Latest news with #MoneyAccountforGrowthandAdvancement
The Hill
12-06-2025
- Business
- The Hill
What a $1,000 baby bond buys, and why one and done isn't enough
A new federal proposal included in the administration's 'one, big, beautiful' bill would provide a one-time deposit of $1,000 to every child born between 2025 and 2028 through Trump Accounts — previously known as the Money Account for Growth and Advancement, or MAGA Accounts. While the name has changed, the underlying proposal remains the same. It's a welcome sign that lawmakers on both sides of the aisle continue to recognize the value of starting early when it comes to building financial security. There's longstanding bipartisan support for investing in children from birth. Back in 2006, then-Sen. Jeff Sessions (R-Ala.) introduced a Portable Lifelong Universal Savings Account — a PLUS Account — modeled after the federal thrift savings plan, with an initial $1,000 deposit and a $5,000 annual contribution limit. More recently, Sen. Cory Booker (D-N.J.) reintroduced the American Opportunity Accounts Act, commonly known as baby bonds, which would seed $1,000 into an account for every child born after Dec. 31, 2023. The most recent Trump Account draws from a proposal by Sen. Ted Cruz (R-Texas) and would invest that $1,000 in an index fund. It's been nearly two decades since that first proposal, and Congress is still circling the same starting number. Imagine how much stronger families could be today if, instead of restarting the conversation, we had built on it. There's broad recognition that raising a family has never been more expensive and that the rising cost of essentials is contributing to declining birth rates. Recent estimates show that families spend between $15,000 to $21,000 in a child's first year alone, covering diapers, formula, baby gear, and child care. These aren't optional extras, they're baseline costs of parenthood. Baby food and formula costs rose 8.7 percent from January 2023 to January 2024, outpacing overall inflation. Diapers remain a major strain on household budgets, with 1 in 3 struggling to afford them even before the pandemic, and 1 in 4 now reporting they've had to miss work or school due to diaper needs. Child care is another overwhelming expense. In nearly every state, the cost of full-time infant care exceeds $14,000 a year, which is more than 10 percent of median household income. KPMG estimates that the cost of daycare and preschool has surged by 263 percent since 1990. On top of that, tariffs could raise prices on cribs, car seats and strollers by as much as 128 percent, according to S&P Global. These are basic safety items, not luxury goods, and they're increasingly out of reach. None of these costs can be meaningfully addressed by a one-time Trump Account, or by baby bonds or PLUS Accounts alone, but they shape the reality into which these proposals are introduced. Families grappling with steep costs today are far less likely to contribute to long-term savings accounts, even with a $1,000 head start. That's why policies like the Trump Account must be viewed not as stand-alone solutions, but as part of a comprehensive strategy to help families meet today's demands while planning for tomorrow's opportunities. The Trump Account would represent a step forward in how the government invests in family and long-term financial stability. It shares a key idea with prior proposals: the earlier the investment, the greater the return. There are, however, important differences in design. Baby bonds were proposed as government-funded accounts invested in a bond with an anticipated 3 percent annual return, receiving ongoing contributions, especially for children from households with limited financial resources, and these distinctions are a constructive differentiator. The Trump Account, by comparison, offers a one-time government deposit to be invested in an index fund, which has the potential for a higher rate of annual return, and because it is tied to the stock market, also carries additional risk. As a one-time deposit, it is not yet a full solution because it lacks the consistent annual investment to make its potential a meaningful tool for financial growth for children who are born into families without wealth. This ongoing investment matters. With inflation driving up prices and wages failing to keep pace, families need more than symbolic gestures. They need tools that build over time and bridge the gap between short-term help and long-term financial security. This is not just about individual families. It's about national economic potential. The Institute for Women's Policy Research estimates that if women participated in the workforce at the same rate as men, it could add $4.3 trillion to the U.S. economy this year. But that participation depends on the affordability of child care, baby essentials and family stability, areas where rising costs continue to hold parents back. The Trump Account reflects growing awareness that financial opportunity begins at birth. But if we're serious about building economic resilience, we must ensure that early investments are designed to grow and to last. Ongoing investment, like in the baby bonds and PLUS Account proposals, offers a path forward that is practical, scalable and rooted in research. If we want to give every child a real chance at economic mobility, it's not just about when and where we invest. It's about how we follow through. Marisa Calderon is the president and CEO of Prosperity Now.
