### **“In a way, it is a backdoor for privatizing Social Security.”**
**— Treasury Secretary Scott Bessent, July 2025 **
Bessent’s admission came during a policy panel on the Trump administration’s new “savings accounts for children.” Stripped of euphemism, this is about privatizing Social Security—the bedrock retirement program serving nearly 70 million Americans. The implications are staggering.
Bessent’s admission came during a policy panel on the Trump administration’s new “savings accounts for children.” Stripped of euphemism, this is about privatizing Social Security—the bedrock retirement program serving nearly 70 million Americans. The implications are staggering.
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## II. The Price of Privatization
The efficiency gap between Social Security and private retirement systems tells a stark story.
– **Social Security:** Administrative costs equal **0.4% of benefit outlays**—about **$4 billion** to manage over **$1 trillion** in annual payments.
– **Private retirement plans:** Typically charge **3–5% annually** in fees (management, administration, transactions, marketing). In reality, once broker commissions, sales loads, advisory fees, and hidden charges are included, total costs can climb to **6–7% or more**.
The Department of Labor shows that even a **1% fee difference** can reduce lifetime retirement savings by **28%**. They don’t need 4–6%; the wealth transfer is devastating at any percentage.
Compensation structures illustrate the priorities. The Social Security Commissioner earns about **$203,000** annually. By contrast, Wall Street executives take home tens of millions. BlackRock CEO Larry Fink made **$36 million in 2022**; Fidelity’s CEO has earned more than **$20 million** in recent years. Those salaries are funded through retirement account fees—costs borne by workers and retirees.
Social Security’s lean operation directs nearly every dollar to benefits. Private systems funnel enormous sums into executive pay, shareholder profits, and overhead that add no value to retirees.
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## III. The Scale of Extraction
Social Security is the largest cash flow in the U.S. economy that bypasses Wall Street: **over $1 trillion annually**, moving directly from workers to beneficiaries.
Privatization would redirect that flow. At private fee levels, Social Security’s current **$4 billion cost** would explode to **$40–50 billion** annually—an extra **$35–45 billion every year** siphoned from retirement security into the financial sector.
Over a lifetime, the difference compounds. A worker paying 4–5% in fees instead of Social Security’s 0.4% could lose **57–65%** of their retirement accumulation. For median earners, that translates into **hundreds of thousands of dollars** diverted to the industry.
This is not efficiency. It is extraction.
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## IV. The Insurance Principle Under Attack
Social Security is not a savings plan. It is **insurance**, pooling risk across the population:
– **Disability:** Provides income even if a worker becomes unable to work early.
– **Survivor benefits:** Support families when breadwinners die young.
– **Longevity protection:** Ensures no one outlives their income.
– **Economic stability:** Benefits continue regardless of recessions, depressions, or market crashes.
Private accounts dismantle this principle. Risks shift entirely to individuals: disability, early death, market collapse, or living longer than expected all become personal catastrophes.
This is why Social Security endured the **2008 crash** and the **COVID market collapse** while private accounts were devastated. Insurance pays regardless of market cycles. Private accounts cannot replicate that protection.
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## V. The Forced Participation Problem
Critics argue workers are “forced” into Social Security. In reality, its universality is precisely what allows Americans to take risks elsewhere—choosing 401(k)s, IRAs, or stocks, knowing a guaranteed floor exists.
Privatization would **force all workers into market risk**. Those who want safety would lose it. Those who want choice would still be trapped in a government-mandated system—only now tied to Wall Street.
And without the Social Security floor, every market crash becomes a survival crisis, driving panic selling and greater instability. Privatization doesn’t expand freedom. It eliminates it.
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## VI. The Historical Pattern: Crashes and Extraction
History shows what happens when retirement depends on markets:
– **2008 crisis:** 401(k) accounts lost **$2.5 trillion** (about 25% of value). Millions delayed retirement; some never recovered. Social Security payments never wavered.
– **COVID crash (March 2020):** Markets dropped 30% in weeks, gutting private accounts. Social Security continued uninterrupted.
Crises devastate individuals but create profit opportunities for Wall Street—through consolidations, fire sales, and bailouts. Under privatization, those losses would no longer be optional; they would strike **70 million beneficiaries and every worker**.
The bailouts required would dwarf anything in U.S. history, locking in moral hazard while funneling even more wealth upward.
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## VII. The Ultimate Prize Revealed
From Wall Street’s perspective, Social Security privatization is the **ultimate prize**.
– It is the last major cash flow—**$1 trillion+ annually**—that remains outside private extraction.
– Even modest fees would generate **tens of billions per year** in new revenue.
– Over decades, this represents the largest wealth transfer from workers to financial elites in American history.
Treasury Secretary Bessent’s “backdoor” remark (made to Breitbart) reveals the strategy: introduce private accounts quietly, then expand them until Social Security itself is replaced.
The urgency comes not because Social Security is failing, but because it is **working too well**. With a **99.7% payment accuracy rate** and minimal overhead, it demonstrates that government administration outperforms private finance in basic insurance. For Wall Street, that efficiency is a problem.
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## Conclusion
Social Security privatization is not about retirement security. It is about capturing the last great pool of public wealth for private profit.
The record is clear:
– Higher fees, lower returns.
– Elimination of insurance protections.
– Greater instability during crises.
– Massive upward wealth transfers.
Treasury Secretary Bessent’s admission strips away the euphemism: Trump Accounts are a **backdoor to privatization**. For Wall Street, this is the ultimate prize. For American workers and retirees, it would be a disaster.
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## References
– Brookings Institution. (2017). *Social Security reform.* https://www.brookings.edu/articles/social-security-reform/
– Congressional Research Service. (2025). *Social Security: Selected findings of the 2025 annual report (IF13045).* https://www.congress.gov/crs-product/IF13045
– Department of Labor. (n.d.). *Retirement plan fees and their effects on savings.* U.S. Department of Labor. [Insert URL]
– Pew Research Center. (2025, May 20). *What the data says about Social Security.* https://www.pewresearch.org/short-reads/2025/05/20/what-the-data-says-about-social-security/
– Social Security Administration. (2025). *2025 annual report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds.* https://www.ssa.gov/oact/tr/2025/tr2025.pdf
– Social Security Administration. (2025). *Social Security administrative expenses.* https://www.ssa.gov/oact/STATS/admin.html
– Stanford School of Medicine. (2021, April). *Researchers chart path to drastically lower administrative costs of healthcare.* https://med.stanford.edu/news/all-news/2021/04/researchers-chart-path-to-lower-health-care-administrative-costs.html
– Urban Institute. (2024, October). *How does funding of administrative expenses affect equity?* https://www.urban.org/sites/default/files/2024-10/How-Does-Funding-of-Administrative-Expenses-Affect-Equity.pdf
– U.S. Treasury Department. (2025). *Remarks by Secretary of the Treasury Scott Bessent before the [event name].* https://home.treasury.gov/news/press-releases/sb0262