A draft of President Trump’s “Big, Beautiful Bill” includes a proposal to establish so-called “MAGA” savings accounts for children.
The pilot program — described as the “money account for growth and advancement” or “MAGA account” in a draft released by the House Ways and Means Committee on Monday — would give the parents of every baby with a Social Security number born between the beginning of 2025 and the end of 2028 a “one-time credit of $1,000.”
That money can then be paid into the child’s “MAGA account,” where it will accumulate interest and value through investments over time.
Families and employees can contribute up to $5,000 per year to the children’s accounts, and according to the House bill, the money will be “exempt from taxation.”
By the time accountholders become adults, they will ideally have tens of thousands of dollars to hand for education, job training, starting a business or buying a home.
Sen. Ted Cruz (R-Texas), is the most prominent GOP advocate of the proposal.
“There are many Americans who don’t own stocks or bonds, are not invested in the market, and may not feel particularly invested in the American free enterprise system,” Cruz told Semafor in an interview Monday. “This will give everyone a stake.”
Democrats have pitched variations on the “MAGA account” idea, with Sen. Cory Booker (D-NJ) proposing the creation of savings accounts seeded with $1,000 for every newborn during his 2020 presidential campaign.
Under Booker’s plan, the money would have gained interest until the account holder turned 18 and could access the cash for certain uses like homebuying or paying for college — and not investing.
“That is just a government program,” Cruz told Semafor of the Democratic proposal, “where this is very much designed to get the next generation to invest in the market.”
“You see a lot of young people who in public opinion surveys, say they have a negative view of capitalism and they embrace socialism,” he added. “And what is powerful about this is, when every child has invested, it’s no longer an abstract idea.”
Cruz related to Semafor that he saw enthusiasm for the idea among CEOs when he attended last week’s Milken Conference in Los Angeles.
In an interview with CNBC last week, Altmeier Capital founder, chairman and CEO Brad Gerstner — another powerful advocate of giving kids a version of retirement account from birth — revealed the leaders of companies including Uber, Dell, Nvidia and Oracle have said “they’ll contribute to the accounts of the kids of their employees.”
“This is essentially a 401k for every newborn in America, and just like with 401ks, employers have seen it is a very attractive benefit for their employees to match or help seed those savings accounts,” Cruz said.
“What is powerful is enabling every child in America to have an investment account and a stake in the American free enterprise system.”
The proposal still has a long way to go in Congress, with Republicans holding slim majorities in both the House and Senate, and the plan is likely to be revised if it remains in the bill at all.