Parents of more than 4 Million American Children have signed up for Trump Accounts
- Thread starter Libhater
- Start date
Aren't there already bonds?
Um it isn't new. Only thing "new" is his name.
CBHype
Verified User
Of course this is new.
Why do you lie?
No it isn't new.
Grim Reaper
Chief Exit Officer (CEO)
It is easy to see the surface-level appeal of Trump Accounts. After months of federal policies that have squeezed working families—from tighter SNAP eligibility to higher health-care premiums—any effort to help parents save for their children is a welcome shift. And the instinct behind the program is sound: well-designed, automatic savings can influence family behavior. A study of Oklahoma’s SEED OK experiment found that newborns who were randomly assigned to receive $1,000 in a 529 College Savings Plan saw their parents report higher expectations for their children’s education and engage more in long-term planning. Trump Accounts are not designed exclusively for education, but the study offers hope that well-designed savings policies can change how families plan for their children’s future.
But while the White House frames the Trump Accounts as a way to “give every newborn child a head start toward lifelong financial security and the American Dream,” the reality is far less even-handed. The program may be open to every child, but its benefits will flow overwhelmingly to families with the means to contribute thousands of dollars a year. What could have been a leveling tool instead risks becoming a widening wedge between the haves and the have-nots.
You don’t have to take our word for it; the White House’s own numbers make this plain. In its analysis, the Council of Economic Advisers modeled how much a child’s account would grow under different contribution patterns. For a family living paycheck-to-paycheck that is unable to add anything beyond the government’s $1,000 seed deposit, the balance reaches just $5,839 by age 18. That’s better than nothing, but hardly transformative.
For wealthier families, the picture looks entirely different. Those able to make the maximum contributions of an inflation-adjusted $5,000 per year will see the same account swell to $303,757 by age 18. Two children, two seemingly identical programs, and two very different financial futures.
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And the disparities don’t stop there. Because Trump Accounts are structured like tax-advantaged retirement plans, the families who contribute the most also receive the largest tax breaks. A child whose family can’t save beyond the initial $1,000 sees only modest tax benefits by age 18. A child whose parents can make the maximum contributions receives tax relief on an entirely different scale. In short: the richer the parents, the bigger the tax subsidy.
But it doesn’t have to work this way. We already have models for building children’s assets in ways that narrow gaps rather than widen them—approaches designed to give kids without family wealth the foothold that some savings can provide.
The basic idea of the Trump Accounts echoes a previous proposal from Senator Cory Booker known as “Baby Bonds.” That plan would also give every child a $1,000 deposit at birth, but would add up to $2,000 a year in federal contributions, with the largest amounts going to the families with the least. By the time those children reach adulthood, they would have a meaningful nest egg to put toward education or buying a first home. The law’s framers estimate that it could create an account balance of $46,215 for the poorest 18-year olds in the country, significantly more than the Trump Accounts would provide. It’s the same premise—build assets early—but would level the playing field rather than tilt it further.
time.com
But while the White House frames the Trump Accounts as a way to “give every newborn child a head start toward lifelong financial security and the American Dream,” the reality is far less even-handed. The program may be open to every child, but its benefits will flow overwhelmingly to families with the means to contribute thousands of dollars a year. What could have been a leveling tool instead risks becoming a widening wedge between the haves and the have-nots.
You don’t have to take our word for it; the White House’s own numbers make this plain. In its analysis, the Council of Economic Advisers modeled how much a child’s account would grow under different contribution patterns. For a family living paycheck-to-paycheck that is unable to add anything beyond the government’s $1,000 seed deposit, the balance reaches just $5,839 by age 18. That’s better than nothing, but hardly transformative.
For wealthier families, the picture looks entirely different. Those able to make the maximum contributions of an inflation-adjusted $5,000 per year will see the same account swell to $303,757 by age 18. Two children, two seemingly identical programs, and two very different financial futures.
Advertisement
And the disparities don’t stop there. Because Trump Accounts are structured like tax-advantaged retirement plans, the families who contribute the most also receive the largest tax breaks. A child whose family can’t save beyond the initial $1,000 sees only modest tax benefits by age 18. A child whose parents can make the maximum contributions receives tax relief on an entirely different scale. In short: the richer the parents, the bigger the tax subsidy.
But it doesn’t have to work this way. We already have models for building children’s assets in ways that narrow gaps rather than widen them—approaches designed to give kids without family wealth the foothold that some savings can provide.
The basic idea of the Trump Accounts echoes a previous proposal from Senator Cory Booker known as “Baby Bonds.” That plan would also give every child a $1,000 deposit at birth, but would add up to $2,000 a year in federal contributions, with the largest amounts going to the families with the least. By the time those children reach adulthood, they would have a meaningful nest egg to put toward education or buying a first home. The law’s framers estimate that it could create an account balance of $46,215 for the poorest 18-year olds in the country, significantly more than the Trump Accounts would provide. It’s the same premise—build assets early—but would level the playing field rather than tilt it further.
The Problem with Trump Accounts
Stanford economists explain how Trump Accounts will disproportionately benefit well-off Americans.
time.com