The Daily - Could ‘Trump Accounts’ Actually Close the Wealth Gap?

Episode Date: July 24, 2026

This month, President Trump announced the start of “Trump accounts,” an investment device that could eventually help address the nation’s wealth gap. Claire Cain Miller, who covers families and education for The New York Times, explains how these accounts work and why so many Americans have yet to sign up. Guest: Claire Cain Miller writes for The Upshot, which uses data and visuals to help explain the world. Background reading:  Many children don’t have Trump accounts. Some are missing out on $1,000. Photo: Allison Robbert for The New York Times For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.  Subscribe today at nytimes.com/podcasts or on Apple Podcasts and Spotify. You can also subscribe via your favorite podcast app here https://www.nytimes.com/activate-access/audio?source=podcatcher. For more podcasts and narrated articles, download The New York Times app at nytimes.com/app. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

From the New York Times, I'm Zolinkano Young's, filling in his host. And this is the Daily. I want to stand next to these soon to be very rich people. Earlier this month, in the Oval Office, surrounded by kids, President Trump rang a ceremonial bell to open the stock market. So today, with the ringing of the opening bell for the stock market, those accounts will now begin to grow right along with our booming economy. He announced the start of so-called Trump.

Trump accounts, a new investment device that could eventually address the nation's wealth gap. We're giving this money to children so they can have a good life. Very early on, they can have a good life. Today, my colleague Claire Kane-Miller on how these accounts actually work, why they have bipartisan support, and why, even weeks after their launch, so many Americans have yet to sign up for free money. It's Friday, July 24th. Hello, Claire. Hi.

I'm so glad that you could join us today because when we talk about Trump's signature piece of legislation of this second term, what he calls the big beautiful bill, we typically talk about tax cuts, we talk about ICE funding, hiring Border Patrol agents, but tucked into this enormous piece of legislation is an initiative that I know you have been focusing on, and that's Trump accounts. Clara, as someone who covers families and the public policy that affects them, can you tell me where this idea came from, this idea of Trump-branded investment accounts for children? Where do we start here? Sure. So the general idea is that babies and children can start investing in the stock market. And babies born during Trump's second term get $1,000 from the federal government to do so. The idea is actually, decades old. It's trying to address the fact that many Americans aren't in the stock market at all. And so they're missing out on that wealth building. And it contributes to a wealth gap between, you know, kids from poor and rich families, kids from black and Latino families and white families. And so the general idea is try to shrink that to give everyone a chance to invest starting when they're really young so that they have more time for that investment to compare. and grow. And this is essentially free money. People don't need to pay for this. This is just money that's out there that they can take advantage of. That's right. All they need to do is open a Trump

account. You mentioned that there was also a history behind this kind of idea even before Trump announced it as well. Can you take me through a little bit of that history? Sure. So this idea started several decades ago, and there are a few states that have experimented with it. Two examples are Oklahoma, where some kids, as part of an experiment, have received money to invest in the stock market, and Maine, where a philanthropist has pledged to give every baby born a certain amount of money to invest in the stock market. Some cities have also done this, and they're mostly going into college savings accounts, like 529s. And the idea, interestingly, to me, has bipartisan support. Both Democrats and Republicans have supported the general idea. They might disagree on some of the specifics of how the policy works. But the idea of allowing children to start investing in the stock market when they're young appeals to both parties. And it's one that people have been trying to get in to the mainstream for decades now. That's interesting. More recently, there were two bills, one from the right and one from the left trying to start these accounts.

One was from Corey Booker, a Democrat, who proposed the idea of baby bonds, where all babies would get a certain amount, and then babies born in low-income families would get even more to try to close that wealth gap. And then another idea came from someone on the opposite side of the aisle, Ted Cruz, who proposed an idea that looks very much like the version of Trump accounts that we now have in this bill. Ted Cruz and Cory Booker, two people not exactly. always meeting and agreeing on the same policy. But here, we have this rare case of bipartisanship. Right. And I think it reflects something that I've been observing covering family policy, which is that politicians in general talk about the importance of family. They talk a lot about family values. But in general, Democrats have been more willing to invest government resources in family policies, things like paid family leave or universal child care or an expanded child tax credit.