Yahoo
22-05-2025
- Business
- Yahoo
Ted Cruz says he doesn't mind that his $1,000 investment account plan for babies is now called 'Trump accounts'
The GOP renamed "MAGA accounts" to "Trump accounts." If approved, $1,000 will go to any baby born between 2024 and 2028. Sen. Ted Cruz — the person who came up with the idea — says he doesn't mind the Trumpified name. First, they were called "MAGA accounts." Now, they're "Trump accounts." As part of their "One Big Beautiful Bill," Republicans on Capitol Hill want to establish new investment accounts for American children. Under the plan, babies born after January 31, 2024 and before January 1, 2029 — essentially, the last three years of President Donald Trump's term — will receive $1,000 for the account from the federal government. The original name was an acronym for "Money Account for Growth and Advancement" — the same initials as Trump's political movement. In a last-minute change before the House passed their version of the "Big Beautiful Bill" on Thursday, "MAGA" was replaced with "Trump." While the president stands to get the credit, it was Sen. Ted Cruz's idea to create "Invest America" accounts. The Texas Republican says he doesn't mind. "What I care is that they remain in there," Cruz told BI, referring to the provision's inclusion in the larger bill. "I think it doesn't matter what they're called. What it matters is what they do." In terms of political branding, it's further than other recent presidents have gone. President Joe Biden, for instance, chose not to sign COVID-19 stimulus checks like Trump did — though he later said it was "stupid" not to do so. Other government-backed programs have taken on the name of their creators. The Affordable Care Act, championed by President Barack Obama, is commonly known as "Obamacare," though that was initially a Republican epithet. And Sens. William Roth and Claiborne Pell have also found their names written into the tax code. "That is not unusual," Cruz said. "You have things like Roth IRAs that were named after Senator Roth. You have things like Pell Grants that were named after Senator Pell. You have things like Obamacare that were named after President Obama." It's unclear exactly why the accounts were named after Trump, and the White House did not respond to a request for comment. Cruz had pitched the idea as a way to give kids a stake in the free market from an early age, allowing them to potentially reap financial benefits down the line while making them less likely to support socialism. "It enables every newborn child in America to experience the enormous benefits of compounded growth, and to accumulate significant resources with the passage of time," Cruz said. "It creates a generation of new capitalists." According to the bill, individuals with "Trump accounts" will be able to use the savings for things like higher education and first-time home purchases starting at age 18. Money taken out of the account for those purposes will be taxed as long-term capital gains, while money withdrawn for other purposes is taxed as regular income. Read the original article on Business Insider
Business Insider
22-05-2025
- Business
- Business Insider
Ted Cruz says he doesn't mind that his $1,000 investment account plan for babies is now called 'Trump accounts'
As part of their "One Big Beautiful Bill," Republicans on Capitol Hill want to establish new investment accounts for American children. Under the plan, babies born after January 31, 2024 and before January 1, 2029 — essentially, the last three years of President Donald Trump's term — will receive $1,000 for the account from the federal government. The original name was an acronym for "Money Account for Growth and Advancement" — the same initials as Trump's political movement. In a last-minute change before the House passed their version of the "Big Beautiful Bill" on Thursday, "MAGA" was replaced with "Trump." While the president stands to get the credit, it was Sen. Ted Cruz's idea to create "Invest America" accounts. The Texas Republican says he doesn't mind. "What I care is that they remain in there," Cruz told BI, referring to the provision's inclusion in the larger bill. "I think it doesn't matter what they're called. What it matters is what they do." In terms of political branding, it's further than other recent presidents have gone. President Joe Biden, for instance, chose not to sign COVID-19 stimulus checks like Trump did — though he later said it was "stupid" not to do so. Other government-backed programs have taken on the name of their creators. The Affordable Care Act, championed by President Barack Obama, is commonly known as "Obamacare," though that was initially a Republican epithet. And Sens. William Roth and Claiborne Pell have also found their names written into the tax code. "That is not unusual," Cruz said. "You have things like Roth IRAs that were named after Senator Roth. You have things like Pell Grants that were named after Senator Pell. You have things like Obamacare that were named after President Obama." It's unclear exactly why the accounts were named after Trump, and the White House did not respond to a request for comment. Cruz had pitched the idea as a way to give kids a stake in the free market from an early age, allowing them to potentially reap financial benefits down the line while making them less likely to support socialism. "It enables every newborn child in America to experience the enormous benefits of compounded growth, and to accumulate significant resources with the passage of time," Cruz said. "It creates a generation of new capitalists." According to the bill, individuals with "Trump accounts" will be able to use the savings for things like higher education and first-time home purchases starting at age 18.
