On Monday, Trump announced that the Government will give every child born between 31 December 2024 and 1 January 2029 $1,000 in an investment account. When the eligible child turns 18, they will get access to the funds to spend as they wish. Parents will be able to invest extra money into this account on their child’s behalf, up to $5,000 a year. Trump touted the measure as a “pro-family initiative”, but this policy isn’t on the wishlist of any struggling American parent.

Trump is right that families need support. The birth rate has slipped to only 1.6 children per woman. Americans are having fewer children than they want to. They cite economic insecurity and difficulty balancing work with parenthood as the factors making it harder to become a parent.

The Trump administration claims to care about this problem of falling birth rates. Earlier this year, it was reportedly considering a $5,000 baby bonus for new parents. But that idea, which may indeed have helped more people have children, has fallen by the wayside. The $1,000 investment account is offered as a poor substitute.

Supporters might argue that the promise of free money for a future child could encourage more Americans to take the leap into parenthood. But $1,000 (about £740) is not a sum of money that will incentivize anyone struggling to start or expand their family to do so. Especially when that money is not even accessible to parents, or to children for 18 years.

The policy is not a standalone measure but part of the Republicans’ “Big Beautiful Bill” which is currently making its way through the Senate. The bill’s other policies include the extension of tax cuts Trump made during his first term, new tax exemptions, and cash to fund mass deportations and anti-illegal immigration measures. Last week, Elon Musk attacked Trump over the bill’s profligacy, calling it a “disgusting abomination” and predicting that it will increase the US budget deficit by $2.5 trillion.

The baby measure is estimated to cost $3 billion a year. And to fund the bill, cuts will be made to existing policies that support lower income families. One program that the bill cut back is SNAP (the Supplemental Nutrition Assistance Program), which helps poorer Americans buy food. If you are an American parent thinking about having another child, which is more helpful to you: cheaper groceries, or your child acquiring a tiny equities portfolio in almost two decades?

The bill does include one other fillip to parents. It increases child tax credit from $2,000 to $2,500 per family. Yet any impact of this positive change on American family formation may well be washed away by the severe cuts the bill imposes upon lower income families.

In the end, the decision to give children an investment account is a gimmicky policy that will see some $12 billion spent on a benefit that parents didn’t ask for and probably don’t want.

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Phoebe is director of Boom and Head of the New Deal for Parents campaign at Onward.

PMArslanagic

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