Trump accounts are Social Security personal accounts as GOP senator reveals ‘dirty little secret’
Republican Senator Ted Cruz suggested that the alleged Trump accounts for American children are part of an effort to revamp Social Security, a sensitive political issue long considered the “third rail” in US politics.
The Big Beautiful Bill Act, created last year, allowed parents and other authorized individuals to open tax-advantaged savings accounts for any child under 18 with a Social Security number.
during a Panel discussion at the Milken Institute Global Summit On Monday, Cruz said he wrote that part of the law, noting that half of Americans don’t own stocks and won’t benefit from decades of compound growth.
He added that US conservatives have been trying to emulate Australia’s pension program for 50 years; The program requires employers to pay into an investment fund that an employee can access after retirement, as a way to reduce reliance on public pensions. Cruz described the U.S. version as Social Security personal accounts.
“Here’s the dirty little secret: Trump accounts are Social Security personal accounts,” he said.
Republicans tried to make changes to Social Security during President George W. Bush’s second term, but withdrew after being pushed back on the politically charged issue.
Retirees and soon-to-be retirees are a powerful voting bloc that has long instilled fear in lawmakers, especially those considering any adjustments to Social Security and Medicare.
“How did we do it this time? Because we gave the money to the babies so the old people wouldn’t get mad,” Cruz said.
The White House predicted Fully funded Trump accounts could eventually grow to $1.9 million by the time the child turns 28, he said.
As parents see their children’s Trump accounts grow, Cruz said, they will become more open to changing the way their own payroll taxes are spent.
“Wouldn’t you like to have a Trump account just like your kid does, instead of keeping some of your current tax payments and sending it to Uncle Sam?” he added. “And my prediction is that in five years this will have a really compelling constituency because people will see this and I think it’s powerful and transformative.”
But this is where politics comes into play. Social Security benefits are currently funded by workers paying payroll taxes, which means diverting today’s tax payments would impact today’s retirees.
At the same time, U.S. debt has dwarfed GDP, and the outlook is worsening due to rising entitlement spending and exploding interest expenses.
Social Security tax revenue is currently insufficient to cover benefits; The difference is currently being made up by the Social Security trust fund. However, the trust fund is projected to run out of money by 2034.
If no changes were made to the program to generate additional revenue, benefits would be cut immediately to match the money that came in after the trust fund went bankrupt.
President Donald Trump has promised not to touch Social Security benefits. Instead, the One Big Beautiful Bill Act reduced the amount of income taxes recipients paid on their benefits.
Meanwhile, the White House has described Trump accounts as a way to build wealth and get a head start on saving for retirement.
Treasury Secretary Scott Bessent called the accounts last year “Backdoor to Social Security privatization” but quickly clarified that they instead contributed to benefits as well as Social Security.
For now, Trump accounts will become a ubiquitous workplace benefit where employers match employees’ contributions, just like 401k accounts, Cruz said.
“Relatively speaking, this is a pretty cheap employee benefit,” he added. “But over time, the benefit is huge.”
This story first appeared on: Fortune.com
