There were many reasons George W. Bush’s presidency cratered in his second term, but one notable turning point was his administration’s failed attempt to privatize Social Security. Voter backlash was fierce. Two decades later, President Donald Trump may be eyeing a new attempt.
A new federal program that gives newborns a $1,000 savings account could be a “back door for privatizing Social Security,” said Treasury Secretary Scott Bessent last week. Bessent’s comments came as the federal retirement program is challenged: A “23% cut to benefits” could come in the early 2030s because “workers and employers are not paying enough” into the system as the number of retirees grows, said The Washington Post. The new savings program, called “Trump accounts,” could let Americans save “hundreds of thousands of dollars for your retirement,” Bessent said.
What did the commentators say?
Social Security has “long been a third rail in politics,” said The Hill. Democrats quickly moved to criticize Bessent and the Trump administration. Republicans want to convert the program from a “dependable safety net to a risky profit center for moneyed special interests,” Sen. Jack Reed (D-R.I.) said on X. AARP, the powerful lobby for older Americans, denounced Bessent’s comments. Any move toward privatization “is unacceptable,” said John Hishta, AARP’s senior vice president of campaigns.
Bessent “got a little too honest” about Republican plans for Social Security, said Helaine R. Olen at MSNBC. The Treasury Secretary tried to walk back his remarks, saying the savings accounts would “supplement” the retirement program instead of replacing it, but he was “far from unclear in his original remarks,” Olen said. The walkback is understandable, since Americans know “privatization isn’t as good as it sounds.” But GOP politicians have been taking aim at Social Security “for almost the entirety of its 90-year existence.”
Bush’s proposal “sank like a lead balloon,” said Brett Arend at MarketWatch. And for good reason: Diverting Social Security taxes away from the government program and into individual retirement accounts “would be the beginning of the end of Social Security as we know it.” That’s because Social Security is currently a “defined-benefit program” that pays out benefits without the recipient being responsible for investment returns. Privatization would make retirement payments dependent “on your investment returns.” That comes with obvious risk. “Wait until you see a bear market.”
What next?
The Trump administration is “committed to protecting Social Security and to making sure seniors have more money,” Bessent said Wednesday on X. His comments came after Democrats attacked the earlier “back door” remarks, said ABC News. The administration’s position is that the new savings accounts are a supplement to Social Security, “not a replacement for the program.”
The $1,000 savings accounts for newborns “could compound until today’s infants retire decades from now,” said The New York Times. That is a “potentially exponential increase” in value. Even so, the new program has “befuddled” tax experts. New parents “may be better off contributing to a traditional investment account on behalf of their children.”
Bessent calls savings program a ‘back door’ to privatization
