Social Security Privatization Fantasies and Conservatives' Insanity
How is it possible that Social Security was in the news again this week? One answer is that the accumulated outrages of the past six-plus months are mostly already old news. The United States military was deployed in Los Angeles. Citizens and legal residents are hiding in their homes for fear of being swept off the streets. At least 17 million people will soon lose access to health care. The US bombed Iran. University administrators are serially abetting the death of academic freedom. Thousands of people have been sent -- most without even being able to prove that they are the victims of error or worse -- to gulags both inside and outside of the country.
Also, the Supreme Court -- led by a Chief Justice whose pose as "the ultimate institutionalist" has finally been exposed as a sham -- is letting the Trump White House do anything it wants. Attacks on trans people and other vulnerable groups continue. Donald Trump is relentlessly threatening and punishing our former allies, and he might generate an even bigger crisis sometime soon by trying to fire the Federal Reserve chair.
With all of that madness all but consigned to the memory hole, however, Social Security briefly popped up again in the news. Admittedly, it was a small story, what with Jeffrey Epstein still dominating the headlines, along with tariffs and such things.
In fact, however, it has not been a particularly long time since Social Security was in the news, even though the nation's retirement program is not a hot-button, culture wars issue. Conservatives have loathed what ultimately became the world's most successful social program from its very inception 90 years ago. With that much contempt and rage having been building up for so long, the Trumpists who (for obvious reasons) feel that all of the guardrails have disappeared are of course going to allow their feelings to bubble up, even when Social Security is not the target du jour.
And so it was that Scott Bessent, the soporific nonentity who was somehow chosen to be the US Treasury Secretary, poked his head into this week's news cycle by saying that an obscure part of the Republicans' terrible budget bill is in fact a Trojan horse for privatizing Social Security. Am I exaggerating or mischaracterizing? A New York Times article from two days ago provides this smoking gun:
[T]he so-called Trump accounts Republicans created for children in their tax and spending bill are ... "a back door for privatizing Social Security," Mr. 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 in the hundreds of thousands of dollars for your retirement, then that’s a game changer."
I will not take the time here to roast Bessent in the way that he deserves, but I will recommend to readers this anodyne-but-damning news article from December 2024 as an amusing window into how out to lunch the guy is. (You're welcome. And I'm sorry.) When it comes to gleeful dishonesty, he is not in the category of Trump's other top economic advisors -- whom I have roasted more than once, though not as thoroughly as I could have -- but he is truly in over his head in his current job. Even so, he is undeniably the United States Treasury Secretary, so we need to pay attention to what he says.
As the article in The Times notes, Bessent soon frantically walked back his boneheadedly honest musings "clarified his comments" with this: "Trump Baby Accounts are an additive benefit for future generations,
which will supplement the sanctity of Social Security’s guaranteed
payments. This is not an either-or question: our
Administration is committed to protecting Social Security and to making
sure seniors have more money." I suppose it is good news that it is still considered a political requirement for Republicans to pretend to treat Social Security as sacrosanct, but there can be little doubt about what Bessent meant in his initial comments.
Not that "to be fair" needs to be in anyone's toolkit anymore, but I will bend over backward here to give Bessent the tiny benefit of a possible doubt. In the block quote above, "Social Security is a defined benefit plan paid out" is gibberish, but his next sentence could be read to say something at least coherent (albeit ridiculous). He seems to suggest that if a person has private savings accounts that "all of a sudden ... grow" to the point where they "have hundreds of thousands of dollars for [their] retirement," then that person might not vote against Republican politicians who attack Social Security.
How does that logic work? Privileged people like Bessent do not care at all about Social Security, because they are rich and therefore have no need for the system's retirement benefits; so if more people were to become rich, the thinking seems to go, fewer people would care about Social Security.
But seriously, could that be his argument? Through the "Trump accounts," "American babies born through 2028 are eligible to receive $1,000 from the federal government" (per The Times), a one-time payment that can only be invested in low-risk, low-return investments. There is nothing in that plan that could lead to a world in which significant numbers of people later find themselves with hundreds of thousands of dollars in retirement savings. The accounts do allow parents and others to make limited additional deposits, but that of course is only going to be meaningfully useful for families that have extra funds on hand in the first place. At most, this merely diverts some savings that a wealthier family would otherwise have invested elsewhere into a tax-advantaged but under-performing (by design) alternative investment.
Moreover, the current average Social Security benefit payment is roughly $2000 per month, which is approximately the monthly payment that a 60-year-old man could buy with a $350,000 payment into a fixed annuity. Again, that is two thousand dollars per month, or $24,000 per year, which is hardly a king's ransom -- making proposals to increase Social Security benefits, like then-presidential candidate Elizabeth Warren's plan in 2020, all the more important.