More recently, though, Republicans have been more willing to do that, realizing that if they want to address some of their priorities, like banning abortions and increasing fertility, that working families might need some help. And this policy is one way that they thought they could do that. It seems like what you're saying is both parties have stated this focus on helping working families. Two different ways of actually doing that. But recently we are seeing both parties coalesce around one similar idea of these Trump accounts. Exactly. Now, how did this idea then get on the president's radar? So there are people on the right who have been loudly advocating for accounts like these.

And they got the Trump administration's ear during the writing of the tax bill. There's a group called Invest America that had this idea. and from what I understand, it appealed to people in the administration for two main reasons. Okay. One is that it relies on the free markets to grow money for Americans. Instead of just government handouts, though babies born in his second term do get the $1,000, it's mostly about the compounding returns from the stock market instead of using taxpayer money to support families and children. A second reason is that it gives people choice.

on how they spend the money. Republicans have generally been opposed to family policies that only provide for one way of caring for children. For example, subsidized child care, which some worry encourages parents to work outside the home. Instead, they prefer policies that provide choice, basically giving families money so that they can choose for themselves and their children how they spend it. Okay, Claire, you started to get into this, but what is the idea exactly? What are these accounts? What's the process for it? So anyone under 18 can have an account opened in their name. The law says that the money must be invested in low-cost index funds, which basically means that for minimal fees, they're accessing the broad stock market. If children are born since January 1, 2025, and they have an account open in their name, they'll automatically get the $1,000 from the federal government. And families, friends, employers can donate. Also, philanthropic. can. So the Dell's behind the Dell computer fortune have donated $250 to most children who aren't

eligible for that $1,000 from the federal government to try to cede these accounts. Wow. And parents could have checked a box on their tax forms in April to open these accounts, or they can go to IRS.gov and get a tax form. And a new thing is that when parents of newborns register for their social security number at the hospital, they will also. get a chance to open a Trump account for their baby. Okay. When the child is 18, they then become an IRA, which is essentially an account that can only be used for certain purposes.

Retirement, college, buying a first home, things like that. If someone tries to withdraw money from the account for a different purpose, they're assessed a penalty. Fascinating. Okay. So, Claire, you mentioned that in part, one goal of this is to address the wealth gap, right? Right. I just want to take a step back here.

what exactly is the difference between the wealth gap and the income gap? So we've heard a lot about income inequality in the United States, which is the vast difference between what the lowest paid workers earn each year and what the highest paid workers like CEOs and billionaires earn. That's about how much you earn from your job. But wealth refers to savings and assets. These are like retirement accounts, a brokerage account with your savings in it, the house that you own.

So the gap between the least wealthy Americans and the most wealthy Americans is even larger than the gap in how much they earn. Right, right. Your wealth is basically your net worth, which would cover your long-term savings, rather than just what you would earn in a given year. That's right. And this matters for things like eventually retiring or paying for college, but it also matters in an important day-to-day way, because having these kind of savings provides a buffer.

If your car breaks down, if you have an unexpected health care expense, and you have no savings, that's an incredible stress for your family that can plunge you into poverty. And research has found that even just knowing that a family has some savings like that can decrease the stress in the family even when there's not a financial emergency. I hear you on that. We're talking about this being a buffer, right? But I can't help but think now that also this piece of legislation was criticized for also cutting the social safety net, cutting programs that many of the needy relied on like food stamps. So I can imagine some folks looking at the cost of this program and asking, well, wait, why not get immediate cashier? Like what good is sort of an investment in a long-term plan to address the wealth gap when I,

I've got bills to pay right now. So is this, which is more long-term, a solution. What's the argument for that? It's a good question. And the people who I talk to who advocate on behalf of families and addressing child poverty would say both are needed. They really serve different purposes. Giving families cash now, which happens in the form of the child tax credit, which the Trump administration did expand slightly. This helps with day-to-day needs, like getting food on the table, filling up your car with gas, making sure your children have winter coats. These kind of things are very important, and it could be frustrating to have your child get an account that the Trump administration puts $1,000 in, but you can't access it even though

you can't afford to feed your children right now, right? Right, right. And so the thing about the long-term savings accounts is that if you get $1,000 as a newborn now, it could be worth $6,000 if no more money was put in by the time they're And so taking advantage of the compounding returns of the stock market could really serve people well. But it doesn't mean that families don't also need help in the form of day-to-day assistance now. And people who study this field and craft these policies mostly say that both are necessary. But you're talking about when it comes to the Trump accounts, you're talking about the idea of money that's building, right?

