It looks like President Donald Trump might be trying a controversial method to privatize social security.
Treasury Secretary Scott Bessent on Wednesday likened the Trump accounts created by Republicans’ massive new domestic policy law to “a backdoor for privatizing Social Security.” Democrats are already launching political attacks.
The U.S. Social Security program is a federal government system that provides financial support to retirees, disabled individuals, and survivors of deceased workers.
READ: ‘America first’: Trump targets Google, Microsoft for outsourcing Indian hires (
Established in 1935 as part of the New Deal, it serves as a safety net for millions of Americans. Funded primarily through payroll taxes collected under the Federal Insurance Contributions Act (FICA), Social Security pays monthly benefits based on an individual’s earnings history.
Workers and employers each contribute 6.2% of wages up to a taxable maximum. The program offers retirement benefits starting as early as age 62 with full benefits available at the “full retirement age,” which varies based on birth year. Disability benefits support those unable to work due to severe health conditions, while survivors’ benefits provide income to family members after a worker’s death.
Despite its importance, Social Security faces financial challenges due to an aging population and longer life expectancies, prompting ongoing debates about its long-term sustainability and potential reforms.
The federal government will contribute $1,000 into these new tax-deferred investment accounts for U.S. citizen children born between 2025 and 2028, while parents and others can contribute up to $5,000 annually. The funds are intended to be used for higher education, buying a home or starting a small business.
“In a way, it is a backdoor for privatizing Social Security,” Bessent said. “Social Security is a defined benefit plan paid out. To the extent that if, all of a sudden, these accounts grow and you have hundreds of thousands of dollars for your retirement, then that’s a game changer, too.”
READ: Trump to impose 25% tariffs plus penalty on India despite trade deal (July 30, 2025)
Democrats have long been against the privatization of social security. “Donald Trump’s Treasury Secretary Scott Bessent just said the quiet part out loud: The administration is scheming to privatize Social Security,” Tim Hogan, the Democratic National Committee’s senior adviser for messaging, mobilization and strategy, said in a statement. “Trump is now coming after American seniors with a ‘backdoor’ scam to take away the benefits they earned.”
If the Republicans privatize Social Security, the current government-managed program would shift toward allowing individuals to invest their payroll taxes into private accounts, such as stocks, bonds, or mutual funds. Proponents argue that privatization could offer higher returns and greater personal control over retirement savings, potentially increasing overall benefits. It might also reduce government spending on Social Security in the long term by lowering public liabilities.
Critics warn that privatization could increase income inequality, as individuals with higher financial literacy and resources would benefit more, while vulnerable populations could face greater financial insecurity. Moreover, the administrative costs of managing private accounts could reduce overall returns.