Business Insider
22-05-2025
- Business
- Business Insider
Ted Cruz says he doesn't mind that his $1,000 investment account plan for babies is now called 'Trump accounts'
First, they were called "MAGA accounts." Now, they're "Trump accounts." As part of their "One Big Beautiful Bill," Republicans on Capitol Hill want to establish new investment accounts for American children. Under the plan, babies born after January 31, 2024 and before January 1, 2029 — essentially, the last three years of President Donald Trump's term — will receive $1,000 for the account from the federal government. The original name was an acronym for "Money Account for Growth and Advancement" — the same initials as Trump's political movement. In a last-minute change before the House passed their version of the "Big Beautiful Bill" on Thursday, "MAGA" was replaced with "Trump." While the president stands to get the credit, it was Sen. Ted Cruz's idea to create "Invest America" accounts. The Texas Republican says he doesn't mind. "What I care is that they remain in there," Cruz told BI, referring to the provision's inclusion in the larger bill. "I think it doesn't matter what they're called. What it matters is what they do." In terms of political branding, it's further than other recent presidents have gone. President Joe Biden, for instance, chose not to sign COVID-19 stimulus checks like Trump did — though he later said it was "stupid" not to do so. Other government-backed programs have taken on the name of their creators. The Affordable Care Act, championed by President Barack Obama, is commonly known as "Obamacare," though that was initially a Republican epithet. And Sens. William Roth and Claiborne Pell have also found their names written into the tax code. "That is not unusual," Cruz said. "You have things like Roth IRAs that were named after Senator Roth. You have things like Pell Grants that were named after Senator Pell. You have things like Obamacare that were named after President Obama." It's unclear exactly why the accounts were named after Trump, and the White House did not respond to a request for comment. Cruz had pitched the idea as a way to give kids a stake in the free market from an early age, allowing them to potentially reap financial benefits down the line while making them less likely to support socialism. "It enables every newborn child in America to experience the enormous benefits of compounded growth, and to accumulate significant resources with the passage of time," Cruz said. "It creates a generation of new capitalists." According to the bill, individuals with "Trump accounts" will be able to use the savings for things like higher education and first-time home purchases starting at age 18. Money taken out of the account for those purposes will be taxed as long-term capital gains, while money withdrawn for other purposes is taxed as regular income.
Irish Times
20-05-2025
- Business
- Irish Times
Could a MAGA-inspired baby fund work in Ireland?
Republican firebrand Ted Cruz isn't the most obvious inspiration for Irish policymakers, but his new MAGA Account proposal echoes the Programme for Government's vague plan to introduce managed savings accounts for newborns. MAGA, in this case, stands for 'Money Account for Growth and Advancement,' not the usual red-hatted version. Under Cruz's plan, every American newborn would get a $1,000 stock market account, with friends and family allowed to contribute up to $5,000 annually. From age 18, the money could be used for college, a first home or to start a business. The idea was welcomed by Trump supporter and hedge fund billionaire Bill Ackman, who has long proposed giving each newborn $6,750 to invest in index funds until retirement – enough to grow into $1 million by age 65 at annual equity returns of 8 per cent. Adjusted for 3 per cent annual inflation, that figure shrinks to around $161,000, but the principle still holds. As Cruz puts it, Americans would 'experience the miracle of compound interest'. READ MORE There's bipartisan momentum behind the general concept. Vanguard, JPMorgan and BlackRock's Larry Fink all support some version of early investment accounts, as do some Democrats. Some US research finds that so-called baby bonds could reduce the racial wealth gap. As Stocktake argued in January, the real lesson is this: don't just save more – save sooner, and smarter. Choose low-cost index funds, and let time do the heavy lifting.
