If this account were a simple device for handing out $1,000 to every certifiably American baby, its economic impact would be relatively trivial — particularly in comparison to the tens of thousands of tax dollars spent per child on public education.
As Mr. Lind points out, its enormously regressive component is in providing one more tax advantaged investment program that provides the greatest benefits to the wealthiest families.
If you don’t want the money, don’t take it. As far as worrying about it being spent on the wrong things, we could say that SNAP and welfare are spent on a lot of the wrong things. And the fact that it takes away money that could be used for services… you mean more services for lower income or illegals. This program is meant to be distributed evenly for any baby regardless of color, race, gender, poor, rich, middle class. How refreshing.
I appreciate the points the author raises in this essay.
A fundamental flaw of "Trump Accounts" is they are based on Socialism. First, the initial funding being supplied by government borrowing. Second, these accounts entangle the government in ensuring good market returns.
Those who value free markets should not want markets where the government is greatly interested in escalating asset prices. Such markets are not free and they greatly reward those who have first access to capital. The end result being an economy that is distorted to serve financial interests - the price of assets - and not economic interests - the value of time, labor and money.
I see what you mean. I hadn't considered all the downsides.
When we have so much that needs fixing as far as government's economic relationship with the governed, we should probably try to first fix what ails us. We have a tremendous debt that is much larger than $1000 for every newborn. Instead of babies I'd look to dead people who can't complain and take whatever they have over $20,000,000 per heir, that's 3/4 of the debt right there.
Cato this week tried to get people fighting with each other by saying old people want to tax young folks to fix the gap in SS. How about we tax old people instead, those of us making all the money in equities, or over 185K. Not bigly, just normal, like everyone else. Every year I make tons more money and I don't work. Every year I pay less in taxes as a percent. Crazy.
I'm all for importing smart folk but that's not what companies want, they want indentured servitude or peons. Maybe companies should pay 3x the going rate and that way we could be assured we were attracting top flight geniuses. Some tech firms have been paying multi million dollar salaries for brilliant people, surely they could fork out triple the regular going rate if someone is so smart. Enough ranting.
I too have concerns about Trump Accounts. Top of mind is the decision to provide $1,000, via more deficit spending, sending the bill to taxpayers too young to vote and generations yet unborn.
Instead, I would have replicated the spousal IRA to also apply to dependent children under age 18 but limited to Roth IRAs.
Roth IRA contributions are available for households who, in 2026 have Modified Adjusted Gross Incomes of:
Less than $242,000, full $7,000 a year contribution is permitted,
That would have avoided ALL deficit spending for at least 41 years (until the first child currently under age 18 reaches age 59 1/2). And, it would have limited contributions to those households who are low- or middle class, up to the 90th percentile in household income.
With respect to each of your concerns, here's my thoughts - keep or pitch - need two notes to respond:
CHILD TRUST FUNDS Undermine the Dignity of Work:
Not in the least. Each of my children has had a "Ben Franklin" Account since birth. That $1,000 I deposit at birth has grown (they are now ages 41 and 38), but, won't the accumulated assets aren't sufficient to enable them to forego work for another decade or more to come. Not a chance that it deligitimizes wage income.
In terms of income from ownership of assets or capital, that is one goal embraced by many past Administrations - Democrat and Republican - if only via Employee Stock Ownership Plans, as well as equity ownership via retirement plans, retirement savings plans, IRAs, etc.
The Trump Accounts are, for all intents and purposes, a unique form of Individual Retirement Account. I say, take a page out of Ben Franklin's book on long term investing. For America's 250 year anniversary, read Mike Meyer's recent book: Benjamin Franklin's Last Bet: The Favorite Founder’s Divisive Death, Enduring Afterlife, and Blueprint for American Prosperity.
And, of course, money is fungible, so, these monies allow the individual to use other earnings and assets (or debt financing) to add skills, purchase a home, etc.
A middle-class standard of living has historically been defined not solely by wage income but the accumulation of assets, insurance protection, etc. Many think of financial wellness or financial resiliency in terms once defined by the Consumer Financial Protection Board.
The Consumer Financial Protection Bureau (CFPB) defines financial well-being as a state of being wherein a person can fully meet current and ongoing financial obligations, feel secure in their financial future, and make choices that allow them to enjoy life.
