Ted Cruz

Senator Ted Cruz, a Texas Republican, said earlier this week a new Trump‑backed savings program for children could eventually be used to reshape Social Security into personal investment accounts.

"Here's the dirty little secret: Trump Accounts are Social Security personal accounts," Cruz said at an event during the Milken Institute Global Conference. "We're going to be able to go to parents and say, 'Hey, you know that Trump account your kid has? 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?"

The senator's comments have set off alarm bells for some even as President Donald Trump has repeatedly pledged he would not to cut Social Security or Medicare benefits.

Why It Matters

Social Security is one of the most politically sensitive and widely relied‑upon programs in the country, providing benefits to more than 70 million retirees, disabled workers, and survivors.

Even small perceived changes to how it is funded or structured tend to trigger intense public debate, in part because the program is already facing long‑term financial strain and automatic benefit cuts within the next decade if Congress does not act.

What to Know

During the Milken Institute Global Conference in Beverly Hills, California, Cruz described Trump Accounts as something more ambitious.

"Conservatives in America, for 50 years…have been trying to do Social Security personal accounts,” Cruz, who was the "chief architect" behind the legislation that created Trump Accounts, said, adding that former President George W. Bush “tried this fight, and sadly, Congress ran for the hills in a display of extraordinary cowardice."

The most significant reform proposal for Social Security came during Bush's second term whose plan would've reformed the program by allowing Americans to voluntarily invest taxable earnings and payroll taxes in low-cost stock market index funds into a retirement account.

The senator added on Monday: “How did we get it done this time? Because we gave the money to babies, and so the old people didn’t get pissed. But you know what? Babies grow up. That little girl born this year, she is going to be 70. And the math is if you contribute regularly to it, by the time she is 18, she will have $170,000 in that account.”

Cruz’s comments have sparked concern as they suggest a longer‑term vision of changing how Social Security works, which could potentially be without cutting benefits outright but also may shift future funding.

“Turning over Americans’ hard-earned benefits to Wall Street would expose future retirees to unnecessary risk while lining the pockets of the financial elites who donate to Republicans,” Max Richtman, the president and CEO of the National Committee to Preserve Social Security and Medicare, said in a statement.

“In a 2022 poll, only 15 percent of the public supported privatizing Social Security. Ted Cruz, Donald Trump, and their Republican allies should realize that the people will not stand for privatization of their hard-earned benefits, and we in the advocacy community will continue to ensure that it never happens.”

A Data for Progress poll that was conducted in December 2022 and surveyed 1,184 likely voters nationally found only 15 percent of voters support privatizing Social Security, with 77 percent believing the system should remain as is. In a further breakdown, the poll found 76 percent of Republicans and 79 percent of Democrats said Social Security should stay the way it is, while 17 percent of Republicans and 13 percent of Democrats said the program should be privatized. The poll's margin of error was 3 percentage points.

What Are Trump Accounts?

Trump Accounts were created under the One Big Beautiful Bill (OBBB) Act, signed into law last year. Officially, they are tax‑advantaged investment accounts for children, sometimes described as “401(k)s for babies.”

Under the program, every eligible child born between 2025 and 2028 receives a $1,000 federal seed deposit. Families, employers, and others can make additional contributions, and the money is invested in low‑cost U.S. stock market index funds.

Funds are locked until the child reaches adulthood. The administration has pitched Trump Accounts as a way to expand wealth‑building and financial literacy, particularly for families that may not otherwise have access to these types of investments.

Social Security Facing Impending Financial Shortfall

Right now, Social Security is facing an impending financing shortfall. The program’s main trust fund is projected to become unable to pay full benefits in the early 2030s if Congress does not act, triggering an automatic reduction in payments.

Republicans who support structural reform often argue investment‑based accounts could produce higher long‑term returns than the current pay‑as‑you‑go system. They say younger workers, in particular, could benefit from decades of compound market growth.

“Transitioning the current system wouldn't be cheap, and the program would still be obligated to pay current beneficiaries during the switchover. Depending on the funds invested in, there could be deductions made for administrative and management costs, as well,” Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek. “Obviously, the counterpoint to all the concerns is ideally, investing Social Security in the broader market should lead to higher returns over time.”

However, those against this type of privatized Social Security programs say that market exposure creates unnecessary risk and undermines Social Security’s core promise of guaranteed, inflation‑adjusted benefits for life.

“The idea is ridiculous on its face. The Trump account only starts with a one-time $1,000 contribution, and unless there are substantial ongoing additions, it is nowhere near enough to solve anything long term,” Kevin Thompson, the CEO of 9i Caital Group and the host of the 9innings podcast, told Newsweek. “The concept sounds flashy, but when you actually break down the math, it falls apart quickly.”

What Happens Next

Trump Accounts do not currently alter Social Security, and there is no legislation that would move payroll taxes into personal investment accounts.

However, Cruz’s comments could reframe the debate, with child savings accounts as a potential stepping‑stone toward broader changes in how Americans fund retirement.