Trump’s newborn savings accounts a ‘back door for privatizing Social Security,’ Bessent says

The newborn savings accounts created as part of President Donald Trump’s massive new tax and immigration law are a “back door for privatizing Social Security,” Treasury Secretary Scott Bessent said Wednesday.

The so-called “Trump accounts” enacted as part of the “One Big Beautiful Bill” give newborns a $1,000 savings account that can be invested with tax deferred treatment. Families or their employers can make $5,000 contributions to the accounts each year until the beneficiary turns 18 years old.

The program is one of more popular components of the legislation, which Trump signed into law on July 4, and borrows from proposals made for years by Democrats.

Speaking at an event Wednesday hosted by the conservative news site Breitbart, Bessent said the accounts would improve economic outcomes for babies and children and said the Treasury Department would use them to increase financial literacy among young people. He likened learning about sound investing practices to a child learning to take responsibility for a pet.

And Bessent added that if enrollees allowed their accounts to grow over decades and saw the benefits of compound interest, they could in effect replace Social Security by allowing beneficiaries to accrue large and tax-preferred savings balances.

“At the end of the day, I’m not sure when the distribution level date should be. Should it be 30 and you can buy a house? Should it be 60? But in a way, it is a back door for privatizing Social Security,” Bessent said. “Social Security is a defined benefit plan paid out to the extent that if all of a sudden, if these accounts grow and you have hundreds of thousands of dollars for your retirement, then that’s a game changer.”

A Treasury spokesperson in a statement said Trump accounts are an “additive government program” that in addition to Social Security benefits will “broaden and increase the savings and wealth of Americans.”

“Social Security is a critical safety net for Americans and always will be. This administration has not just fought tirelessly for seniors, but is also fighting for the next generation,” said the spokesperson, who spoke on the condition of anonymity, citing a department policy preventing them from speaking on the record.

Social Security benefits are financed by payroll taxes, and as the number of retirees boom, U.S. workers and employers are not paying enough into the trust fund to sustain future benefits.

Without action from Congress to overhaul the program’s finances, the trust fund that pays for it will be insolvent by 2033, according to June projections from the program’s trustees, forcing a 23 percent cut to benefits.

Those figures, though, do not account for policy changes in Trump’s landmark tax law. A bonus to the standard deduction for seniors could hasten Social Security’s insolvency date to 2032, according to the Committee for a Responsible Federal Budget, a nonpartisan Washington think tank.

“On one hand, what they are doing is they are making Social Security less solvent and a riskier proposition for people,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center. “On the other hand, the treasury secretary seems to be musing out loud about the idea of beginning to privatize the system.”

Previous Republican presidential administrations have discussed privatizing Social Security. President George W. Bush pitched partially privatizing the program with individual private investment accounts.

The idea was politically unpopular, and it contributed to historic losses for Republicans in the 2006 midterm elections, giving Democrats control of both chambers of Congress and largely ending the Bush administration’s legislative agenda.

“Today the Treasury Secretary said the quiet part out loud: Republicans’ ultimate goal is to privatize Social Security, and there isn’t a backdoor they won’t try to make Wall Street’s dream a reality,” Rep. Richard Neal (Massachusetts), the top Democrat on the tax-writing Ways and Means Committee, said in a statement. “For everyone else though, it’s yet another warning sign that they cannot be trusted to safeguard the program millions rely on and have paid into over a lifetime of work.”