And, a middle class standard of living in retirement has historically been defined by a balance of income and wealth known as the three legged stool. Trump Accounts, done right, can clearly assist in providing part of or all of one or two of the legs.
Nothing wrong with what you denote as a "get rich quick" scheme that only blossoms after 50, 60 or 70 years.
You state: "Assuming that the Supreme Court rejects the Trump administration’s argument against “birthright citizenship” and upholds the traditional interpretation, Trump Accounts create a major new incentive to get across the border and are likely to prompt a massive expansion of the already large birth tourism industry that brings pregnant foreign nationals to the U.S. to give birth to American citizen babies."
Well, sounds like long past time to enforce our immigration laws, no?
During the 2025 fiscal year, the U.S. Border Patrol recorded 237,538 encounters with migrants at the U.S.-Mexico border. This marked an 87% drop from recent averages and the lowest recorded figure since 1970. In the 2025 fiscal year, there were 8,280 total U.S. Border Patrol apprehensions at the Northern border.
Sounds like a good start.
For comparison, approximately 250,000 to 300,000 babies are estimated to be born annually to unauthorized immigrant mothers in the United States. These births represent nearly 10% of all babies born nationwide, with the majority of these newborns automatically acquiring U.S. citizenship under the Fourteenth Amendment. So, for 2025 - 2028 300,000 * 1,000 = $300 Million!
Sounds like long past time to deport those who are not here legally.
CHILD TRUST FUND Amounts Are Too Small to Make a Difference to Most People or to Reduce Wealth and Income Inequality. You state: "... without additional funds from parents, parents’ employers, or philanthropy, by age 18 the account would grow only to an estimated $5,389. Chump change. ..."
Agree, however, which is it, do the accounts undermine the dignity of work, or are they too small to make a difference?
I'll asccept your criticism if you can show me your complaints from years gone by with respect to Child Savings Accounts, like:
- Maine: The Alfond Scholarship Foundation
- Illinois, Nebraska, Pennsylvania, and Rhode Island: 529 accounts with seed deposits.
- Nevada: The College Kickstart program
- Connecticut and Washington D.C.: Both offer state-sponsored "baby bonds" that dedicate trust funds to eligible low-income children for wealth-building.
I agree that failure to make additional contributions beyond the $1,000 seed will result in an account that is "chump change". But, again, anyone can make a contribution, parents, siblings, grandparents, government entities, NGOs, charities, and like Ben Franklin, folks the child has never met and will never meet (Michael Dell, and many others: https://atr.org/trumpaccounts/)
And, of course, we are on the cusp of the greatest wealth transfer in history, why not pass it along to something that is a long term investment, instead of having the beneficieries take it in cash and spend it today. The "Great Wealth Transfer" is a historic, multi-decade event where aging Baby Boomers and the Silent Generation will pass down an estimated $84 to $124 trillion in assets to younger generations and charities by 2045–2048. This unprecedented shift will predominantly benefit Gen X, Millennials, and Gen Z.
Wrong answer, why not pass it along to Generation Alpha, born between 2010 and 2024, and Generation Beta, born in 2025+!
Government Imposes Restrictions on How Child Trust Fund Money Can Be Spent
Nope. Simply, nope. Once a child reaches age 18, they can spend trust or custodial account money on absolutely anything they want. Because they legally gain total ownership and control, they are not restricted to just educational or medical expenses and can freely use the funds for living expenses, vehicles, travel, or investments.
Child Trust Funds Are Used as Excuses to Cut or Eliminate More Efficient and Fair Public Programs
Which ones were eliminated in favor of Trump Accounts?
I agree, that should they be a success, our Democratic and Republican Congressional idiots of the future may decide, after Social Security celebrates its 100+ anniversary, to remake Social Security into a welfare, means-tested program.
You state: "... Trump Account supporters proudly frame them as a stealth form of Social Security privatization. ..." I agree, leading Republicans, including Sen. Ted Cruz and Treasury Secretary Scott Bessent, have referred to these accounts as a "backdoor" or "dirty little secret" toward achieving long-held conservative goals of privatizing Social Security. The concept relies on the idea that shifting government contributions into stock market-invested accounts accustoms the public to personal retirement investing rather than relying solely on traditional, government-funded safety nets.