Bessent, however, is saying that it could be a "game changer" if "all of a sudden these accounts grow, and you have in the hundreds of thousands of dollars for your retirement." What game would be changed, exactly? After all, throughout all of the years before the piddling Trump accounts were ever created, people could all of a sudden come into money with wise/lucky investments. Anyone who is fortunate enough to accumulate savings that can support a more comfortable lifestyle in retirement will be happy about that, but Bessent seemed to be telling his very right-wing audience (he was speaking at an event sponsored by Breitbart) that this would change the politics of Social Security, providing a way for Republicans to take away something that he thinks will no longer be needed.
Or even missed, apparently. Imagine that a person has a super-Bessent run in the markets and ends up with, say, a cool million in private retirement savings. That person can then receive roughly $6000 monthly by drawing down their account, which is nice for them. At that point, however, does anyone think that they would happily see Social Security disappear? "Ah, whatever, man. I've got my 6k rolling in every month, so I have no problem seeing the other 2k go bye-bye."
Of course, even to describe such a silly scenario makes it clear how completely all of this misses the timing involved. If, at the end of their working life, a person has accumulated a big private retirement account, Bessent seems to believe that the person will no longer care about Social Security benefits. Even setting aside my argument immediately above (re the fantasy world in which people give up 24k per year for funsies), the person will only be sure that they are financially set for retirement when they are in fact set to retire. Even if they have a couple of hundred thousand built up by the time they are 50, they are hardly going to think that they can coast from there.
Why not? Because market collapses happen, some of which are now known by soothing names like "The Great Depression." And those market collapses lead to things like the creation of Social Security and other protections from the depredations of Wall Street. Speaking of which, the returns on the private Trump accounts will be smaller than promised, because those funds will need to be invested with private brokers who will charge fees and otherwise deplete their clients' accounts.
The larger point, however, is again that no one in their right mind is going to say in advance of retirement that they are willing to give up Social Security benefits because they know that they will have enough money from other sources. The best Republicans could do is to convince people when they are very young that they can beat the markets and should thus vote in favor of privatization. The idea would be to give up on Social Security early, but only if enough young people could be convinced that they are going to be wealthy enough when they retire not to need any extra money.
How well might that political message work? First, it is exactly what Republicans have been trying to tell young people for decades -- leavened with the lie that Social Security is "going broke" anyway -- yet we are still in a world in which Bessent had to go into panic mode after his remarks made the news. Second, Bessent's attempt at damage control explicitly relied on the claim that Trump will "supplement" Social Security and that "[t]his not an either-or question."
And third, has anyone talked to young people lately about their financial optimism or pessimism? It is true that too many of them are cynical enough to believe the lies that Social Security is structurally doomed (which, again, it most definitely is not), but that in no way means that they will believe that they will be rich enough to retire on the basis of their own lifelong savings. They currently feel too strapped to get married and have kids, and they have no reason to believe that their jobs are secure or that benefits -- especially health care (oops) -- will continue to be available to them at a non-ruinous cost.
In short, the innocent-ish version of what Bessent said is at best a fantasy, or perhaps a parody. If the "back door for privatizing Social Security" is merely the hope that widespread success in private investing will make people stop caring about receiving Social Security benefits, that is the kind of thing that billionaires seem to fantasize about when they wonder why the poors cannot pull themselves up by the bootstraps. It is similar to Bessent's colleague Howard Lutnick, the current Commerce Secretary, who was blasted a few months ago for saying this: "Let's say Social Security didn't send out their checks this month — my mother-in-law, who's 94, she wouldn't call and complain."
Or to go back a few decades, former New York Governor (and briefly the Vice President of the United States) Nelson Rockefeller once reportedly began a sentence with this: "You take the average guy making $100,000 a year . . .” That was in 1959, when the country's median family income was $5,400. Rockefeller was a Rockefeller, so he was of course completely clueless about life among real people. The fact is, however, that his thought experiment was genuinely an effort to think about how Joe Average could be helped by government policy. (Rockefeller was a Republican back when there were genuinely liberal Republicans.) By contrast, twenty-first century plutocrats like Bessent have nothing but contempt for the non-moneyed masses.
All of which means that Bessent is either so ignorant of real life that he imagines that Republicans can end up euthanizing Social Security by national consensus, or he was excited to tell Trump's most rabid base that they had finally put in place a back-door privatization plan. Or maybe both. In any event, it is truly impressive that anyone in the Trump orbit can still make news for being purely ignorant and confused rather than openly malicious. Nicely done, Mr. Secretary.
- Neil H. Buchanan