Donald Trump’s new savings scheme for American children has sparked debate. The White House claims it will give millions of children a way into stock ownership.
The scheme, Trump Accounts, offers a $1,000 contribution for babies born during Trump’s second term in office. According to the White House, this will help families who have little or no exposure to stock ownership.
However, Will McBride, chief economist at the Tax Foundation think tank, says the scheme is too complicated. He believes only a “minority that benefits” will take advantage of it, mainly parents who are “relatively well-informed, relatively well-off”.
Andy Blocker, head of policy at Edward Jones, disagrees. He says the $1,000 contribution will remove a “barrier of having nothing to start with”. Blocker believes the scheme will be a success if more families start saving and investing for their children’s financial futures.
Adam Michel, director of tax policy studies at the Cato Institute, says the idea is admirable but might “not live up to the rhetoric”. He warns that many families would be better off using existing savings accounts and points out barriers such as penalties for early withdrawal.
Michel notes that lower-income children may feel compelled to take the money out when they turn 18 to “help make ends meet”, and therefore have to pay a penalty. He says Trump Accounts “do not fix that problem”.
As the scheme moves forward, it remains to be seen whether it will succeed in its goal of giving millions of children a way into stock ownership. According to Andy Blocker, success will be measured by the number of families who start saving and investing for their children’s financial futures by the end of the year.
The White House will likely face continued criticism and scrutiny as the scheme is implemented. Only time will tell if Trump Accounts will live up to their promise and provide a lasting benefit to American children.
