'Trump Accounts' included in the tax and spending cut bill would be available to U.S. citizens born between 2025 and 2028, and whose parent, or parents, if legally married, already have Social Security numbers. (Getty Images)
WASHINGTON — Tucked in the “one big beautiful bill” is a proposal for tax-advantaged “Trump Accounts,” each seeded with $1,000 from the government for certain babies born in the United States over the next few years.
But financial experts and advocates for low-income children are not overly impressed.
The idea is not new and has been likened to other “baby bonds” programs aimed at reducing the growing wealth gap, like state-run trust funds in California and Connecticut. Democrats in Congress have introduced a bill to create a similar federal program.
The White House has touted the proposal in the tax and spending cut measure as “pro-family” and one that “will afford a generation of children the chance to experience the miracle of compounded growth.”
At a June 9 event to promote the “Trump Accounts” featuring CEOs of top American companies, President Donald Trump promised the pilot program will make it possible for “countless American children to have a strong start in life at no cost to the American taxpayer.”
Speaking at the same event, top House Republican tax writer Rep. Jason Smith of Missouri said “every child born under this policy will have a better shot at a future. It does not matter if they live on a city block or on a county road, this will make a significant difference to their lives.”
Critics say the accounts, as proposed, would mostly benefit children born to wealthier families.
They also say the restricted-access accounts, and the one-time government contribution of $1,000, will not help in the face of cuts to food and health programs for low-income people written into the massive budget reconciliation bill, titled the “One Big Beautiful Bill Act.”
How ‘Trump Accounts’ would work
The investment savings accounts would be available to U.S. citizens born between 2025 and 2028, and whose parent, or parents, if legally married, already have Social Security numbers.
Each year, from a child’s birth to age 18, family and friends, parents’ employers, churches and other private foundations, could contribute up to a combined $5,000 annually to the investment account that will track a stock index and gain interest accordingly.
Deposits into the account are taxed. Later on, withdrawals would be subject to the long-term capital gains tax — a tax on the profit made from selling an asset, or investment, that a person has held for longer than a year.
After reaching 18, the account beneficiary could access half the account’s value only for qualified expenses that include higher education, vocational training, the purchase of a first home, and costs associated with an enterprise for which the beneficiary has received a small business loan or small farm loan.
The beneficiary could access the remaining half of the account after age 25. At age 31, the account loses its status as a “Trump Account” and any remaining balance is taxed as income.
Drawbacks seen
The Urban Institute warns that the proposed structure of the account will mostly benefit wealthy families who already have the resources to grow the funds.
The bottom 80% of households, by income, only hold half as much cash on hand as the top 20% of households, according to the left-leaning think tank’s nationwide financial health data.
Additionally, because of penalties for early withdrawals, lower-income families would be incentivized to save in less restrictive accounts, according to the think tank’s May 27 analysis.
The institute recommends the government provide more contributions based on income level, beyond just the one-time $1,000, and lessen the penalties for accessing cash for catastrophic events.
A 2023 Democratic legislative proposal put forth by Sen. Cory Booker of New Jersey and Rep. Ayanna Pressley of Massachusetts aimed to create an account that would target the benefit to children from lower-income households.
Their plan suggests accounts be initially seeded with $1,000, and then children would receive up to an additional $2,000 annually based on their family’s income level.
According to Booker’s and Pressley’s plan, a child from a family of four that brings in less than $25,100 in annual income would have an estimated $46,200 in investment savings by the time they turn 18.
Under the Trump Account proposal, a child’s one-time $1,000 deposit from the government would grow to roughly $5,000 by age 18 if no other contributions were ever made, according to the Urban Institute.
Child tax credits
Brendan Duke, senior director for federal fiscal policy at the left-leaning Center on Budget and Policy Priorities, said the GOP proposal “wasn’t particularly well thought through.”
“It’s this question of whether it makes more sense to give every family $1,000 that they can’t access in those really important years, or whether you should have expanded the child tax credit,” Duke said.
Duke criticized lawmakers’ proposals that do not expand the child tax credit to the lowest-income families in the massive GOP budget reconciliation package.
While the House version temporarily expands the credit to $2,500 per child, up from $2,000, and the Senate version permanently expands the credit by a more modest amount of $2,200, neither version expands income or refundability parameters that would benefit the poorest families.
The CBPP estimates that 17 million children are left out of the credit because of the restrictions.
