“In a way, it is a backdoor way for privatizing Social Security,” Treasury Secretary Scott Bessent said of new $1,000 accounts for newborns that passed in President Trump’s “Big, Beautiful Bill.”
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WASHINGTON ― Treasury Secretary Scott Bessent touted new savings accounts for American babies included in President Donald Trump’s recently approved megabill as a “backdoor for privatizing Social Security.”
Bessent on July 30 hailed so-called “Trump accounts” for American newborns that passed in Trump’s “Big, Beautiful Bill” as an innovative way to get more Americans to take part in the financial system, increase financial literacy and build their retirement savings.
Under the program, American children born this year through 2028 are eligible for a one-time $1,000 contribution from the federal government per toddler into a mutual fund or index fund that is tied to the performance of the stock market.
“In a way, it is a backdoor way for privatizing Social Security,” Bessent said, speaking at a policy event hosted by the conservative outlet Breitbart News. “Social Security is a defined benefit plan paid out ‒ that to the extent that if all of a sudden these accounts grow, and you have in the hundreds of thousands of dollars for your retirement, that’s a game-changer.”
Trump’s megabill ‒ which the president signed into law on July 4 after it cleared Congress with only Republican support ‒ extended Trump’s 2017 tax cuts, ended taxes on tips, allocated billions in border-wall funding and cut Medicaid and food stamp benefits, among other new policies including the “Trump accounts.”
The new law did not make changes to Social Security, which the president vowed to protect.
Demcorats slammed Bessent’s comments. “Trump White House openly admits their plan to privatize Social Security,” U.S. Rep. Brendan Boyle, D-Pennsylvania, said in a post on X. “I will fight them with everything I got to keep their grubby little hands off it.”
But Bessent, in a statement after his remarks, said the “Trump accounts” will be an added benefit on top of Social Security, not a replacement to the program.
“Trump Baby Accounts are an additive benefit for future generations, which will supplement the sanctity of Social Security’s guaranteed payments,” the Treasury secretary said. “This is not an either-or question: our Administration is committed to protecting Social Security and to making sure seniors have more money.”
Democrats have long accused Republicans of aiming to privatize Social Security, a New Deal era welfare program that provides benefits for seniors and Americans with disabilities.
In 2005, President George W. Bush proposed a plan that would have allowed Americans to invest a portion of their Social Security tax payments into the stock market, but the overhaul failed to gain traction in Congress.
The Trump baby accounts are expected to become available next July. Parents can also contribute up to $5,000 annually to the tax-deferred account to be invested in a diversified fund that tracks a U.S.-stock index. Qualified withdrawals, including for education expenses or credentials, a down payment on a first home or as capital to start a small business, are taxed at the long-term capital-gains rate.
There are no income requirements and everyone is eligible, as long as the child is a U.S. citizen, and both parents have Social Security numbers. Money from “Trump accounts” can’t be withdrawn until the beneficiaries turn 18 years old.
Bessent recounted recently talking to construction workers at a gas station who were purcashing $20 lottery tickets.
“I was sitting there thinking ‒ and I tell them ‒ the best thing you could do is save that $20. Now with these (Trump) accounts, they can be part of the system,” Bessent said. “What if they had put that money in the S&P or in Bitcoin, or anything? We are making people part of the system. We are increasing financial literacy.”
This article has been updated with additional information.
Reach Joey Garrison on X @joeygarrison.