I'm not sure when the distribution level date should be, whether it should it be 30 and you can buy a house, should it be 60. But in a way it is a backdoor for privatizing Social Security. [00:00:16] A backdoor to privatizing Social Security. Something that is deeply unpopular with the American people. But Scott Bessent, the Treasury secretary, seems to have admitted out loud during a Breitbart event that there's a provision that was included [00:00:33] in the so-called big beautiful bill. That's essentially a way of chipping away at Social Security or a backdoor to privatizing Social Security. So we looked into this because I wanted to know what it's really about, if there's any truth behind it. [00:00:50] And I do think that there's a potential issue here. So let's go through the details and the facts. So he was referring specifically to a new tax deferred investment account for newborns and how they are the back door to privatizing Social Security. [00:01:08] Now, how does that make any sense? I mean, it's just a new investment account rolled out by the government. Tax deferred. How is this going to privatize Social Security? Something entirely different. Well, it is separate. It doesn't touch Social Security, but it does do something in the long term. [00:01:24] So what are these accounts? Well, the tax deferred investment accounts allow parents to contribute up to $5,000 a year for their children. The accounts allow for penalty free withdrawals after age 59. [00:01:39] So that's when people begin to retire. So I guess this is a this isn't like some education account. This isn't some savings account that's tax deferred. But kids or your children can access it once they're 18 and they can use it for anything. [00:01:55] No no no no. They can use it for anything. But in order to take the money out and not get penalized, they have to be at least 59 years old. Okay. Interesting. The government will also contribute $1,000 to each baby born from 2025 to 2028. [00:02:13] Are they not generous? Are they not generous? You got that three year window. Just a one time $1,000 payment to the account. Okay, great. So, look, Bessent appears to think that this is a way to chip away at our Social security system, which is partially funded, [00:02:30] of course, through payroll taxes that employers pay, along with the Social Security taxes that we all pay when we get paid. Right? Like when we get our paycheck, we see the stub. You can see how much of your income, was contributed to our Social Security system. [00:02:47] And I love that because I know that that money is going specifically to something I believe in and want to protect. It's not going to go to like, the federal government. And then we're going to have this pathetic, corrupt Congress, send our money [00:03:02] to all sorts of greedy, self-interested corporations or to foreign governments. It goes straight to Social Security. Okay. Now, Howard Gleckman. And by the way, it is tax deferred. [00:03:18] So let's say you're in a high tax bracket and you're looking for a way to lower your income bracket. These types of accounts help people do that, right. You can do it through contributing the maximum amount to a traditional 401 K. [00:03:33] And this is just another account where it's tax deferred. You don't pay taxes going in, but when you take money out, that's when you do pay taxes. Now, Howard Gleckman, a senior fellow at the Urban Brookings Tax Policy Center, says on one hand, what they are doing is they are making Social Security less solvent [00:03:50] and a riskier proposition for people. On the other hand, the Treasury secretary seems to be musing out loud about the idea of beginning to privatize the system. So, look, I don't think that this account on its own is going [00:04:06] to make Social Security less solvent. I do think that. Members of Congress have engaged in activity that eventually will make Social Security less solvent. I think we need to significantly raise the Social Security tax cap because after a certain amount of income, you no longer get taxed. [00:04:24] Wealthy people do not get taxed for Social Security. If you lift that cap, we're not going to have a problem. But Congress refuses. Republicans, especially refuse to ever lift that cap to what is necessary to keep Social Security solvent for the long term. And by the way, it is a politically unpopular move to privatize Social [00:04:43] Security, which is why Bessent really did say the quiet part out loud. The idea was politically unpopular, and it contributed to historic losses for Republicans in the 2006 midterm elections, giving Democrats control of both chambers of Congress and largely ending the Bush [00:04:59] administration's legislative agenda. And thank God for that, which is why Treasury Secretary Becerra decided to walk back his statement. Take a look. It was ridiculous. I was giving an interview, and I was talking about the $1,000 baby [00:05:19] bonds that every American citizen, every newborn, is going to get. The Democrats hate this program because the it brings capitalism and markets to every American, not just [00:05:34] their constituents at the upper end. And, you know, over time, the compounding is going to be an incredible supplement to Social Security, not a replacement. It is a complement. [00:05:51] And you know, what I said was Social Security will continue as it is. It is intact. Everyone will get their check every month. Okay. So what's really going on here? I do think that people like the, bison absolutely want to chip away [00:06:10] at Social Security. These accounts don't do that. But I think what they're hoping to do in the long term is garner enough support for getting rid of Social Security, and the way you can do that is ensuring that Americans are essentially putting the [00:06:27] onus on themselves to save for retirement. That clears employers from having to pay payroll taxes through Social Security or to Social Security. And so if you have a giant account that you are fortunate enough to have enough disposable income to contribute $5,000 a year to, well, [00:06:46] by the time your child is ready to retire or is getting close to retirement is at age, you know, 59, well, then they're probably going to care less about Social Security. They're going to have a different account they can lean on. [00:07:02] Of course, it's an account that they fully funded, their parents fully funded on their own, and they got a one time $1,000 payment from the government if they were lucky and were able to open the account. In the three year span where the government is offering that $1,000 payment. [00:07:18] I think that's what Bessent was trying to say. I think that's overly hopeful. Most Americans do not have the disposable income to contribute $5,000 a year tax deferred to this, to this account. [00:07:34] And for those who are fortunate enough to have that great, wonderful. I actually don't really have a problem with this account. And I don't think that the account is going to do what Bessent thinks it's going to do, because he's out of touch and he doesn't understand what the economic situation is for the vast majority of Americans. [00:07:49] The reason why Social Security is popular, the reason why people want to protect it, is because it is not tied to the risk of the stock market, and because it is a guaranteed income that retired people in this country will get and are entitled to because they've paid into the system. [00:08:05] Every time you ring the bell below, an angel gets his wings. 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