However, that's won't affect Social Security or Medicare benefits unless Congress Acts. It will likely impact funding of Medicare Part B and D (including IRMAA, Health Reform's Net Investment Income Tax (NIIT), etc.
However, unless Trump Accounts are universal with significant accumulations (highly unlikely to be widespread, even less likely not to be spent between ages 18 - 62), fat chance they will become a "backdoor" for privatized investment of Social Security monies.
"... To the five congenital flaws of all mainstream child trust fund proposals, the Trump administration and Republicans in Congress have added a sixth—Trump Accounts are incredibly, unbelievably, grotesquely regressive. ..."
Sorry, that's like arguing the Individual Retirement Account, added by a super majority Democratic Congress in 1974, and touted by 23+ Democratic run state legislatures in their Roth IRA initiatives, is "unbelievably, grotesquely regressive". Here's what some of thosse Democratic Governors had to say about their Roth IRA mandates:
California Governor Gavin Newsom famously praised the state's CalSavers retirement program as a way to "level the playing field for millions of Californians" who would otherwise lack access to a workplace retirement plan.
Connecticut Governor Ned Lamont championed the MyCTSavings program as a way to offer hardworking residents "a smart new way to make investments for their futures."
Governor Wes Moore emphasizes that the MarylandSaves program provides a "pathway to... wealth for every family in Maryland" and ensures that "Marylanders who work hard are rewarded"
Aborting Trump Accounts before they are born makes little sense. If, in fact, your fears come to pass, remember that the federal government support for the program in the form of a $1,000 contribution doesn't apply to those born after December 31, 2028. And, Congress can amend IRC 125 at any time to remove that tax preference (even though it has to pass non-discrimination tests under IRC 125 and IRC 129).
However, while the the next President and her/his Administration may not favor extending the $1,000 credit, everyone will be surprised to see revocation of the Trump Accounts.
I suspect you aren't enamored with Trump Accounts in part because of the name. How about we rename them as 530A Accounts.
Or, feel free to pitch my preferred name: The Ben Franklin Child IRAs.
If this account were a simple device for handing out $1,000 to every certifiably American baby, its economic impact would be relatively trivial — particularly in comparison to the tens of thousands of tax dollars spent per child on public education.
As Mr. Lind points out, its enormously regressive component is in providing one more tax advantaged investment program that provides the greatest benefits to the wealthiest families.
If you don’t want the money, don’t take it. As far as worrying about it being spent on the wrong things, we could say that SNAP and welfare are spent on a lot of the wrong things. And the fact that it takes away money that could be used for services… you mean more services for lower income or illegals. This program is meant to be distributed evenly for any baby regardless of color, race, gender, poor, rich, middle class. How refreshing.
I appreciate your understanding that Trump Accounts are just another Government handout.
I appreciate the points the author raises in this essay.
A fundamental flaw of "Trump Accounts" is they are based on Socialism. First, the initial funding being supplied by government borrowing. Second, these accounts entangle the government in ensuring good market returns.
Those who value free markets should not want markets where the government is greatly interested in escalating asset prices. Such markets are not free and they greatly reward those who have first access to capital. The end result being an economy that is distorted to serve financial interests - the price of assets - and not economic interests - the value of time, labor and money.
I see what you mean. I hadn't considered all the downsides.
When we have so much that needs fixing as far as government's economic relationship with the governed, we should probably try to first fix what ails us. We have a tremendous debt that is much larger than $1000 for every newborn. Instead of babies I'd look to dead people who can't complain and take whatever they have over $20,000,000 per heir, that's 3/4 of the debt right there.
Cato this week tried to get people fighting with each other by saying old people want to tax young folks to fix the gap in SS. How about we tax old people instead, those of us making all the money in equities, or over 185K. Not bigly, just normal, like everyone else. Every year I make tons more money and I don't work. Every year I pay less in taxes as a percent. Crazy.
I'm all for importing smart folk but that's not what companies want, they want indentured servitude or peons. Maybe companies should pay 3x the going rate and that way we could be assured we were attracting top flight geniuses. Some tech firms have been paying multi million dollar salaries for brilliant people, surely they could fork out triple the regular going rate if someone is so smart. Enough ranting.
Thanks for your comment.
I too have concerns about Trump Accounts. Top of mind is the decision to provide $1,000, via more deficit spending, sending the bill to taxpayers too young to vote and generations yet unborn.
