President Donald Trump’s baby savings accounts are a “back door for privatizing Social Security,” Treasury Secretary Scott Bessent admitted.
The accounts, originally called MAGA accounts, are part of Trump’s One Big, Beautiful Bill and give newborns a $1,000 savings account. The money will grow over time and will be available when the child turns 18 years old. The money can then be used for college costs, to buy a home or other designated services.
Parents can contribute up to $5,000 a year to the accounts, and employers and charitable organizations can also contribute.
The accounts are expected to be treated similarly to the rules for an individual retirement account, and can eventually be tapped for distribution in adulthood.
Bessent suggested Wednesday that they could eventually be the way Americans save for retirement.
“In a way, it is a back door for privatizing Social Security,” Bessent said at an event hosted by Breitbart News. “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, too.”
Bessent reasoned that the accounts could boost financial literacy among young people who are “disillusioned with the system.”
Democrats seized on the comment as a signal that Republicans want to privatize Social Security—an unpopular GOP idea that was floated 20 years ago and swiftly abandoned.
“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,” said Rep. Richard Neal of Massachusetts, the top Democrat on the House Ways and Means Committee.
“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,” Neal added.
“Bessent actually slipped and told the truth: Donald Trump and his government want to privatize Social Security,” said Senate Minority Leader Chuck Schumer.
Hours later, following criticism, Bessent was compelled to clarify on X that the Trump administration was “committed” to protecting Social Security.
“Trump Baby Accounts are an additive benefit for future generations, which will supplement the sanctity of Social Security’s guaranteed payments,” he wrote. “This is not an either-or question: our Administration is committed to protecting Social Security and to making sure seniors have more money.”
The Treasury said Bessent’s comments had been taken out of context.
“Trump Accounts are an additive government program that work in conjunction with Social Security to broaden and increase the savings and wealth of Americans,” a spokesperson said. “Social Security is a critical safety net for Americans and always will be.”
George W. Bush’s administration considered proposals to privatize Social Security more than 20 years ago. Republicans have since moved away from talking about the issue publicly after it proved politically unpopular.
Privatizing social security would involve taking investments out of government and putting it into the stock market in some form.
“On one hand, what they are doing is they are making Social Security less solvent and a riskier proposition for people,” Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center, told the Washington Post. “On the other hand, the treasury secretary seems to be musing out loud about the idea of beginning to privatize the system.”
If Social Security was privatized, a main benefit would be the possibility of greater returns on investments. However, experts note that it wouldn’t be without risk and could eliminate a guaranteed monthly income for retired Americans.
“You could make more or you could lose it all,” Michael Liner, founder of Social Security disability law firm Liner Legal, told U.S. News.
The Associated Press contributed reporting