Like that's what you're talking about when it comes to compound interest. You may put this money away and it may be frustrating to not use it in the near term, but also that money is going to grow over the long term. Right. It's helping your child when they're an adult versus helping your child right now. And so it's just serving a very different purpose. And there's another real benefit of these kinds of savings accounts, researchers told me, which is that a lot of families use them to save for college. A lot of the states and localities that already have them, they go into college savings account specifically for that purpose. And even small amounts of money can really change children's attitudes towards education. You're saying, look, even if you initially put away $250, that isn't enough to pay for college, as we know. But maybe it starts to change the mindset a little bit. That's right. What the researchers have found is that even having a few hundred dollars in a college savings account makes parents talk about education differently. It gives middle schoolers and high schoolers a college-going mindset, just to know that this exists because it makes people more optimistic about the future. And it gives kids literally

in the idea of what the stock market is. I think a lot of people, you know, even when they're 18, are overwhelmed by the stock market, perhaps scared of it, don't really know what to do if they're offered their first chance. They got a lot going on at that age as well, right? You're overwhelmed. You're figuring it out. You're growing up. And you've never invested in stocks. You don't know what a retirement account is. And a big piece of this that the Trump administration is pretty proud of is financial literacy education. They're trying to get a lot of states. Oklahoma is the first one to put financial literacy into the public school curriculum related to Trump accounts. They have some stuff online that's aimed at teaching kids what stocks are and what investing is and why to invest.

And the hope is because the earlier you invest, the more money you'll make, that this will get more people, more Americans comfortable with it and able to to do it and take advantage of it. Okay, so the benefits of this actually seem pretty clear. You have money that could be growing over time. You have people that are thinking about long-term plans like college from a young age. You're almost changing the vibe, the atmosphere at a home. There's bipartisan support for it. Are we seeing that reflected in how the public is responding to it? Right. So these accounts are potentially a political win for the Trump administration and beneficial for many families in the United States. The concern is whether the families that are opening them

are necessarily the families who would benefit most. And right now it doesn't seem so, and the question is why. We'll be right back. Okay, so there's money on the table, but people aren't enrolling. What do you mean when you say that people who would benefit from this the program the most aren't signing up. Yeah. So, so far, the government has said that about six and a half million children have had Trump accounts opened in their name, which is a lot of kids, but it's less than 10 percent of eligible kids. Wow. That's not as much as I would expect.

Right. And of those who can receive the $1,000, only about a quarter of them have open Trump accounts. Okay, just a quarter. That's striking. And are there any numbers that get at the most needy people as well and just how much they know about this? So the administration has said that because of privacy concerned, it's not able to tell us the demographics of who have opened accounts. But the data that is out there from a variety of sources does suggest that the poorest families have not done so. I mean, just hearing that, those would seem to be the people that this program would maybe benefit the most, the people least likely to invest in the past, no? That's right. So there are a few challenges there. The Trump administration does emphasize that

families across the income spectrum have opened accounts. But the way that many families did it, first of all, was by checking a box on their tax returns in April. And there are families, many families in America who don't earn enough to pay income taxes. Okay, so that's one hurdle. That's one hurdle. Another is the awareness. We had a survey by public first that looked at who has heard about these accounts and then who really knows what they are. And it found that just 10% of the poorest families were even aware that these accounts existed.

Money out there that would be available for families, but people actually don't know about it yet. That's right. What's going on here? Well, to start, these accounts are new. And while parents have been able to sign up for them for a while, they only opened for investments on the 4th of July, so earlier this month. And the Trump administration has been really focused on just standing up the accounts, which happened in a very short period of time.

They told me that they're now turning to outreach. There was a Super Bowl ad. They're putting up billboards in areas of the country that are under are represented in sign-ups. They're trying to incorporate some of this into public school curriculum into hospitals where babies are born to tell parents about them. And so they have said that it's really a priority to reach more American families. But the rollout has been a little bit scattered. Scattered? Scattered. How? Well, there are some disagreements on the right about the goal of these accounts and how to talk about them. We're making people part of the system. We are increasing

financial literacy. For example, the Treasury Secretary, Scott Bessent, who's been a huge proponent at these accounts. At one point, on stage at a Bright Bart News event, said that they were a backdoor to eventually privatizing Social Security. If all of a sudden these accounts grow and you have in the hundreds of thousands of dollars for your retirement, then that's a game changer. And then immediately had to walk that back. It is a compliment to Social Security, not a replacement. But there's another split on the right, too, which is that the populist wing of the party has become much more in favor of the government using its money to help families. But the more traditional Republicans who are hesitant to spend government money are not thrilled about the idea of a government handout in the form of these $1,000 contributions to babies born during his second term.

