Tens of millions of American children recently gained access to a promising wealth-building tool, though many of their parents probably aren’t even aware of it.
The Treasury Department announced last week that it has automatically opened “Trump accounts” for more than 60 million eligible children. Just 7 million had previously enrolled for the benefit, created under the 2025 tax law. Now, nearly everyone under 18 has one.
The transformational power of these accounts has been oversold by the administration, but they offer real promise.
Government paternalistically taking steps on behalf of citizens — the kind of “nudges” that progressive behavioral economists love — often leads to unintended consequences. But given the sorry state of economic education, the nation’s dire fiscal forecast and declining confidence in the proven long-term benefits of the stock market, this is an investment that could pay off for decades.
The “Trump accounts” take in contributions from parents or other family members, employers or charitable programs. The money is invested in a stock index fund and becomes accessible close to a child’s 18th birthday.
Those born in 2025 through 2028 — almost all of Trump’s second term — receive a federal seed contribution of $1,000, envisioned as a pilot program, at an estimated cost of $17 billion.
The idea is for the twin magic of compound interest and long-term returns to create funds for college, starting a business or a lifetime of investment and wealth building.
Treasury Secretary Scott Bessent says this could be the best federal benefit for young people since the GI Bill. That seems overly optimistic. It’s unfortunate that, like so many things the president can claim only tangential credit for, the program bears his name. That politicizes an effort that might otherwise have earned widespread buy-in so that it continues after President Donald Trump leaves office. Families looking to save for college or jump-start a child’s retirement may find better vehicles. Many tax-advantaged options already exist.
For those with fewer options, though, the accounts could pull in philanthropic and corporate donations that kids would otherwise miss. Several billionaires have pledged contributions to lower-income recipients. Computer magnate Michael Dell and his wife, Susan, are donating more than $6 billion in seed money for children in lower-income areas, an extraordinary act of generosity. Such voluntary contributions are certainly preferable to the inefficient mechanisms of government redistribution.
Giving children an account they can watch grow on a phone app might also counter the beating that free markets have taken in the public imagination. If young people see themselves as players who stand to benefit from growth, rather than victims of a modern economy, they’ll be more likely to help protect the system that has created broad-based prosperity.
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