Instead, I would have replicated the spousal IRA to also apply to dependent children under age 18 but limited to Roth IRAs.
Roth IRA contributions are available for households who, in 2026 have Modified Adjusted Gross Incomes of:
Less than $242,000, full $7,000 a year contribution is permitted,
$242,000 – $251,999, prorated $7,000 contribution,
$252,000+, no contribution.
That would have avoided ALL deficit spending for at least 41 years (until the first child currently under age 18 reaches age 59 1/2). And, it would have limited contributions to those households who are low- or middle class, up to the 90th percentile in household income.
See: https://401kspecialistmag.com/let-ben-franklin-create-middle-class-millionaires-eradicate-poverty-in-america/
With respect to each of your concerns, here's my thoughts - keep or pitch - need two notes to respond:
CHILD TRUST FUNDS Undermine the Dignity of Work:
Not in the least. Each of my children has had a "Ben Franklin" Account since birth. That $1,000 I deposit at birth has grown (they are now ages 41 and 38), but, won't the accumulated assets aren't sufficient to enable them to forego work for another decade or more to come. Not a chance that it deligitimizes wage income.
In terms of income from ownership of assets or capital, that is one goal embraced by many past Administrations - Democrat and Republican - if only via Employee Stock Ownership Plans, as well as equity ownership via retirement plans, retirement savings plans, IRAs, etc.
The Trump Accounts are, for all intents and purposes, a unique form of Individual Retirement Account. I say, take a page out of Ben Franklin's book on long term investing. For America's 250 year anniversary, read Mike Meyer's recent book: Benjamin Franklin's Last Bet: The Favorite Founder’s Divisive Death, Enduring Afterlife, and Blueprint for American Prosperity.
And, of course, money is fungible, so, these monies allow the individual to use other earnings and assets (or debt financing) to add skills, purchase a home, etc.
A middle-class standard of living has historically been defined not solely by wage income but the accumulation of assets, insurance protection, etc. Many think of financial wellness or financial resiliency in terms once defined by the Consumer Financial Protection Board.
The Consumer Financial Protection Bureau (CFPB) defines financial well-being as a state of being wherein a person can fully meet current and ongoing financial obligations, feel secure in their financial future, and make choices that allow them to enjoy life.
And, a middle class standard of living in retirement has historically been defined by a balance of income and wealth known as the three legged stool. Trump Accounts, done right, can clearly assist in providing part of or all of one or two of the legs.
Nothing wrong with what you denote as a "get rich quick" scheme that only blossoms after 50, 60 or 70 years.
CHILD TRUST FUNDS Incentivize Illegal Immigration.
You state: "Assuming that the Supreme Court rejects the Trump administration’s argument against “birthright citizenship” and upholds the traditional interpretation, Trump Accounts create a major new incentive to get across the border and are likely to prompt a massive expansion of the already large birth tourism industry that brings pregnant foreign nationals to the U.S. to give birth to American citizen babies."
Well, sounds like long past time to enforce our immigration laws, no?
During the 2025 fiscal year, the U.S. Border Patrol recorded 237,538 encounters with migrants at the U.S.-Mexico border. This marked an 87% drop from recent averages and the lowest recorded figure since 1970. In the 2025 fiscal year, there were 8,280 total U.S. Border Patrol apprehensions at the Northern border.
Sounds like a good start.
For comparison, approximately 250,000 to 300,000 babies are estimated to be born annually to unauthorized immigrant mothers in the United States. These births represent nearly 10% of all babies born nationwide, with the majority of these newborns automatically acquiring U.S. citizenship under the Fourteenth Amendment. So, for 2025 - 2028 300,000 * 1,000 = $300 Million!
Sounds like long past time to deport those who are not here legally.
CHILD TRUST FUND Amounts Are Too Small to Make a Difference to Most People or to Reduce Wealth and Income Inequality. You state: "... without additional funds from parents, parents’ employers, or philanthropy, by age 18 the account would grow only to an estimated $5,389. Chump change. ..."
Agree, however, which is it, do the accounts undermine the dignity of work, or are they too small to make a difference?
I'll asccept your criticism if you can show me your complaints from years gone by with respect to Child Savings Accounts, like:
- Maine: The Alfond Scholarship Foundation
- Illinois, Nebraska, Pennsylvania, and Rhode Island: 529 accounts with seed deposits.
