleservice center, processing center, payment center, workload support unit, or hearing office," which more than 2,200 workers agreed to do. They will receive training, the SSA said.

At the same time, the agency is now requiring beneficiaries to call to make appointments before visiting an office, and wait times and callback times for Social Security's 800-number have been trending upward in recent months (though there was a slight decline from January to February), according to SSA's performance records.

Former Social Security commissioner Martin O'Malley, who served during the Biden administration, has warned beneficiaries all of these changes could result in not just a disruption to customer service, but also possibly benefits. "Most of the actions necessary to create a total system collapse of the Social Security Administration have been taken," O'Malley said during a National Academy of Social Insurance, or NASI, event held earlier this month.

"This is just really going to get worse," said Romig. "It's bad now."

What privatization could look like

This is not the first time there have been talks in Washington to privatize Social Security. Historically, those discussions involved investing the benefits themselves - such as during George W. Bush's administration, when a commission focused on Social Security suggested creating individual accounts with a portion of benefits invested in the stock market. That plan never went through, and it's not currently being discussed.

Instead, the modern form of privatizing Social Security could mean first outsourcing the agency's responsibilities, experts say.

'This is just really going to get worse.'Kathleen Romig, director of Social Security and disability policy at the Center on Budget and Policy Priorities

During a closed-door meeting, acting commissioner Dudek mentioned numerous avenues to alter the agency; one option was to outsource customer service, according to a recording ProPublica obtained.

SSA has used contract workers in the past, as most government agencies do - but not for the most important parts of the program, such as customer service.

Doing so would be difficult, according to Fichtner.

"It takes a long time to train someone," he said. Where outsourcing could make sense, he noted, is in augmenting the program's workforce, such as through automation or other efforts to enhance the system. But, he added: "It is not a replacement."

The agency is at a crossroads, however. While it is in the middle of downsizing its workforce by 12% as well as reducing the number of offices it has, the agency is also shifting some services to online or in-person visits only.

SSA announced in March, for instance, that it was moving identity verification to online and in-person visits, which critics argue will become a burden to the elderly and disabled who do not have internet service or have trouble getting to a physical location. Claimants will be able to start the process on the phone, but it will not be considered complete until they do so through their "My Social Security" account or at an office.

"The updated measures will further safeguard Social Security records and benefits against fraudulent activity," the Social Security Administration said in its announcement.

Making it more difficult for beneficiaries to conduct routine business will lead to frustration, and eventually that will "undermine public support for this agency," said Maria Freese, senior Social Security expert at the National Committee to Preserve Social Security and Medicare. "Step two is that the Republicans can come in - those in particular who for decades have argued it be privatized - and say, 'Obviously the public sector doesn't work, we have to privatize all the functions of the agency and then privatize the benefits too. Why not put it in the stock market anyway - you'd be better off.'"

DOGE did not respond to a request for comment regarding outsourcing, the state of the program, or critics' concerns about a plan to privatize.

Others say a more careful analysis of the administration's moves suggest they are not meant to create a pathway toward privatization. Trump's pledge not to cut Social Security benefits is an "unusual position for a Republican," said Andrew Biggs, senior fellow at the American Enterprise Institute, a right-leaning think tank.

Republican policymakers have in the past made proposals such as raising the retirement age, but the president has not made any efforts to do that. "Secretly trying to privatize Social Security, when he's going out of his way to do the opposite of that, is not very plausible," Biggs said.

Deteriorating consumer confidence

Social Security's trust funds, which the agency relies on to pay benefits, are currently on a trajectory to run out of money sometime in the next decade - at which point beneficiaries would see around a 20% cut to their checks. These latest changes won't improve the solvency issue for Social Security, Biggs said, but "it doesn't mean you don't want to run the program efficiently, and I suspect there are efficiencies to be had within the agency."

Congress has never let the program falter, but it has come close in the past - such as in the early 1980s, right before sweeping changes that implemented what is now the last major reform Social Security has seen.

