The Guardian•
‘Trump accounts’ promise to mint child millionaires. Experts have their doubts
Donald Trump arrives for an event to promote ‘Trump Accounts’ at Wheeler high school in Marietta, Georgia, on 22 July 2026. Photograph: Elijah Nouvelage/Bloomberg via Getty ImagesView image in fullscreenDonald Trump arrives for an event to promote ‘Trump Accounts’ at Wheeler high school in Marietta, Georgia, on 22 July 2026. Photograph: Elijah Nouvelage/Bloomberg via Getty ImagesDonald TrumpAnalysis‘Trump accounts’ promise to mint child millionaires. Experts have their doubtsSteven GreenhousePresident has hyped growth of federal investment accounts to help US children – for his own political gain
Since returning to the White House, Donald Trump has scrapped rules that made childcare more affordable and pushed to cut funding for the nation’s public schools. But with midterm elections fast approaching and his approval ratings very low, the US president has repeatedly trumpeted a two-month-old program designed to help the nation’s children. That program, unhumbly named “Trump accounts”, calls for the federal government to give a one-time $1,000 seed deposit to every newborn whose family applies.
In campaign speeches this summer, Trump has sought to milk these accounts for maximum political advantage, making big promises about how much these accounts will help the nation’s children. In a speech in Las Vegas last month, Trump hailed the program, saying: “It’s really giving [children] a head start on the American dream… They start off with $1,000 … and they can end up with $100,000, $200,000, $300,000” and if the stock market booms, “you’d end up with $1m”.
With these accounts, Trump seems to want to come across as a Santa Claus stuffing $1,000 into every newborn’s stocking (although that money comes from the federal government).
He and other Republicans boast that these accounts will significantly lift up all children, including children from low-income families, and also narrow the wealth gap between rich and poor. When Trump kicked off these accounts in early July, the treasury department said: “Trump Accounts level the playing field by allowing every parent to invest in their children’s future, not just wealthy families with trust funds.”
A big problem, however, is that many economists say Trump’s claims about these accounts are vastly exaggerated or false.
As Trump seeks to excite voters about these accounts, he has hyped how much they will grow, especially with regard to non-affluent families who don’t have the wherewithal to deposit money into these tax-deferred accounts to help their children. In his speeches, Trump sometimes gives the inaccurate impression that a newborn’s account with a $1,000 seed deposit will mushroom to $200,000 or $300,000 by the time the child turns 18, even when that child’s family doesn’t have money to make subsequent deposits.
What’s more, “Trump accounts” are likely to increase, not decrease, the wealth gap between rich and poor. These accounts have definite tax advantages for wealthier families, who, unlike most low-income or working-class families, are able to make the maximum $5,000 deposit allowed each year into these tax-deferred accounts. It’s the families rich enough to contribute $5,000 a year who could see their children’s accounts grow to $200,000 or $300,000, far outstripping the accounts of children from poorer families.
“This policy is not about giving poor kids a leg up. It’s more likely to widen the gap between rich and poor,” said Justin Wolfers, an economics professor at the University of Michigan, in a video.
Kush Desai, a White House spokesperson, said in an email: “Trump Accounts are already shaping up to make a generational difference for working-class children who have not historically benefitted from traditional tax advantaged accounts.” He noted that the billionaires Michael Dell and Ray Dalio, as well as multinational corporations, have “pledged to donate billions of dollars of their wealth to the Trump Accounts of working-class children”.
Desai rejected any assertions that the program would increase inequality, saying: “High income parents have always had an array of tools to grow wealth for their kids, but Trump Accounts are giving middle class parents the same opportunity – with billionaires chipping in to help. Only a moron would argue billionaires giving money away to working-class kids will worsen inequality.”
The Trump administration has hyped the accounts with extremely optimistic claims. A White House website forecasts that many children with “Trump accounts” will have $271,000 in their account by age 18 and $13m by age 55. That sounds fabulous, but according to Wolfers, those big numbers are based on an impressive 10% annual rate of return for decades – a rate of return that is extraordinarily hard to achieve year after year. Moreover, those higher numbers are for children whose parents put in $5,000 annually until age 18, and then $7,000 a year when their children are in their 20s.
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