‘Trump Accounts' for babies? New 'big, beautiful tax bill' revives ‘baby bonds'—newborns could get $1,000
More than 71 million people are enrolled in Medicaid in US
Synopsis A Republican-led tax bill proposes giving every American baby born between 2025 and 2028 a $1,000 government-funded investment account — now dubbed a "Trump Account." Initially called a "MAGA Account," the savings plan sparked debate for its overt political branding and limited tax advantages. The renamed accounts are part of a broader $4 trillion fiscal package designed to showcase loyalty to Donald Trump while promoting early financial literacy. Experts, however, question the plan's financial efficacy compared to existing savings options. In a bold move to brand financial policy with political allegiance, House Republicans have unveiled a proposal to deposit $1,000 into an investment account for every American child born between 1 January 2025 and 1 January 2029. Originally labelled a 'MAGA account,' the savings initiative has now been rebranded simply as a 'Trump account.'
ADVERTISEMENT The shift in name came via a last-minute amendment to the party's sweeping fiscal package, nicknamed the 'One, Big Beautiful Bill.' The rename strips away any subtlety, making it crystal clear that Republicans want the public to associate the financial gift with President Donald Trump.The original proposal described the account as a 'money account for growth and advancement,' or MAGA — an acronym that echoes Trump's iconic campaign slogan. Yet even that was deemed too understated. So Republicans revised the bill late Wednesday, just ahead of a planned vote.
'The Trump Accounts would seed $1,000 for every American baby born starting in 2026,' the bill states.Parents can contribute up to $5,000 annually into the accounts, and if they fail to open one, the government will do it for them. Funds must be invested in a broad stock index and can only be withdrawn for specific uses such as higher education, starting a business, or buying a home.Withdrawals made for other reasons would be taxed as ordinary income, not capital gains — a detail that has raised eyebrows among financial professionals. As financial adviser Ann Reilley put it, 'It's not very attractive. It just seems like they're complicating things for no reason.'
ADVERTISEMENT
Also Read: US House Rules Committee clears Trump's big tax-cut billUnlike tax-advantaged plans like 529 education accounts or Roth IRAs, Trump Accounts offer fewer benefits. Gains are taxed unless used for a narrow list of approved purposes, and contributions must be made with post-tax income.
ADVERTISEMENT 'The giving kids money aspect is generally good,' said Zach Teutsch, a managing partner at Values Added Financial. 'The account structure seems ill-considered.'
He added, 'A family would need to be shockingly sure that their child wasn't going to college before it would make sense to invest in a MAGA account instead of a 529.'
ADVERTISEMENT The overt political branding sparked a sharp response from Democrats during a House Rules Committee hearing.'You all would be screaming bloody murder if we named savings accounts after Barack Obama,' said Rep. Joe Neguse (D-Colo.).
ADVERTISEMENT Rep. Mary Gay Scanlon (D-Pa.) added, 'Why don't we call it the Trump Diaper Savings? It could be TDS, because I think the only way you end up with a stupid name like this is if you have TDS.'
Also Read: Republicans proposing nearly $1 trillion in cuts to Medicaid and food stamps. Will you be impacted? The Trump Account proposal joins a growing list of Republican efforts to enshrine Trump's name into federal policy. Other proposals have included putting his face on the $100 bill, renaming Washington Dulles International Airport, and even allowing him a third presidential term. One bill would even give Trump authority to negotiate the purchase of Greenland — a plan that included renaming the island 'Red, White and Blueland.'The Trump Account is arguably the most likely of these symbolic tributes to actually become law.
Also Read: When will Trump's 'Big, beautiful Bill' be passed? The broader concept of giving every child a start-up fund isn't new. Democrats have long promoted 'baby bonds' to reduce inequality. Senator Cory Booker (D-N.J.), for instance, proposed $1,000 savings accounts for all babies during his 2020 campaign.
Republicans, led by Senator Ted Cruz, have rebranded the idea as a capitalist initiative. 'There are many Americans who don't own stocks or bonds, are not invested in the market, and may not feel particularly invested in the American free enterprise system,' Cruz told Semafor. 'This will give everyone a stake.' 'You see a lot of young people who in public opinion surveys say they have a negative view of capitalism and they embrace socialism,' Cruz added. 'And what is powerful about this is, when every child has invested, it's no longer an abstract idea.'Cruz said that enthusiasm for the idea is spreading among CEOs. At the recent Milken Conference in Los Angeles, he claimed executives from companies like Uber, Dell, Nvidia, and Oracle expressed interest in contributing to employee children's accounts.'This is essentially a 401k for every newborn in America,' Cruz said. 'What is powerful is enabling every child in America to have an investment account and a stake in the American free enterprise system.'The pilot programme is expected to cost the government around $17 billion over 10 years, a relatively small slice of the $4 trillion tax package. According to Alan Cole of the Tax Foundation, 'It's like, thank you government for the free money, but I care about the usefulness.'
