Trump pushes $1,000 ‘Trump accounts' for babies

Washington Post

3 days ago

As Republicans' massive tax and spending cut bill makes its way through the Senate, President Donald Trump on Monday touted a provision in the measure that would provide every child born in the United States with a $1,000 investment account.
Dubbed 'Trump accounts,' the tax-deferred investment accounts would be set up for children born in the U.S. after Dec. 31, 2024, and before Jan. 1, 2029 — covering the majority of Trump's second term. The accounts will, over the course of a child's first 18 years, track the overall stock market, and parents are allowed to contribute up to $5,000 a year to the account. The accounts will be controlled by the child's guardians or parents.
Once an account holder turns 18, they can cash out and use the funds, which will be taxed as long-term capital gains, for limited purposes: they can pay for college or a job training program, open a small business or make a down payment on a first home. If the money is spent on anything else, it will be taxed as ordinary income.
'This is a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation, and they'll really be getting a big jump on life, especially if we get a little bit lucky with some of the numbers in the economies into the future,' Trump said Monday.
Trump promoted the program as a pro-family, pro-child initiative at the same time his administration and congressional Republicans face criticism from Democrats over cuts that the tax, spending and immigration bill would make to programs like Medicaid and the Supplemental Nutrition Assistance Program. Democrats argue the reductions would leave millions of American children and families without proper health care or nutritional benefits.
Trump appeared at a White House roundtable that featured leading CEOs, including Dell Technologies founder Michael Dell, Goldman Sachs chief executive David Solomon and Uber CEO Dara Khosrowshahi. Dell said his company would match the government's $1,000 seed money in the accounts of their employees' new children.
At the event, House Speaker Mike Johnson (R-Louisiana), who shepherded the tax and spending cuts bill through the House last month, said the program is a 'transformative policy that gives every eligible American child a financial head start from day one.'
'If you have a 401(k), you understand the power of investing early for the future,' Johnson said at the White House.
Trump accounts were originally introduced under the 'MAGA Act' — short for 'Money Accounts for Growth and Advancement' — by Rep. Blake D. Moore (R-Utah) in May. The proposal adopted Trump's name before it was incorporated in the House Republican version of the bill, which the Senate is working on. While Trump and Johnson encouraged Senate Republicans on Monday to keep the program in the bill, it is unclear if the proposal will remain. Already, fiscally conservative Republicans in the Senate have complained that the bill doesn't do enough to cut spending, and they are looking to make substantial revisions in the House package.
Republicans have not released any cost estimates for the program. But with about 3.6 million babies born in the U.S. each year, the cost could exceed $3 billion annually. The One Big Beautiful Bill — as Trump and Republicans have dubbed the tax and spending cut package — is expected to add more than $3 trillion to the national debt over the next decade, according to the Congressional Budget Office.
The Trump program is similar to 'baby bond' programs run in California, Connecticut and Washington, D.C., which give some newborns investment accounts. However, while those local programs were created to reduce the wealth gap by supporting children in need or lower-income families, Trump accounts will be made available to Americans regardless of their socioeconomic status. To open a Trump account for their child, at least one of the parents will be required to have a Social Security number with work authorizations — leaving some U.S.-born children of immigrants out of the program.
Economist Darrick Hamilton — who conceptualized the idea of baby bonds — told The Washington Post that Republicans' program will probably 'enhance inequality' by 'directing our public resources towards an already affluent class while at the same time, imposing … mean-spirited cuts to those who need the most.'
'It's a bad idea co-opting a good idea in both rhetoric and design,' Hamilton said.
Other critics of the program said American children in poverty would be better off if congressional Republicans did not make major cuts to social safety net programs like Medicaid and the Supplemental Nutrition Assistance Program. The current tax and spending bill would make significant cuts to both programs.
'Feel like low-income families would prefer their assistance buying groceries not get cut, but that's just me,' said Center on Budget and Policy Priorities Senior Director Brendan Duke on X.