Another goal, as we've been talking about, is to reduce the wealth gap. Yet the way the law is written, unlike the policies that Democrats have proposed, actually restricts donors from choosing who gets money based on income. They cannot give money specifically to kids whose parents are below a certain income. Okay. And then there's also the goal of reducing the racial wealth gap. And what we know is that about 60% of Americans own stock, and they are more likely, to be white, to have college degrees, and to earn high incomes. And so the stock market has now become the biggest driver of the racial wealth gap,

which is the amount of savings and other wealth that black and Hispanic people have versus white people. This is something that the Trump administration has talked about almost not at all. As we know, it has worked very hard to end diversity, equity, and inclusion measures. Right. This is an administration that has almost made. just the term equity stigma in a way, you know, and has tried to remove that term from grant applications. It strikes me as surprising that they would go out and sell a policy that has

Trump's name on it as an equity policy, even if that might be part of the impact of it, addressing the racial wealth gap. That's exactly right. So instead, they focused on something else, which is just the incredible success of the U.S. stock market. The idea that the U.S. stock market is a really powerful way to build wealth and the idea that every American child should be a shareholder. Instead of talking about children who are poor, who are black and Latino, who may not be able to access that wealth, they're just talking about how every American child should be able to get into the stock market. It seems like they're still trying to figure out the right way to talk about this. But I guess the person at the center of this is the messenger, is President

Trump. How consistent has he been when it's. comes to getting the message out here. From what I've heard, people on the right think that addressing the struggles of working families and the affordability crisis is really, really key for the president because working families are having such a tough time right now. But many of them say that the president is not paying enough attention to those issues. And even the things that he has done, like these Trump accounts, like expanding the child tax credit, he's not talking much about them. I'll say this is a little bit of groundhog day for me in a way. I do. I do. usually cover the White House. And I feel like, you know, we've heard him get blowback from his

America First supporters, that they want him to focus more on the daily needs of Americans. And often it's Trump aides themselves who will say, you know, this is going to be the speech where he focuses on these economic policies. And he ends up launching into a list of grievances or sort of the more red meat issues. And look, we saw this just this week. It is an honor for me to welcome you to the Cobb County School District. President Trump traveled to Georgia. The White House had been billing this event as a speech that was going to be focused on Trump accounts. You're going to hear a lot more because it's so important Trump accounts. Thank you. That does deserve an applause. It did seem like Republicans want to talk about it, especially local Republicans who spoke before him, who had a very focused

message. But President Trump took the stage. Well, thank you very much, everybody. It's a special place. spoke for more than an hour and 20 minutes, and only 10 minutes of that was actually focused on this policy. It's called the Trump accounts that it's hot as a pistol. It didn't take long for him to start talking about Iran, to start talking about Joe Biden. Sleepy Joe Biden and the radical left Democrats, they're Democrats. It does seem like there's opportunities to get out there

and talk about this policy. But President Trump has never really been known as having a consistent message particularly on economic issues. So then I guess I'm wondering, is the president himself a hurdle to this policy? He is in the sense that we're seeing from reporting that the Trump branding on these accounts is very polarizing. These accounts went by various names during the drafting of the bill, and the official name is a 530A account. But right before the Republican tax bill was passed, the name was changed to Trump accounts. And this, it turns out, has been a turnoff for some of the parents who could be opening them for their children. Trump's name is a turnoff

to some families you're saying. That's right. We've heard from many people that it actually is preventing them from wanting to sign up. And this is showing up in surveys too. There are also some trust issues that we've heard, will these actually be funded? Trump has a history of defaulting on his debts. So there are other hurdles as well. I do realize that the president has low approval numbers right now, that he's incredibly polarizing. But when we're talking about essentially free money being out there, I mean, that is pretty striking. Yeah. And he's really branding these. Another funny thing is that the tax form from the IRS

used to sign up for these is number 45-47, which all signs point to being named after his presidencies. I think that's a fair assumption there. Okay, so we've talked about the hurdles to enrollment here. Yeah. What could the government do to get over some of these hurdles and actually increase enrollment? The biggest thing they could do, and this is according to researchers who have studied the way that these kinds of accounts work in other places, is auto enroll children. Okay.

