The Trump administration this week is rolling out “Trump Accounts,” promising $1,000 in taxpayer money for every child born between 2025 and 2028. What looks like a gift for families is really another expensive government handout that adds billions of dollars to the national debt while pretending to teach financial responsibility.
Among the sweeping provisions of last year’s One Big Beautiful Bill Act are the newly established Trump Accounts — tax-advantaged savings and retirement accounts for newborns. Each account will be seeded with $1,000 of taxpayer money for children born between 2025 and 2028. Although promoting savings and wealth building is commendable, relying on debt and government support will place financial strain on taxpayers and increase debt levels. Future generations deserve a more responsible and sustainable fiscal strategy.
While many members of Congress followed the party line and supported the OBBBA, a few spoke out about the risks of ballooning the $38 trillion national debt. Rep. Thomas Massie (R-KY) voted against the bill, warning that it would significantly increase budget deficits, fuel inflation, and raise interest rates — threatening the economic future of all people. Massie’s words hit the mark: every dollar added to the debt and deficit threatens the future of the people and goes against the promises President Donald Trump made.
Encouraging investing at a young age and starting early so that investments can grow over a long time horizon and be tax-free is undoubtedly a strong foundation for building wealth. Albert Einstein pointed out, “Compound interest is the eighth wonder of the world. He who understands it, earns it. … He who doesn’t … pays it.” Arguably the greatest investor of our lifetime, Warren Buffett, has similarly stated, “Time is your friend; impulse is your enemy. Take advantage of compound interest and don’t be captivated by the siren song of the market.”
The appeal of starting early with savings and investments is understandable. Parents naturally want to give their children a financial head start, and policymakers want to encourage habits that will lead to long-term wealth accumulation. In principle, this kind of program could serve a useful purpose if executed responsibly and sustainably. But the Trump Accounts, as currently structured, fail to meet that standard.
The main problem with the Trump Accounts isn’t the gains of compound interest investing tax-free over a long period of time, but rather that taxpayers end up bearing the costs. An annual expenditure of $3.5 billion may appear insignificant in comparison to nearly $2 trillion in annual deficits, but these costs accumulate over time, ultimately burdening future generations with crippling debt. The individual, not the federal government, should be responsible for helping younger generations reach financial independence.
Over time, these costs compound in the same way that investment earnings do — but in reverse. Unlike a private investment account, which builds wealth for the account holder, government spending adds obligations to the national ledger. Every new “benefit” must be financed either through additional borrowing, higher taxes, or cuts to other programs, creating a ripple effect that hits families and businesses nationwide.
The Trump accounts are available only to babies born during the Trump administration, which is arbitrary. Multiple, short-lived programs increase the risk of errors, waste taxpayer resources, and undermine accountability, all while adding to the long-term cost to the federal budget.
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Another concern is their repetitive nature; they resemble 529 plans and state-based Education Savings Accounts, which offer tax-exempt savings at the federal and state levels for future education costs, or Uniform Gifts to Minors Act or Uniform Transfers to Minors Act accounts, which allow parents to save and invest for their children without the same tax benefits. To reduce the complexity of the many savings accounts with specific rules and tax advantages, lawmakers should consider consolidating them into a single universal savings account with tax advantages. Such an account would allow everyone to save a fixed amount tax-free annually, promoting long-term savings without relying on handouts, bailouts, or tax increases.
While Trump Accounts may seem attractive, they hide a significant downside: each government handout increases the national debt, burdening future generations. Genuine prosperity stems from policies that promote responsible saving and fiscal responsibility, not from temporary giveaways. America’s children merit a sustainable economic future, not fleeting handouts.
Christina Smith is the director of the Taxpayers Protection Alliance’s Consumer Center.