Since returning to the White House, President Donald Trump has introduced a program designed to provide a financial boost to newborns through what are officially called “Trump accounts.” Launched in early July, the initiative offers a one-time $1,000 seed deposit from the federal government for every newborn whose family applies. The program aims to give children a starting point to build wealth over time, with the broader goal of promoting economic opportunity and narrowing the wealth gap.

In campaign appearances, Trump and other Republicans have promoted the accounts as transformative for American children, particularly those from working-class families. Trump has asserted that the initial $1,000 deposit could grow substantially, painting scenarios where the funds might reach $100,000 to $300,000—or even $1 million if the stock market performs exceptionally well. The White House has published projections indicating that some children’s accounts could grow to $271,000 by age 18 and $13 million by age 55, assuming annual contributions and sustained investment returns around 10 percent.

However, economists and experts have expressed skepticism about these claims, warning that the numbers are overly optimistic and potentially misleading. They note that the projections depend heavily on families making maximum annual contributions of up to $5,000 and achieving consistent high investment returns, conditions unlikely to be met by many, especially low-income households. Without additional contributions beyond the initial $1,000, White House estimates suggest the account would grow to approximately $6,000 by age 18, based on the same optimistic return assumptions.

Critics also argue that, rather than reducing the wealth gap, Trump accounts could exacerbate it. Wealthier families are more able to make regular contributions and take advantage of the program’s tax benefits, allowing their children’s accounts to grow much larger. In contrast, families without the financial means to contribute beyond the seed deposit receive far less benefit, limiting the program’s impact on economic mobility.

“This policy is not about giving poor kids a leg up. It’s more likely to widen the gap between rich and poor,” said Justin Wolfers, an economics professor at the University of Michigan. He described the administration’s growth projections as “ridiculous” and “misleading.” Darickt Hamilton, an economics professor at the New School and an early proponent of baby bonds, emphasized that the amounts involved for low-income families are insufficient to meaningfully change life outcomes, calling the program “an income transfer, not a wealth-building tool.”

The program also allows employers to contribute up to $2,500 annually to employees’ children’s accounts, which generates tax breaks primarily benefiting higher-income workers. Meanwhile, the $1,000 seed deposits are set to expire at the end of Trump’s second term, but the ongoing tax deferrals and contributions are expected to continue indefinitely, concentrating advantages among wealthier families.

White House spokesperson Kush Desai maintained that Trump accounts are making a generational difference for working-class children and highlighted philanthropic contributions from billionaires like Michael Dell and Ray Dalio aimed at supporting lower-income families. Desai rejected assertions that the program would increase inequality, stating that the initiative provides middle-class parents opportunities previously only available to the wealthy.

While some Republicans have praised the program as a way to integrate more Americans into the capitalist system, others caution that it aligns with efforts to privatize social safety nets. Senator Ted Cruz likened Trump accounts to a new version of the New Deal focused on individual wealth accumulation, whereas critics suggest it may undermine existing public support structures.

In contrast to the Trump accounts, legislators such as Senator Cory Booker and Representative Ayanna Pressley proposed baby bonds legislation that would allocate larger deposits to children from lower-income families, intending to provide greater wealth-building potential to those most in need. That approach, however, was never enacted.

Overall, while Trump accounts represent a novel approach to child savings initiatives, experts agree that their benefits are likely to vary sharply by family income, raising questions about their effectiveness in reducing economic disparities.