Trump’s baby accounts: Wealth builder or redistribution trap?
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A White House roundtable this week spotlighted Michael and Susan Dell’s $6.25 billion philanthropic contribution seeding newborn investment “Trump Accounts” beyond the federal $1,000 Treasury Department contribution established in the One Big Beautiful Bill (OBBB) Act.
The Dell initiative means 25 million children will see an additional $250 added to their accounts without a dime of taxpayer coercion. At the White House, Dell described how the money could grow tax-free in an S&P 500 Index fund where at age 18, “the child can use that money to go to college, to buy a home, to start a business [or] to continue saving.” Dell also expressed optimism that other philanthropists and community groups would likewise step forward. Employees — and of course parents — can also now contribute up to $5,000 in this pilot project.
Apart from the Treasury contribution, this model is the right approach: private, voluntary, and community-driven rather than federal and centralized. Trump Accounts also squarely align with other steps to inculcate household resilience and forestall the political predation and dependency that followed every recent economic shock — 9/11, the 2008 financial crisis, and COVID. Previous waves of trillion-dollar federal interventions expanded the welfare state and left families and businesses worse off with a debt-laden government.
Resilience must come from individuals, families, entrepreneurs, civil society, and household balance sheets robust enough to weather inevitable storms rather than from government dependency. This economic armor-plating can emerge via what we might call an Abuse-of-Crisis Prevention Act. Broadly, this agenda would scrap the administrative state, end Washington’s custodial grip on adults, force real resilience in firms and households (as the expansion of Trump Accounts would do), end the abuse of emergency powers, revive state sovereignty, and shut down the political predation that makes every crisis a pretext for federal expansion.
Newborn accounts are the first element to materialize in such a resilience agenda. With compounding beginning at birth, families can, over time, accumulate assets that not only help weather storms but reduce reliance on programs politicians refuse to reform — Social Security included.
But here’s the catch: the accounts must remain private rather than continually seeded by government. Some progressives praised the Trump Accounts and the Dell contribution while also claiming the “problem” is that, without additional government money, the Trump Accounts would merely worsen wealth inequality and replace other child-oriented federal programs (which, in fact, they should do). This mutation of Trump Accounts represents a fundamentally different agenda, one incompatible with genuine household resilience and independence.
Sen. Cory Booker (D-NJ), for example, regularly slams the OBBB, but he praised Trump Accounts to the extent they bear a certain resemblance to the “Baby Bonds” that he and Rep. Ayanna Pressley (D-MA) floated in their “American Opportunity Accounts Act.” However, progressives’ ultimate vision is one of a permanent, taxpayer-funded wealth redistribution scheme inversely scaled to income. Upon the Dell announcement, a press release from Pressley urged the replacement of Trump Accounts with “Baby Bonds to close the wealth gap and advance economic justice” for “marginalized communities” rather than a one-time seeding. This reads like yet another step toward Universal Basic Income (or UBI) dependency, continuing a trend that began during COVID.
If Washington expanded Trump Accounts into government-guaranteed entitlements, the entire effort would transform into a Trojan horse for the very custodianship policies conservatives claim to oppose — and Republicans can hardly be trusted as a backstop. For all the party’s anti-New Deal rhetoric, GOP leaders routinely preserve every rung of the entitlement framework, most recently by voting to expand SNAP and currently by moving to extend key provisions of Obamacare.
Without firm boundaries, newborn accounts could quickly become yet another mandatory scheme — essentially Social Security for children — when the proper approach is to opt newborns out of that very program and supplant it with private newborn accounts.
The path forward should expand opportunities for philanthropic, family, and community contributions that keep Trump Accounts private and voluntary. In fact, they should be far larger than current limits allow. By scaling the OBBB’s rudimentary model and keeping government hands off, the nation can shift from dependency and vulnerability toward true household and societal resilience.
If managed properly, Trump Accounts can be the first step in a needed reset: not the progressive “Great Reset,” but one that restores the primacy of free and individual households over those defined by reliance on a custodial, supervisory entitlement state. Done right, Trump Accounts can exceed even the Dell contribution, breaking the welfare/regulatory state cycle and fostering long-term household wealth and independence rather than long-term dependency.
For more, see:
“A One-Pager on an ‘Abuse-of-Crisis Prevention Act’,” CEI
“Universal Basic Income and the Custodial Administrative State,” CEI