May 25, 2026
Sen. Ted Cruz (R-Texas) said something the White House has spent months carefully avoiding: that Trump Accounts — the new government savings program for children, created under last year’s One Big Beautiful Bill Act — are the foundation for eventually privatizing Social Security.
“Here’s the dirty little secret: Trump Accounts are Social Security personal accounts,” Cruz said at the Milken Institute Global Conference in Los Angeles earlier this month.
Advertisement
Teresa Ghilarducci says Cruz is wrong about what the policy means. A labor economist at the New School for Social Research, Ghilarducci co-authored a 2021 white paper on universal retirement savings with Kevin Hassett, who now runs Trump’s National Economic Council.
“From everybody that I’ve talked to for the past four years about creating these universal accounts,” she told CNBC, “no one has breathed privatization.”
Ghilarducci’s point is there’s a difference between creating new savings vehicles alongside Social Security, and redirecting the payroll taxes that fund Social Security into private accounts.
The details behind Trump Accounts
Before the debate over what Trump Accounts might become, here’s what they are today. The 530A accounts, created under the One Big Beautiful Bill Act, are tax-advantaged investment accounts for any child under 18 with a Social Security number. Children born between Jan. 1, 2025, and Dec. 31, 2028, who are strictly American citizens, will receive a one-time $1,000 government seed deposit. Their parents, friends, and family members can then contribute up to $5,000 into that account every year in after-tax dollars.
The accounts will open by July 4, 2026, and all contributions must be invested in low-cost U.S. stock index funds with fund-level fees capped at 0.1%, though broker and advisor fees sit outside that cap.
The IRS said in March that 4 million children have already been enrolled in Trump Accounts, with 1 million children claiming the $1,000 pilot contribution. When the child turns 18, the account converts to a traditional IRA, subject to standard IRA distribution rules.
That’s the current program. No one’s payroll tax is being redirected anywhere.
Must Read
- You can now build wealth like a landlord for as little as $100 — and no, you don't have to chase down rent or take 3 A.M tenant calls
- Goldman Sachs used to hoard prime real estate deals for the ultrarich. Two ex-analysts just opened the door for $250
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
What Cruz envisions for Trump Accounts
Cruz said conservatives had been trying to create exactly this kind of vehicle for 50 years, and explained why it worked this time when Bush’s 2005 attempt didn’t.
“How did we get it done? You remember George W. Bush tried this in his second term and, sadly, Congress ran for the hills in a display of extraordinary cowardice. How did we get it done this time? It’s because we gave the money to babies so the old people didn’t get pissed,” he said. “But babies grow up.”
Advertisement
He told the conference that once Trump Accounts accumulate meaningful balances, the political case for going further writes itself. “That little girl who is born this year — the math is, if you contribute regularly to it, by the time she’s 18, she’ll have $170,000 in that account. By the time she’s 35, she’ll have $700,000 in that account. This will become Social Security personal accounts.”
From there, Cruz envisions workers eventually diverting a portion of their payroll taxes, which currently fund Social Security benefits for today’s retirees, into personal investment accounts instead.
“We’re going to be able to go to parents and say, ‘Hey, you know that Trump Account your kid has that you keep seeing the numbers go up and you’re seeing this compound growth, wouldn’t you like to be able to keep a portion of your tax payments that you’re paying already, and instead of sending it to Uncle Sam, wouldn’t you like to have a Trump Account just like your kid does?’” he said. “My prediction is within five years, that is going to have a really compelling constituency because people will have seen it.”
Treasury Secretary Scott Bessent made a similar statement last July, calling the accounts “a backdoor for privatizing Social Security” before walking it back.
What this means for anyone watching Social Security
A Bipartisan Policy Center poll surveying 4,037 US adults revealed 93% of respondents consider Social Security the single most valued federal program. That’s why it’s been called the “third rail” of American politics for decades: touch it and you lose.
If you’re near retirement, nothing changes today. Social Security is intact, and Trump Accounts are a separate, additive program.
That said, Social Security faces real pressure. The program is running a $230 billion cash shortfall in 2026, and the Congressional Budget Office (CBO) projects the Social Security trust fund would get exhausted by 2032. At that point, incoming revenue would cover roughly 72% of scheduled benefits, according to the CBO’s most recent projections.
Lawmakers will either have to find more money (which would eventually mean higher taxes or new revenue), cut benefits, or change the system in ways that could include new savings vehicles or more dramatic reforms. That fiscal reality is what creates the opening for debates like this one. Whether Trump Accounts end up being a first step toward privatizing Social Security or just another savings option is anyone’s guess, and essentially depends on political choices that have not yet been made.
You May Also Like
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
- Robert Kiyosaki issues grim warning for baby boomers. Many could be ‘wiped out’ and homeless ‘all over’ the country. How to protect yourself now
Godwin Oluponmile is a content specialist, SEO strategist and copywriter with seven years of expertise in finance, Web 3.0, B2B SaaS and technology. His work has been featured in publications such as Entrepreneur, HackerNoon, Blocktelegraph and Benzinga.
