WASHINGTON, DC - APRIL 30: U.S. President Donald Trump answers questions during an executive order signing in the Oval Office of the White House on April 30, 2026 in Washington, DC. President Trump signed multiple executive orders including one to expand retirement account access for workers. (Photo by Andrew Harnik/Getty Images)
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Senator Ted Cruz and Treasury Secretary Scott Bessent have both described Trump’s proposed “Trump Accounts” as a back door to Social Security privatization. The structure of the accounts shows something different: They add to Social Security rather than carve money out of it. That distinction matters enormously. It determines whether the debate centers on a genuine policy opportunity or on a mischaracterization that echoes the failed privatization fight of 2005. Based on decades of research on retirement security, the key question is not what some hope these accounts might someday become, but what they are designed to do now.
Cruz recently dropped what he called a “dirty little secret” about Trump accounts at the Milken Institute Global Conference: “Conservatives in America, for 50 years… have been trying to do Social Security personal accounts. Here’s the dirty little secret: Trump Accounts are Social Security personal accounts.” Bessent similarly described Trump accounts as “a back door for privatizing Social Security” before he quickly walked it back.
Both characterizations mistake what the accounts do. The Trump accounts are not privatization. The distinction matters enormously, and getting it right matters for whether progressives engage constructively with a genuine opportunity or spend political capital fighting the wrong battle.
Twenty years ago, President George W. Bush made Social Security privatization the centerpiece of his second-term domestic agenda. His proposal was a subtraction: Workers would divert up to 4% of their payroll taxes — money that flows directly into Social Security — into private investment accounts. Diverting that revenue would have drained the very funds that pay current and future benefits. Democrats opposed the diversion because it would have reduced the funds available to pay current benefits. Bush’s 60-stop road show collapsed under public resistance by summer 2005. It was a political moment worth remembering.
Trump accounts are structured differently. They are an addition: federal seed money deposited into tax-deferred investment accounts that sit alongside Social Security, not in place of it. The $1,000 per baby born between 2025 and 2028 comes from new federal funding — no payroll tax is diverted, no benefit is cut. When Bessent corrected himself, he said the accounts would “supplement the sanctity of Social Security’s guaranteed payments.”
That description aligns with the structure. The Trump accounts function as supplements to Social Security.
Cruz’s vision of using Trump accounts as a political gateway to future privatization is a real concern — one worth watching. But a policy should be judged by what it does, not by what an ambitious senator hopes it might someday lead to. As reported by Emily Peck in Axios, Cruz’s remarks circulated behind closed doors on Capitol Hill before he said them publicly, but no Republican has proposed a payroll tax carve-out. Watch what lawmakers do, not what Cruz hints at.
American workers have never wanted a one-pillar retirement system. For the past century, they have fought for two things at once: a strong Social Security foundation and workplace accounts to build on top of it. From steelworkers to autoworkers to teachers, organized labor understood that Social Security was necessary but not sufficient. A dignified retirement required a supplement.
The Netherlands, Denmark and Iceland — the countries that consistently top the Mercer CFA Institute Global Pension Index — all combine the pay-as-you-go solidarity of Social Security with advance-funded employer-sponsored savings, as as economists Nicholas Barr and Peter Diamond have analyzed. The hybrid architecture reflects hard-won wisdom: Pay-as-you-go systems provide guarantees against market crashes and longevity risk; advance-funded systems build capital that compounds over a lifetime of work. Together they are more resilient than either alone.
As David Madland and Christian Weller at the Center for American Progress document, unions historically won mostly defined benefit plans, but they also bargained for 401(k)s. The fundamental point is that workers want supplements to Social Security, and when workers have power, they get them. Research by myself, Kevin Forden and Anthony Webb finds that being in a union at some point in one’s career is associated with a 646% increase in retirement wealth, largely because union coverage means access to defined benefit plans.
Trump accounts do for workers what the minimum wage does for wages. When workers lack bargaining power, the government steps in. The minimum wage substitutes for collectively bargained wages; government regulation provides what the market won’t. Trump accounts operate as a minimum wage for wealth acquisition — a floor, not an achievement. In that sense, they align with the logic unions have long advanced.
The scale of the problem makes this floor urgently necessary: 69 million American workers today have no workplace retirement plan. The Trump accounts, even at a modest $1,000, acknowledge a principle that progressive retirement policy has long championed: Every American worker and every American child should have a funded account.
The Retirement Savings for Americans Act is the legislation that addresses what the Trump accounts do not.
ForbesA Retirement Fix For 69 Million American Workers: Australia InspiredWhere Trump accounts seed investment for the young, the RSAA aims to ensure universal coverage for roughly 60 million workers who have no employer-sponsored retirement plan. It restructures federal retirement tax incentives as refundable credits that deliver maximum benefit to workers who need them most, rather than the current system that directs 70 cents of every federal retirement subsidy to the top income quintile. And the RSAA is designed to operate alongside Social Security’s pay-as-you-go foundation while building an advance-funded complement on top of it.
The 2005 debate left a lasting imprint on retirement policy discussions. Workers’ groups, retiree organizations and Democratic lawmakers spent months fighting a proposal that would have diverted payroll taxes out of Social Security. They prevailed. The lesson of that fight should not be that any new savings account threatens Social Security. The lesson is that the line between additive and subtractive matters — and that every American deserves both a guaranteed foundation and a funded supplement.
American workers have always known this. They fought for Social Security in the 1930s and for pensions through every decade since. The Trump accounts are an imperfect, inequitable but structurally valid step toward the hybrid system unions have demanded for a century. The RSAA is one proposal aimed at expanding that hybrid system. As Peter Coy writes: “You never know with these bipartisan projects: They can be loved by both sides or hated by both sides. In this case, it seems more like love.”
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