US President Trump is giving $1,000 to all newborns. Why is he doing this and what is it expected to achieve?
Goal of the Trump Accounts is to kickstart wealth creation from birth
US President Donald Trump has unveiled a bold new proposal as part of his sweeping economic agenda: $1,000 investment accounts for every newborn American.
Dubbed “Trump Accounts,” the initiative is one of the headline features of his “One Big Beautiful Bill,” a larger Republican-backed tax and spending package.
Why $1,000 for babies?
The goal of the Trump Accounts is to kickstart wealth creation from birth. Under the plan, every child born in the US between January 1, 2025, and December 31, 2028, would automatically receive $1,000 in a special investment account, backed by the federal government.
The money would be invested in broad-based US stock index funds, allowing the funds to grow tax-free over time. Families would also have the option to contribute up to $5,000 per year to the account. Withdrawals would be permitted for specific purposes such as college education, buying a first home, or starting a business.
Trump and his allies argue that this early exposure to investing will instil financial discipline and help bridge long-term wealth gaps. “We’re making it possible for every child in America to start their life with a piece of the American economy,” Trump said during a recent speech in Florida.
What is it expected to achieve?
Proponents of the programme argue that compound growth over time could turn $1,000 into substantial savings by adulthood. Supporters estimate that if untouched for decades, the account could grow into tens or even hundreds of thousands of dollars depending on market returns.
For example, assuming historical average returns from stock markets, that $1,000 could grow to about $8,000–$10,000 by the time the child turns 20, or potentially far more if left invested longer.
But while the number looks good on paper, critics point out that without regular additional contributions, the actual benefit may be modest when compared to real-world costs like tuition or housing.
Business backing
One of the elements of the Trump Accounts plan is its support from corporate leaders. CEOs from companies including Dell, Goldman Sachs, and Uber have spoken positively about the initiative. Dell Technologies has even pledged to match the $1,000 government contribution for the newborn children of its employees.
Trump has framed this as a rare example of public-private partnership, blending conservative economic principles with populist appeal.
Criticism and scepticism
Despite the support from business circles, critics have raised significant concerns:
Too little, too late: Many argue that $1,000 isn’t enough to make a meaningful difference for poorer families, particularly those who can’t afford to contribute the additional amounts that wealthier families might easily manage.
Doesn’t address urgent needs: Critics highlight that Trump’s plan comes alongside proposals to cut social programmes like food stamps and Medicaid. They argue that struggling families need immediate help with food, housing, and healthcare, not speculative investment accounts.
Wealth gap concerns: Some economists warn that without strong protections, such programmes risk widening wealth disparities rather than closing them, because richer families can build on the initial investment more easily than poorer ones.
Some financial experts have also noted that existing tools like 529 college savings plans or Roth IRAs might provide more practical benefits with clearer terms and better flexibility.
Political status
The Trump Accounts proposal has passed the House as part of the broader GOP tax bill, but it faces challenges in the Senate. Some moderate Republicans have voiced concerns about the cost — estimated at around $3.5 billion per year — while Democrats have criticised the measure as largely symbolic and insufficient to solve deeper economic inequities.
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