If the money is spent on anything else, it will be taxed as ordinary income.
“This is a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation, and they’ll really be getting a big jump on life, especially if we get a little bit lucky with some of the numbers in the economies into the future,” Trump said.
Trump promoted the programme as a pro-family, pro-child initiative at the same time his Administration and congressional Republicans face criticism from Democrats over cuts that the tax, spending and immigration bill would make to programmes like Medicaid and the Supplemental Nutrition Assistance Programme.
Democrats argue the reductions would leave millions of American children and families without proper health care or nutritional benefits.
Trump appeared at a White House roundtable that featured leading chief executives, including Dell Technologies founder Michael Dell, Goldman Sachs chief executive David Solomon and Uber CEO Dara Khosrowshahi.
Dell said his company would match the Government’s US$1000 seed money in the accounts of their employees’ new children.
At the event, House Speaker Mike Johnson, a Republican from Louisiana, who shepherded the bill through the House, said the programme is a “transformative policy that gives every eligible American child a financial head start from day one”.
“If you have a 401(k), you understand the power of investing early for the future,” Johnson said at the White House.
Trump accounts were originally introduced under the “Maga Act” – short for “Money Accounts for Growth and Advancement” – by Representative Blake Moore (Republican, Utah) in May.
The proposal adopted Trump’s name before it was incorporated in the House Republican version of the bill, which the Senate is working on. While Trump and Johnson encouraged Senate Republicans on Monday to keep the programme in the bill, it is unclear if the proposal will remain.
Already, fiscally conservative Republicans in the Senate have complained that the bill doesn’t do enough to cut spending, and they are looking to make substantial revisions in the House package.
Republicans have not released any cost estimates for the programme. But with about 3.6 million babies born in the US each year, the cost could exceed US$3 billion annually.
The One Big Beautiful Bill – as Trump and Republicans have dubbed the tax and spending cut package – is expected to add more than US$3 trillion to the national debt over the next decade, according to the Congressional Budget Office.
The Trump programme is similar to “baby bond” programmes run in California, Connecticut and Washington, DC, which give some new-borns investment accounts.
However, while those local programmes were created to reduce the wealth gap by supporting children in need or lower-income families, Trump accounts will be made available to Americans regardless of their socioeconomic status.
To open a Trump account for their child, at least one of the parents will be required to have a Social Security number with work authorisations – leaving some US-born children of immigrants out of the programme.
Economist Darrick Hamilton – who conceptualised the idea of baby bonds – told the Washington Post that the Republican programme will probably “enhance inequality” by “directing our public resources towards an already affluent class while at the same time, imposing … mean-spirited cuts to those who need the most”.
“It’s a bad idea co-opting a good idea in both rhetoric and design,” Hamilton said.
Other critics of the programme said American children in poverty would be better off if congressional Republicans did not make major cuts to social safety net programmes.
“Feel like low-income families would prefer their assistance buying groceries not get cut, but that’s just me,” said Centre on Budget and Policy Priorities Senior Director Brendan Duke on X.