Existing savings vehicles
Another criticism of the Trump Accounts is that they provide a redundant option among the several existing tax-preferred savings vehicles for Americans, including 529 education investment savings accounts, Roth and Traditional IRAs and Health Savings Accounts.
The Tax Foundation’s Alex Muresianu said the account is “a move toward complexity rather than simplification.”
“We already have plenty of savings accounts with specific purposes, and a lot of different strings attached,” said Muresianu, senior policy analyst with the right-leaning foundation.
“We don’t really need another targeted account for a specific purpose, rather than a more easily accessible account with fewer conditions.”
In April, 2,004 residents of Menominee County in northeast Wisconsin received benefits from the federal Supplemental Nutrition Assistance Program (SNAP).
SNAP, formerly known as food stamps and called FoodShare in Wisconsin, provides food assistance for low-income people.
Other reports show similar rates.
As of March 2024, 51% of residents in the Menominee tribal nation received SNAP, according to the nonpartisan Wisconsin Policy Forum.
The latest U.S. Census data, for 2022, showed the rate for Menominee County was 49%.
American Indians constitute nearly 80% of the county’s population.
Menominee County’s rate was cited June 14 by U.S. Sen. Raphael Warnock, D-Ga., at the Wisconsin Democratic Party convention. He commented on President Donald Trump’s tax cut bill pending in Congress. It would remove an estimated 3.2 million people from SNAP, according to the nonpartisan Congressional Budget Office.
Rep. Dan Knodl (R-Germantown) looks at the root beer float made by Rep. Ryan Clancy (D-Milwaukee) during the Assembly Public Benefit Reform Committee. Clancy made it as he was arguing the definitions in the bill were arbitrary and unclear. (Photo by Baylor Spears/Wisconsin Examiner)
Republican lawmakers are seeking to implement a pair of bills that would prevent low-income Wisconsinites from buying “junk” food and ban certain ingredients in school meals, taking inspiration from U.S. Health and Human Services Secretary Robert F. Kennedy’s “Make America Healthy Again” agenda.
Rep. Clint Moses (R-Menomonie), the lead author on both of the bills, has said he wants to help ensure the food children and others are eating is healthy.
AB 180 would bar participants in Supplemental Nutrition Assistance Program (SNAP) — or, as it’s known in Wisconsin, FoodShare — from purchasing soda and candy with their benefits. Under the bill, the Wisconsin Department of Health Services (DHS) would need to submit a waiver to the federal government for approval to make the change to the program.
Kennedy wants a similar policy implemented nationwide, and so far several states, including Arkansas and Indiana, have asked the Trump administration for a waiver that would remove soda and candy from SNAP eligibility.
Moses said at a hearing on the proposal earlier this month that by allowing people to purchase those items with FoodShare, Wisconsin is “facilitating consumption of harmful, additive-filled foods” and that “instead, we should be supporting healthy, sustainable food choices for [people’s] overall health of individuals, the health of our society as a whole.”
Moses argued the restrictions wouldn’t be a novel idea, since people already can’t use their SNAP benefits to purchase alcohol, pet food and other items. SNAP currently also can’t be used for hot foods (such as a meal at a restaurant), supplements and vitamins and nonfood items.
He also compared it to the Women, Infants & Children (WIC) program, the assistance program that provides free healthy foods, breastfeeding support, nutrition education and referrals to other services to income-eligible pregnant and postpartum women, breastfeeding moms and children under 5.
“Most government money has strings attached to what that money can be used for,” Moses told the Assembly Public Benefits Reform Committee. “Adding this provision is no different than the special supplemental nutrition program for the WIC program… WIC basically includes a list of good items or essentials that people can buy that does not include any of this other stuff.”
Expert: SNAP, WIC have different goals
UW-Madison food insecurity expert Judith Bartfeld says, however, that the programs are fundamentally different. WIC serves as a narrowly targeted nutrition program that provides specific foods for a defined group of nutritionally at-risk people.
The SNAP program, meanwhile, is designed to serve as a “supplement to existing income” and “to fill the gap between a USDA estimate of what is needed to meet a household’s food needs and the amount a given household is assumed to be able to spend on food out of current income,” Bartfeld wrote in an email to the Examiner.
She said periodic state and federal attempts to restrict SNAP have been unsuccessful in the past, in part because of a “reluctance to upset the balance for a program that is a backbone of the safety net.”