- Nevada: The College Kickstart program
- Connecticut and Washington D.C.: Both offer state-sponsored "baby bonds" that dedicate trust funds to eligible low-income children for wealth-building.
I agree that failure to make additional contributions beyond the $1,000 seed will result in an account that is "chump change". But, again, anyone can make a contribution, parents, siblings, grandparents, government entities, NGOs, charities, and like Ben Franklin, folks the child has never met and will never meet (Michael Dell, and many others: https://atr.org/trumpaccounts/)
And, of course, we are on the cusp of the greatest wealth transfer in history, why not pass it along to something that is a long term investment, instead of having the beneficieries take it in cash and spend it today. The "Great Wealth Transfer" is a historic, multi-decade event where aging Baby Boomers and the Silent Generation will pass down an estimated $84 to $124 trillion in assets to younger generations and charities by 2045–2048. This unprecedented shift will predominantly benefit Gen X, Millennials, and Gen Z.
Wrong answer, why not pass it along to Generation Alpha, born between 2010 and 2024, and Generation Beta, born in 2025+!
Continued:
Government Imposes Restrictions on How Child Trust Fund Money Can Be Spent
Nope. Simply, nope. Once a child reaches age 18, they can spend trust or custodial account money on absolutely anything they want. Because they legally gain total ownership and control, they are not restricted to just educational or medical expenses and can freely use the funds for living expenses, vehicles, travel, or investments.
Child Trust Funds Are Used as Excuses to Cut or Eliminate More Efficient and Fair Public Programs
Which ones were eliminated in favor of Trump Accounts?
I agree, that should they be a success, our Democratic and Republican Congressional idiots of the future may decide, after Social Security celebrates its 100+ anniversary, to remake Social Security into a welfare, means-tested program.
You state: "... Trump Account supporters proudly frame them as a stealth form of Social Security privatization. ..." I agree, leading Republicans, including Sen. Ted Cruz and Treasury Secretary Scott Bessent, have referred to these accounts as a "backdoor" or "dirty little secret" toward achieving long-held conservative goals of privatizing Social Security. The concept relies on the idea that shifting government contributions into stock market-invested accounts accustoms the public to personal retirement investing rather than relying solely on traditional, government-funded safety nets.
However, that's won't affect Social Security or Medicare benefits unless Congress Acts. It will likely impact funding of Medicare Part B and D (including IRMAA, Health Reform's Net Investment Income Tax (NIIT), etc.
However, unless Trump Accounts are universal with significant accumulations (highly unlikely to be widespread, even less likely not to be spent between ages 18 - 62), fat chance they will become a "backdoor" for privatized investment of Social Security monies.
"... To the five congenital flaws of all mainstream child trust fund proposals, the Trump administration and Republicans in Congress have added a sixth—Trump Accounts are incredibly, unbelievably, grotesquely regressive. ..."
Sorry, that's like arguing the Individual Retirement Account, added by a super majority Democratic Congress in 1974, and touted by 23+ Democratic run state legislatures in their Roth IRA initiatives, is "unbelievably, grotesquely regressive". Here's what some of thosse Democratic Governors had to say about their Roth IRA mandates:
California Governor Gavin Newsom famously praised the state's CalSavers retirement program as a way to "level the playing field for millions of Californians" who would otherwise lack access to a workplace retirement plan.
Connecticut Governor Ned Lamont championed the MyCTSavings program as a way to offer hardworking residents "a smart new way to make investments for their futures."
Governor Wes Moore emphasizes that the MarylandSaves program provides a "pathway to... wealth for every family in Maryland" and ensures that "Marylanders who work hard are rewarded"
Aborting Trump Accounts before they are born makes little sense. If, in fact, your fears come to pass, remember that the federal government support for the program in the form of a $1,000 contribution doesn't apply to those born after December 31, 2028. And, Congress can amend IRC 125 at any time to remove that tax preference (even though it has to pass non-discrimination tests under IRC 125 and IRC 129).
However, while the the next President and her/his Administration may not favor extending the $1,000 credit, everyone will be surprised to see revocation of the Trump Accounts.
I suspect you aren't enamored with Trump Accounts in part because of the name. How about we rename them as 530A Accounts.
Or, feel free to pitch my preferred name: The Ben Franklin Child IRAs.