Even More Incentivizing Failure

Quietly embedded in the One Big Beautiful Bill is a provision to provide a one time $1,000 payment from the government into an investment account for children.

The One Big Beautiful Bill Act, recently signed into law by President Donald Trump, allows millions of babies born in the U.S. to receive a $1,000 "Trump Account."

These accounts, which are created by the government for those under 18 years old, are designed to help young people start investing early.

"This will afford a generation of children the chance to experience the miracle of compounded growth and set them on a course for prosperity from the very beginning," the White House said.

Children born between Jan. 1, 2025 and Dec. 31, 2028 are eligible for a one-time $1,000 payment into their Trump Accounts, courtesy of the federal government.

Parents and relatives can contribute up to $5,000 each year into the account until the child turns 18 years old. After 2027, the $5,000 number may be adjusted for inflation.

The child can access the money, which must be invested in low-cost stock mutual funds or exchange-traded funds like the S&P 500, once they turn 18 years old.

Now at first this might seem like a laudable move. Giving babies “free” money, who could be against that?

Me for starters.

First of all, nothing is free. In a nation that has run trillion+ deficits for a long time any new spending is “paid” for by borrowing make-believe money. At this point it is all so fake and gay that I don’t necessarily object to spending made-up money as a matter of principle but there is plenty more reason to object to this.

Like for example the fact that close to, if not more than, half of all newborns in America are other-than-White. Who will be paying for this? Whites of course. While we are barely a majority in our own country these days, we are a distinct supermajority when it comes to paying taxes.

What this amounts to is just another way of transferring wealth from White taxpayers to non-White benefit leeches. I don’t believe that is what Trump intended but it is often the case that legislation is passed with the best of intentions only to become a nightmare in practice.

Finally….the money can be accessed at age 18. I have recounted this before but as a bank manager in Northern Michigan I had a handful of customers that were members of a local Indian tribe. The younger Indians would get cash payments from the government when they turned 18, it might have been a little more complicated but that’s the gist of it, and almost without exception they blew through that money in no time and never on anything useful.

Imagine yourself at 18 and suddenly having access to a few thousand dollars. Now you can sit on that money and let it keep earning interest until you need it for something significant like a down-payment or your future children’s education…or you can cash it out and spend it on something right away, maybe something frivolous or maybe something like rent or food.

The bulk of my corporate career was working with retirement plans, 401(k) or 403(b), and when people leave their employer they can either leave the money in the plan if they have a large enough balance, roll their balance over to a new employer plan or a special type of IRA or cash it out, paying taxes and usually penalties.

Guess what most of them did.

They cashed them in, took the penalty and spent the money again on something frivolous or on something critical. Either way the money was gone.

There is little reason for me to expect anything different here, especially as this is "found money" that they didn't invest themselves. When given access to what seems like a windfall, most people (especially at 18) are going to take the money and blow it. That is not how you “build wealth”. Building wealth requires a certain mindset and not many young people have that mindset. This is why young Amish sign their paychecks over to their parents, I know some that make close to or above six figure incomes in their early 20s but their father controls their money until they get to a certain age or get married.

Why was this created? Look at the subheading on the screenshot above. It’s a quote from David M. Solomon, the CEO of Goldman Sachs (and yes he is). I would bet a bunch of shekels that Goldman will be involved in these plans. I would also bet that whichever firms are acting as the custodian for these accounts are getting paid for it because no one does that stuff for free and who wouldn’t want a bunch of accounts that are generating management fees but require next to no maintenance? There are something like 3.6 million babies born in America every year, it doesn’t take much of a management fee for that to start becoming real money.

This is going to be another stupid boondoggle and it won’t accomplish much other than lining the pockets of investment firms and the sellers of spinner rims and gold teef when these kids turn 18.