https://truthout.org/articles/critics-warn-trump-accounts-wont-address-most-families-needs/
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On Tuesday, Dell Technologies founder Michael Dell and his wife, Susan, announced that they will donate $6.25 billion to fund investment accounts for 25 million children in the U.S. The money would bolster “Trump accounts” launched by the White House in July by providing each eligible child with $250 for their account’s growth.
The program has faced widespread criticism for providing rich families with yet another tax shelter while potentially reinforcing wealth inequality in the U.S.
Trump Accounts were created as part of Trump’s “One Big Beautiful Bill” Act, which passed earlier this year. Any child under the age of 18 is eligible to create an account, and their families can contribute up to $5,000 annually, which can grow through investment of diversified, low-cost U.S. stock index funds. Children cannot access their money until they become adults, although there could be eligible rollovers allowed into other brokerage accounts. The new law also invests $1,000 into Trump Accounts for every child born between January 1, 2025, and December 31, 2028.
Although parents can sign up for the program now, Trump Accounts will not become available to manage until May 2026, according to the Treasury Department.
Trump praised the Dells for their gift, describing it as a “pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation.”
Michael Dell explained why he and his spouse made the gift, stating, “We’ve seen what happens when a child gets even a small financial head start — their world expands.”
However, observers have noted that Trump Accounts may do little to help children whose families are unable to make huge investments into their accounts. And the program could be a precursor to eliminating other safety net and retirement programs, such as Social Security — an outcome that members of the Trump administration have indicated is the end goal.
In July, while promoting Trump Accounts, Treasury Secretary Scott Bessent described the program as a potential “backdoor for privatizing Social Security,” before walking back that statement amid backlash.
“Bessent actually slipped and told the truth: Donald Trump and his government want to privatize Social Security,” Senate Minority Leader Chuck Schumer (D-New York) said in response to Bessent’s comments.
Other lawmakers have also criticized the program.
“The so-called ‘Trump accounts’ are a missed opportunity that focused on Donald Trump’s vanity and giving Republicans a hollow talking point rather than truly helping young people,” Rep. Don Beyer (D-Virginia) said last month.
Notably, parents who want to participate must opt their children into the program around tax time, which some families may not be aware of.
“We’re concerned about families who don’t have to file, families who need to file but don’t, families who do file but don’t do the form correctly,” said Ray Boshara of the Aspen Institute.
“They’re going to miss a lot of kids if you do it through a tax return.”
Amy Matsui, vice president of income security and child care at the National Women’s Law Center, also panned the program, noting that it would benefit wealthy families while leaving those with modest incomes out in the cold. Said Matsui:
While we support direct investments in families, the Trump Accounts being hailed by the White House are a policy solution that doesn’t meet most families’ needs. As currently structured, these accounts will just become another tax shelter for the wealthiest, while the overwhelming majority of American families, who are struggling to cover basic costs like food, childcare, and housing, will be hard-pressed to find the extra money that could turn the seed money into a meaningful investment.
“In the end, this policy mirrors the rest of the law: another giveaway to the richest Americans that leaves everyone else further behind,” Matsui added.
Indeed, the program has the potential to widen wealth gaps that are already embedded in the U.S. For example, a family that had a child today and signed up for the $1,000 initial investment given to Trump Accounts, but who struggled to contribute to the account and never made any personal investments afterward, would only see their child’s account grow by around $700 after 18 years, assuming a 3 percent rate of growth annually. By contrast, a child whose family is wealthy enough to contribute the full $5,000 per year into the account would see growth of around $150,000 by the time they became an adult, under the same growth conditions.
Advocates have called for other measures to combat childhood poverty and wealth inequality, including the expansion of the child tax credit.
The expanded child tax credit was implemented during the pandemic as a way to lift children in low-income families out of poverty, and was wildly successful at doing so, helping to drop poverty and hunger rates for 61 million children in the U.S. However, immediately after the expanded credits expired in 2022, the child poverty rate more than doubled, going from 5.2 percent to 12.4 percent in just one year.
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