Since President Franklin D. Roosevelt signed Social Security into law 90 years ago, workers - especially the youngest of the workforce - have wondered if they'd receive any benefits when they retired, yet the program has remained. With enough changes that could weaken the agency, however, Americans will question the federal government's ability to continue maintaining a program that pays out benefits to approximately 69 million retirees, dependents and disabled individuals, experts say.

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March 22, 2025 08:00 ET (12:00 GMT)

MW Social Security is on the path to -2-

In recent weeks, Trump and Musk have openly talked about finding millions of dead recipients still receiving benefits. People familiar with the program, including the SSA itself, refute those claims. Experts say the file DOGE found is used to list every individual with a Social Security number, not necessarily beneficiaries currently receiving money. The file has a place to enter the person's name, number and date of birth, but no place for date of death - which is why some beneficiaries would appear to be in their 100s, 200s and even older, they say.

"The people at DOGE jumped to the conclusion that those people are still getting benefits," said John Svahn, SSA commissioner during the 1983 reform, in an interview with MarketWatch. "They might have been 85 in 1936 when they got their number. I can guarantee they're not living now, and not getting Social Security."

Democratic Rep. John Larson of Connecticut - who authored the proposed Social Security 2100 Act, which would have changed the consumer-price index used for benefits as well as benefit calculations and taxation - said he and his colleagues have invited Musk to speak with lawmakers about the fraud and waste DOGE has found within the program, but he hasn't done so yet.

"Show us and answer our questions, because if there is fraud, abuse and waste, we certainly want to get rid of that as well - but I don't think that is his agenda," Larson said in an interview with MarketWatch. "His agenda is to privatize, but he is doing it by dismantling the agency itself so that he and the president can say it is not working - it is not delivering the way it should. And how could it if you're dismantling it?"

Ways in which SSA is being 'dismantled'

Already, the Trump administration has taken several steps to drastically transform the program, which some experts argue risk moving it toward privatization.

'Show us and answer our questions, because if there is fraud, abuse and waste, we certainly want to get rid of that as well - but I don't think that is his agenda.'Rep. John Larson, a Connecticut Democrat

The latest reductions to staffing, offices and the like are equivalent to taking a "meat axe" to the program, Michael Astrue, a former SSA commissioner who served under President George W. Bush, said during the NASI event earlier this month.

There is room for more efficiency, but "there is a right way and a wrong way to do it," he said. The agency could use artificial intelligence in the back office to help with labor-intensive tasks such as organizing files, he noted.

"At some level, I admire Musk as a disrupter. You look at what he's done with cars and rockets, it is amazing," Astrue said during the event. But there are multiple ways to cause disruption, he added, and "what's happening right now is just wrong."

For example, encouraging employees to leave will result in losing "your very best and most valuable" workers, he said.

President Trump has also called for the elimination of taxation on Social Security benefits, which may be a popular political move but one with consequences to the program's finances.

Social Security accounts for 21% of the federal budget, making it the single largest government program, Romig said - but it is self-financing, meaning it relies on its own funding to run. The program relies on payroll taxes as well as taxes on Social Security benefits, and eliminating the taxation of Social Security benefits would hurt the program's finances, she said.

Recipients may like the idea of no taxes on their Social Security benefits in the short term, but it isn't good public policy when the system is already underfunded, said the American Enterprise Institute's Biggs. The people who pay taxes on Social Security benefits, he added, are a disproportionately rich segment of retirees.

The ramifications of these changes are not yet known, and many policymakers, analysts and taxpayers are anxiously waiting to hear more about DOGE's plans regarding the program.

"It is being caught up in the politicization of the federal government in general," said Fichtner, the former acting SSA deputy commissioner. "Even if you wanted to take the Trump administration at its face value - to try weed out fraud, waste and abuse, and try to make the government more efficient ... this is not how you would do it."

-Alessandra Malito

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March 22, 2025 08:00 ET (12:00 GMT)

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