“In a way, it’s a backdoor way to privatize Social Security,” Treasury Secretary Scott Bescent said about a new $1,000 account for newborns associated with President Trump’s recent legislation.
WASHINGTON – Treasury Secretary Scott Bescent has described a new savings account for American babies as a potential method to, in a sense, privatize Social Security.
On July 30, Bescent welcomed what’s referred to as the “Trump account,” a novel initiative initiated through the president’s recently passed legislation, hinting at plans to enhance financial inclusion for Americans, boost financial literacy, and grow retirement savings.
This program makes $1,000 available to children born between now and 2028, funded by the federal government, which can be invested in mutual or index funds connected to the stock market.
“In a way, it’s a backdoor way to privatize Social Security,” Bescent remarked during an event organized by Breitbart News. He noted that substantial growth of these accounts could significantly impact retirement savings.
Trump’s legislative package, which cleared Congress with Republican support, includes various new policies, notably the “Trump Account,” alongside tax cuts, funding for a border wall, and alterations to Medicaid and food stamp benefits.
Though the new law leaves Social Security unchanged, the president has committed to safeguarding it.
Democrats have criticized Bescent’s comments. U.S. Rep. Brendan Boyle, a Democrat from Pennsylvania, stated that the Trump administration openly reveals intentions to privatize Social Security. “I will fight them with everything I have to keep their dirty little hands away from it,” he declared in a post.
Following the backlash, Bescent retorted, insisting that the “Trump Account” is merely an additional benefit and not a substitute for Social Security. He asserted, “These baby accounts provide extra advantages for future generations and will uphold the integrity of Social Security’s guaranteed payments.” The administration, he claims, remains dedicated to protecting Social Security and helping seniors earn more.
Democrats have historically warned against efforts to privatize Social Security, which provides benefits to seniors, individuals with disabilities, and others.
In 2005, former President George W. Bush proposed a similar idea allowing individuals to invest parts of their Social Security taxes in the stock market, but that plan did not succeed in Congress.
The Trump Baby account is set to launch in July next year, with parents permitted to contribute as much as $5,000 annually to tax-deferred accounts, investing in various funds tracking U.S. market indexes. Qualified withdrawals for education costs, buying a home, or launching a small business would be taxed at long-term capital gains rates.
Eligibility for the Trump Account extends to children who are U.S. citizens and whose parents both have Social Security numbers, with no income limits. However, funds from the account cannot be accessed until the beneficiary turns 18.
Bescent shared a personal anecdote about speaking with construction workers while winning a small lottery ticket, emphasizing the importance of saving. “With these accounts, they can now be part of the system,” he remarked, suggesting that investing could promote financial literacy.
This article has been updated with additional information.
