'Trump accounts': The backdoor to customize social security
U.S. Treasury Secretary Scott Bessent described the president's new “Trump accounts” as a transformative tool for creating long-term wealth and a “backdoor to privatizing social security.”
Earlier this month, Bessent said new tax snooze investment accounts created by President Donald Trump's comprehensive tax law could be a way to increase financial literacy and young voters' participation in the economy.
At the Breitbart event in Bessent, Washington, referring to the rise of democratic socialist Zohran Mamdani in New York in the New York mayoral election, winning the support of young voters, “Why have we come to the threshold of Caracas on the banks of the Hudson River in New York? Why is this man so popular? Because young people were disappointed with the system," he said.
Bessent said Trump accounts would “make everyone a shareholder” in the success of the economy and claimed that “the people who are part of the system do not want to destroy the system.”
Originally called “MAGA accounts”, these accounts allow parents to contribute up to $5,000 each year on behalf of their children. Contributions can also come from employers and charities.
The funds will be credited in portfolios linked to U.S. stock market indices and will be structured similarly to individual pension accounts, withdrawing money after the age of 59.5 or without penalty deduction at an earlier age for university expenses or initial home purchase.
Trump's law also provides for a $1,000 contribution from the government for every baby born between 2025 and 2028, regardless of family income.
Bessent said at the Breitbart event, “In a way, this is a backdoor to privatize Social Security. If these accounts suddenly grow and you have hundreds of thousands of dollars for your retirement, that changes the rules of the game," he said.
Later, in a post on Bessent, X, it announced that the new Trump accounts are “an additional benefit for future generations and will complement the sanctity of Social Security's guaranteed payments.”
“This isn't a problem either that or that: Our administration is committed to protecting Social Security and ensuring that the elderly have more money,” Bessent added.
Democrats immediately grabbed Bessent's words and claimed that the Trump administration did not keep the president's promise that it would not touch Social Security.
Senate Minority Leader Chuck Schumer said in a speech, "Bessent actually blurt out and said the truth: Donald Trump and his government want to privatize Social Security."
Richard Neal, the top Democratic member of the House of Representatives tax committee, reiterated this view, stating in a statement that Bessent has “said loud the quiet part” and that “the ultimate goal of the Republicans is to privatize Social Security, and there is no way they should not try to make the dream of Wall Street a reality.”
A spokesman for the Treasury Department argued that Bessent's words were cut off from context. A Treasury spokesman said in a statement, “Social Security is a very important safety net for Americans and always will be. This administration not only struggles tirelessly for the elderly, but also struggles for future generations," he said.
In his speech, Bessent added that the Treasury Department, which should prepare regulations to implement new accounts, will implement the program with financial literacy in mind.
Bessent said, "As the Ministry of Treasury, we will encourage these accounts. If you have an account, we want you to learn and understand about these accounts," he said.