At the White House this week, tech CEO Michael Dell and his wife, Susan, announced a $6.25 billion gift to support one of the President’s signature initiatives: a new tax-advantaged savings vehicle known as the “Trump Account.” The program creates an investment account for every newborn, seeded through a $1,000 federal deposit, with the stated goal of helping all Americans begin building assets from day one.
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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…
