Ted Cruz: Trump accounts are personal Social Security accounts

The big picture: The Trump accounts and a new retirement account executive order announced last week are part of an effort by lawmakers, investors and philanthropists to get more Americans invested in the stock market.

Zoom in: "Conservatives in America, for 50 years ... have been trying to do Social Security personal accounts," Cruz said at a panel Monday, referring to a policy proposed by former President George W. Bush where instead of paying a payroll tax, people invest that money in stocks.

• "Here's the dirty little secret: Trump accounts are Social Security personal accounts."
• Bush, in his second term, "tried this fight, and sadly, Congress ran for the hills in a display of extraordinary cowardice," said Cruz, who has long advocated for Social Security reform and was the "chief architect" behind the legislation that created Trump accounts.
• "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."

How it works: Cruz suggested that the kids who get these accounts would wind up amassing so much money that their parents would want their own account — and be amenable to the idea of diverting payroll taxes into one.

• In five or 10 years, "we're going to be able to go to parents and say, 'Hey, you know that Trump account your kid has?'" he said.
• "'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?'" he said, describing the pitch.

Friction point: It's "sort of surprising and refreshing" that Cruz said the quiet part out loud, says Nancy Altman, the co-founder of Social Security Works, an advocacy group.

• The group has been warning that the accounts are part of a strategy to privatize Social Security.

Zoom out: The panel on Monday in Beverly Hills, California, was part of the annual Milken conference, a confab of CEOs and investors who come together to talk about the economy, markets and geopolitics.

• Cruz was joined by White House economic adviser Kevin Hassett and Brad Gerstner, an investor and champion of the accounts, at a panel moderated by conference founder Michael Milken.

• "For a long time, Social Security was a third rail of American politics," Gerstner said.

Flashback: Last year, Treasury Secretary Scott Bessent said the accounts were "in a way, a backdoor for privatizing Social Security," but he later walked that back, clarifying that the accounts were an "additive benefit."

• "Trump Accounts are an additive government program that work in conjunction with Social Security to broaden and increase the savings and wealth of Americans," a Treasury spokesperson said in an email to Axios after Bessent's comments last year.

Yes, but: The White House has repeatedly promised not to touch Social Security.

• "The beauty of Trump Accounts is that they are helping the next generation of Americans build wealth, tax free, for any purpose — for school, a down payment on a new house, seed capital for a new business, or simply to get a head start on saving for retirement," White House spokesperson Kush Desai tells Axios.

Between the lines: The idea that Trump accounts could replace or augment Social Security is something that has been talked about behind closed doors with lawmakers, a person familiar with those conversations tells Axios.

• But no one has wanted to touch that third rail, at least publicly.

The bottom line: The launch of these new accounts could change the political calculus.