Despite limited tax advantages and practical constraints, the Trump Account could mark a lasting imprint on American savings policy — or at the very least, a political one. The fate of the programme now lies with Congress, where even slim Republican majorities may not guarantee its survival.
(You can now subscribe to our Economic Times WhatsApp channel)
(Catch all the US News, UK News, Canada News, International Breaking News Events, and Latest News Updates on The Economic Times.)
Download The Economic Times News App to get Daily International News Updates.
NEXT STORY
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Print
17 minutes ago
- The Print
India, Central Asian nations resolve to jointly tackle challenge of terrorism
External Affairs Minister S Jaishankar chaired the conclave that was attended by his counterparts from Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. The challenge of how to combat terrorism figured prominently at the fourth edition of the India-Central Asia Dialogue hosted by New Delhi, with a focus on expanding the overall trajectory of cooperation between the two sides in several key areas. New Delhi, Jun 6 (PTI) Five Central Asian states on Friday joined India in strongly condemning the April 22 Pahalgam terror attack and demanded that the perpetrators, financiers and sponsors of terrorist acts be held accountable and punished. The foreign ministers of the Central Asian nations reaffirmed their support also for a permanent membership of India in an expanded UN Security Council. A joint statement unveiled at the end of the deliberations said the ministers 'unequivocally condemned the terrorist attack in Pahalgam' and resolved to fight against terrorism in all its forms. They reiterated that using terrorist proxies for cross-border terrorism, terror financing, dissemination of a radical ideology and abuse of cyberspace to spread disinformation goes against the basic principles of humanity and international relations, it said. 'They stressed that perpetrators, organisers, financiers and sponsors of terrorist acts must be held accountable and brought to justice,' the statement said. 'In this context, they called for early adoption of the UN Comprehensive Convention on International Terrorism. They stressed the need to strengthen UN-led global counter-terrorism cooperation and fully implement the relevant UNSC resolutions, global counter-terrorism strategy and FATF standards,' it said. The ministers also called for a 'peaceful and stable' Afghanistan, free from terrorism, war and drugs. 'They stressed the need to stand by the people of Afghanistan.' 'The ministers agreed to continue close coordination and consultations on matters related to Afghanistan,' the statement noted. The conclave also extensively deliberated on boosting connectivity in the region. India welcomed the interest of Central Asian countries to utilise the services of the Shahid Beheshti terminal at the Chabahar Port for facilitating their trade with India and beyond. The Shahid Beheshti terminal at the port is being operated by India. 'The sides agreed to continue engagement for further developing the transit and transport potential of their countries, through simplification and streamlining of goods transit procedures,' the joint statement added. The ministers also emphasised optimum usage of the International North-South Transport Corridor (INSTC) to enhance connectivity between India and the Central Asian countries. The INSTC is a 7,200-km-long multi-mode transport project for moving freight among India, Iran, Afghanistan, Armenia, Azerbaijan, Russia, Central Asia and Europe. India has been supporting the project. 'They stressed that connectivity initiatives should be based on the principles of transparency, broad participation, local priorities, financial sustainability, respect for sovereignty and territorial integrity of all countries,' the statement said. 'India reiterated its support for the membership of Turkmenistan and Uzbekistan in INSTC. In this context, ministers appreciated the initiative taken by Kazakhstan to develop the eastern branch of INSTC,' it said. In his opening remarks at the conclave, Jaishankar appreciated the Central Asian states for standing by India following the Pahalgam terror attack. India would be a 'trusted development partner' for Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, he said. 'I appreciate that your countries stood by India and condemned the heinous terrorist attack that took place in April in Pahalgam,' he said. Jaishankar said India 'deeply cherishes' its millennia-old civilisational and cultural ties with Central Asia. The external affairs minister said the cooperation between India and Central Asia received a 'quantum boost' following Prime Minister Narendra Modi's back-to-back visits to all five countries in the region in July 2015. 'Today, we are well-connected by multiple direct flights. Our enhanced connectivity facilitates greater two-way tourist flows and businesses,' he said. Jaishankar said both India and the Central Asian nations are committed to advancing mutually beneficial cooperation in areas of trade and investment, defence, regional connectivity, security and new and emerging technologies. The India-Central Asia Dialogue, launched in January 2019 in Samarkand, is a meeting of foreign ministers. It serves as a key platform for strengthening ties between India and Central Asia. The second meeting took place virtually in October 2020 and focused on regional security, counter-terrorism, and infrastructure development. PTI MPB VN VN This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