Right now, parents have to sign up, and when they have to do that in other places, a minority do, just like we're seeing with Trump accounts. But in those other places, like Maine and Oklahoma, when babies were automatically enrolled in accounts giving parents the chance to opt out instead of forcing them to opt in, almost none of them did. There was 99% or 100% participation. Wow. Seems like they should be doing auto enrollment. Why aren't they doing it? There are a few reasons. It's a huge task to take on for all the children in the United States.

There is a small fee associated that the government has to pay with opening these accounts. There are also some privacy issues. There are laws about sharing information, identifying information across government agencies, which would need to be done between the IRS and the Social Security Administration. And another reason seems to be that despite these accounts being available to anyone under 18, they are most beneficial if you invest early. If you're a baby or a toddler when you start investing. And so there is some concern in the Trump administration about opening accounts that some families might

never invest in, or which the children are older and they might not have as much time to see compounding returns. Okay, so I'm hearing a couple different reasons. It seems like we've got some privacy laws, also some costs for auto enrollment that the administration would have to pay, but what's the cost of not doing these things and maintaining sort of the course as we've seen it thus far? The risk is that it could do the reverse of what these are aimed at and actually widen the wealth gap. Because the parents who are financially sophisticated, who are already investing in the stock market on behalf of their children, who are hiring tax accountants to help them with their income taxes, those are the people who are going to sign up. The people who can

afford to contribute to these, who maybe work for big white-collar employers who are also going to contribute. And if the poorer families, the ones who are not already in the stock market, are the ones who aren't signing up, these could end up widening the wealth gap instead of shrinking it. I just want to pause you here because we started this conversation by talking about how this could be a means to address that wealth gap, address a disparity, help those that were not prone to invest. That person at the dinner table who might not be talking about this with their family because they don't actually have an account like this. They don't have money in the bank. But what you're saying is there is a risk here of actually undermining the whole goal of this thing. That's the concern.

And I will reiterate that the Trump administration has told me in several ways that reaching low-income families who would benefit most is a top priority. I don't think the goal here is to leave them out. Right. But as of now, those are the families with the least awareness and perhaps the least comfort with opening these accounts. The goal might not be to leave them out, but the design of this program is what's going to determine who actually takes advantage of it. Right. That's the big concern here. It kind of seems like a double whammy in a way, right? We talked about how this bill, this legislation, it had a cost, right? Right. There were major cuts to the social safety net to actually pass this legislation, which has this program that seems to have all of this bipartisan support.

And now we're describing a scenario where the people who relied on that social safety net and saw it cut, they might not be able to reap the rewards. So worst case scenario, this program just becomes another way for wealthy families to invest in the stock market on behalf of their children. Or if it is successful in the way that many policymakers imagined it, it could become a way that the next generation. of adults, those babies being born right now, enter adulthood in a more secure spot, more able to pursue higher education or buy a home or do many of the things that young people are saying today that they can't do. And it could be something that doesn't just define this presidency, but changes the way that we think about wealth building and working families for generations to come. And all of that is likely to be shaped over the next few months and years.

Well, Claire, thank you so much for breaking this down. Thanks for having me. We'll be right back. Here's what else you need to know today. The Trump administration said it would impose tariffs of around 10% on goods for more than 80 countries starting Friday. It was the president's latest effort to replace tariffs that were struck down by the courts. And the president added a major new condition to his nuclear agreement with Saudi. Arabia, one that threw its future into doubt. The president demanded that Saudi Arabia established

diplomatic ties with Israel, a condition that will be difficult to meet. Saudi Arabia has said it would only work with Israel once Israel created a pathway for a Palestinian state, something Israel has firmly opposed since the October 7th attacks. And finally, the Justice Department has withdrawn subpoenas that sought phone records and grand jury testimony from New York Times journalists who reported on the security capabilities of President Trump's new Air Force One. The decision came after a federal judge grilled Trump administration lawyers in court on Thursday over their handling of the subpoenas, which the Times has sought to quash. Today's episode was produced by Adrian Hurst and Eric Kruppke, with help from Diana Wynn.

It was edited by Chris Haxell with help from Michael Benwaffe. and contains music by Marion Lazzano. Our theme music is by Wonderly. This episode was engineered by Chris Wood. That's it for the Daily. I'm Zolinkano-Yungs. See you on Sunday.