Trump accounts could help privatize Social Security

The newly created “Trump accounts” began on the Fourth of July. If the accounts move the country toward private Social Security accounts, as the legislation’s sponsor Sen. Ted Cruz (R-Texas) suggests, it will be one of President Trump’s most consequential positive (as opposed to his numerous negative) economic policies.

First, we need to consider Social Security’s longstanding financial challenges, and then why Trump accounts could help address those challenges.

The Social Security system operates on a pay-as-you-go system. The payroll taxes workers and their employers pay — 12.4 percent of employee income, split between employer and employee — into the Social Security trust fund are used to pay current retirees.

For decades, workers paid in more than was needed to pay retirees, building a trust-fund surplus. That changed in 2010, when trust-fund payouts exceeded revenue (excluding interest). Social Security’s trustees recently reported, “reserves of the combined [Old Age and Survivors Insurance] and [Disability Insurance] Trust Funds declined by $160 billion in 2025 to $2.56 trillion.”

While $2.56 trillion may sound like a lot, the trustees project the trust fund will be depleted by 2034. If Congress doesn’t act, Social Security will only be able to pay 83 percent of scheduled benefits. It’s very unlikely Congress will let the situation get to that point, but there is little agreement about what to do.

Various members of Congress, economists and public policy groups have proposed cutting Social Security benefits for higher-income retirees, raising taxes and/or raising........

© The Hill