The United States has “chronically underinvested” in young people — and President Donald Trump’s newly announced kids' savings accounts are no different, according to Bloomberg columnist Abby McCloskey.
“There are better ways to promote familial financial well-being than Trump Accounts,” McCloskey said. She gave five reasons as to why.
“First, families need support today, not locked-up funds to be used two decades from now. This is particularly true for the bottom half of the income distribution.”
“Second,” she said, “none of these savings accounts speak to each other — 529, 401k, IRA, FSA or HSA, now Trump Accounts. It can be hard to predict where you’ll need the savings, and savers are penalized for withdrawing for other uses.”
“Third, there is still a taxpayer cost attached: a nearly $20 billion price tag when combining the costs of seeding the accounts and tax-free contributions, according to the Joint Committee on Taxation.”
She added, “If the contribution program doesn’t expire after 3.5 years, the price tag will rise by another $15 billion over the next 10 years, based on their average expected annual expenditures for 2027 and 2028.”
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“Fourth, two-thirds of American kids cannot read or do math at grade level by fourth grade,” McCloskey wrote. “This suggests that instead of an investment whose biggest expected use is higher education, children need earlier investments in high-quality tutoring to stay on track.”
“Fifth: a four-year expiration date suggests a short-term political mindset and budget trickery much more than seeding the ground for long-run family flourishing.”
McCloskey, who directed domestic policy on two presidential campaigns, claims American Families would be better off if Trump would “return to his roots.” This includes moves Trump made in his first term, like doubling the Child Tax Credit, boosting funding for Child Care, “12 weeks of paid parental leave for all federal workers, and proposing a universal 6-week paid leave program for all American moms.”
Instead, McCloskey believes Trump is “determined to inflict tariff pain and higher costs on American families.”
“An extra $500 in child tax credit payments per family for a few years sounds nice, until you realize that the costs of tariffs per family are currently estimated to be nearly $3,000,” she wrote, quoting the Yale Budget Lab. “Moreover, the bill as drafted puts us somewhere between $3 and $4 trillion more into debt; guess who inherits that?”
“It might not have had the snazzy Trump Account branding, but Trump’s first term arguably was a much better deal for babies,” McCloskey concluded.