News18
23 minutes ago
- News18
Epstein's Former Lawyer Reacts To Musk's ‘Big Bomb' On Trump: ‘I Specifically Asked Him'
Last Updated: Despite Trump's previous social ties to Epstein, no public documents released so far directly implicate him in Epstein's criminal enterprise. David Schoen, who briefly represented Jeffrey Epstein before his death in 2019, has publicly rejected Elon Musk's explosive claim that US President Donald Trump is named in the unreleased Epstein files. Schoen said he directly asked Epstein about Trump's involvement and was told there was none. 'I specifically asked him whether Donald Trump was ever involved in anything like that. He said no," Schoen said in newly reported remarks, responding to Musk's viral post on X claiming that 'Trump is in the Epstein files." Schoen said Epstein had first approached him in February 2019 but officially retained him just nine days before dying in federal custody. He noted that during this period, he saw no documentation or evidence suggesting Trump's involvement in any criminal behaviour tied to Epstein's sex trafficking network. Musk's claim has stirred political backlash and prompted House Democrats to demand answers from Attorney General Pam Bondi and FBI Director Kash Patel. Lawmakers are seeking confirmation on whether Trump's name appears in redacted or undisclosed sections of the Epstein case files. 'Time to drop the really big bomb: @realDonaldTrump is in the Epstein files. That is the real reason they have not been made public. Have a nice day, DJT!" said Musk in an X post. Notably, the feud between Musk and Trump has intensified in recent weeks, with Musk publicly withdrawing his support and calling for a probe against Trump. The US President responded by calling Musk 'a lunatic" who 'lost his mind." Despite Trump's previous social ties to Epstein, no public documents released so far directly implicate him in Epstein's criminal enterprise. Legal experts and investigators have noted that many names in the files are mentioned in passing, often without accusations or evidence of wrongdoing. The Department of Justice has not commented on Musk's claims or the Democrats' request for transparency. Get breaking news, in-depth analysis, and expert perspectives on everything from geopolitics to diplomacy and global trends. Stay informed with the latest world news only on News18. Download the News18 App to stay updated! First Published: June 07, 2025, 00:00 IST
Time of India
24 minutes ago
- Time of India
What Mark Cuban and other billionaires said on Donald Trump-Elon Musk breakup
The public relationship between and US President unraveled on Thursday (June 5) following Musk's criticism of a key legislative initiative. The dispute, which escalated rapidly, saw both figures engage in public exchanges, leading to significant financial repercussions for Musk. Tired of too many ads? go ad free now The exchange began when Musk, who departed his role at DOGE in May, criticised the Trump Administration's " Big Beautiful Bill ." Musk labeled the legislation the "Debt Slavery Bill" and the "Big Ugly Spending Bill." President Trump responded during a White House event, defending the bill and subsequently threatening to cancel government contracts associated with Musk's companies via a post on Truth Social. This led to a decline in Tesla shares . The public dispute between the two prominent figures has since drawn commentary from various business leaders, including , Bill Ackman, Vinod Khosla and others. Here's what business leaders said about Musk-Trump online spat Mark Cuban The former "Shark Tank" star Mark Cuban endorsed Musk's idea of creating a new political party. Cuban reshared Musk's poll on X with three check marks Bill Ackman Billionaire Bill Ackman backed both Trump and Musk on X, advising them to "make peace for the benefit of our country." 'We are much stronger together than apart,' he said with Musk responding, 'You're not wrong.' Paul Graham Y Combinator cofounder Paul Graham shared his thoughts X, saying, 'A lot of people seem to be treating this as if it were just a beef. But the underlying allegation is a very serious one. If it's true, Trump is surely going to have to resign,' he wrote in a post on X. Vinod Khosla Vinond Khosla, who has been a critic of Musk, supported the Tesla CEO on his stand on deficit. Tired of too many ads? go ad free now 'Despite our differences, I admire your speaking up on the deficit!' Notably, Khosla endorsed Kamala Harris and was engaged in verbal spat online with Musk multiple times. Anthony Scaramucci Anthony Scaramucci, who has been a critic of Trump, voiced his support for Musk. 'Elon is right about Trump," the former Goldman Sachs investment banker said in an X post. In a separate post on Friday, Scaramucci said that "Elon lasted 12 Scaramuccis," a tongue-in-cheek reference to his 10-day tenure as White House communications director before Trump fired him. Shaun Maguire In an X post, Sequoia partner Shaun Maguire praised Musk for sticking to his guns. 'Elon leaves it all on the field. And he puts what he believes in ahead of himself. How can you not be inspired by that,' he added. Gary Cohn According to Gary Cohn, IBM's vice chairman, things could be very different next week, cautioning against overreacting to the situation. 'If we've learned one thing over the Trump administration, this is a few hours, the world could be completely different a week from now. It's not like the White House is sitting there only worried about the Elon Musk situation,' he said on CNBC. JBL Tune Beam 2 Review: The TWS Earbuds That Punch Above Their Weight!