According to DHS, the SNAP program helps nearly 700,000 Wisconsinites put food on their tables annually. A USDA study from 2016, the most recent year, found that “there were no major differences in the expenditure patterns of SNAP and non-SNAP households, no matter how the data were categorized,” and that similar to other families, SNAP recipients spend about 20 cents of every dollar on sweetened drinks, desserts, salty snacks, candy and sugar.
“It’s intended to provide extra resources to support buying food at the store — and its effectiveness in reducing food insecurity is well documented,” Bartfeld said. “There have long been concerns that restricting how benefits can be used would make things more complicated for retailers, more stigmatizing for participants, unlikely to translate into meaningful health improvements, and would risk reducing participation and jeopardizing the well-documented benefits of SNAP on food security.”
In addition, she said, “identifying specific foods that are healthy or unhealthy is much more complicated in practice than it sounds.”
Bartfeld said SNAP combats food insecurity because it provides additional resources to low income people and has become “less stigmatizing and easier to use.” Restrictions, she said, could end up having a negative effect.
“If putting restrictions on SNAP ends up making it stigmatizing for participants, more complicated for retailers or opens the door to an increasingly constrained program, there are real concerns it may become less effective as an anti-hunger program — which of course would have negative health outcomes; this is why the anti-hunger community has long opposed bans such as this, and considered food bans as a line better not crossed,” Bartfeld said.
Bartfeld said it’s also unclear if a ban would improve health. Despite attempts to model health effects of a SNAP soda ban, she said, there is no empirical evidence proposed bans would meaningfully change diets or improve health outcomes.
“In contrast, there is real-world evidence that incentivizing healthy food purchases can modestly impact food choices,” Bartfeld said. “And SNAP has a nutrition education program (SNAP-Ed, which goes by FoodWise in Wisconsin), that appears to increase healthy eating — even as, ironically, that funding is currently at risk.”
The bill would expand work requirements to qualify for benefits, likely leading to reduced participation, cut federal funding and leave it up to states to fill in the gaps and it would entirely eliminate funding for the education program. According to Wisconsin DHS, the cuts would cost the state approximately $314 million every year and would put 90,000 people at risk of losing benefits. The bill now goes to the Senate.
Punishing low-income Wisconsinites?
Bartfeld said this is one of the challenges with some of the recent “health-focused” SNAP proposals across the county as the other proposed cuts and restrictions to the program are unrelated or “often run counter to health.”
“That interest in benefit cuts is happening in tandem with increasing attention to food choices does mean that food programs are at the center of the action, and it can make it challenging to differentiate proposals that are really about health from those that are more fundamentally about regulating the low income [population] and paring back assistance,” Bartfeld said.
Moses during his testimony described the proposal as part of a “national movement basically to really make our food supply healthier.” He said it shouldn’t be partisan and noted former First Lady Michelle Obama’s campaign to improve school meals.
“I expect to receive full support from not just the Legislature but the governor as well,” Moses said.
Democrats on the committee didn’t appear on board with the legislation. Rep. Ryan Clancy (D-Milwaukee) expressed concerns about the legislation focusing on low-income Wisconsinites and including unclear, arbitrary definitions.
Clancy asked Moses about low-income families using benefits to celebrate Halloween and special occasions. Moses replied that “if their kids really want candy, they can go into the neighbor’s house then they could trick or treat, and they’d probably get all the candy they want, but the benefit would be that the taxpayers wouldn’t be paying for it.”
“People that are on SNAP… they are taxpayers as well,” Clancy said, “so I don’t want to categorize folks who are experiencing, hopefully, temporary poverty from being taxpayers. They’re chipping in for, you know, health care benefits and everything else.” He added, “We’re, I think, just targeting low-income people with this.”
Clancy demonstrated his point by pulling out a bottle of Snickers-flavored iced coffee, a seltzer water and, at one point, a cup of ice cream and a bottle of root beer. He poured the root beer into the ice cream, saying the milk in it would make it acceptable to purchase under the definitions in the bill. The definition for “soft drink” is “a beverage that contains less than 0.5 percent of alcohol and that contains natural or artificial sweeteners” and “does not include a beverage that contains milk or milk products; soy, rice, or similar milk substitutes; or more than 50 percent vegetable or fruit juice by volume.”
“A root beer float is totally fine right? By taking this sugary thing, adding it to another sugary thing, this is now legal for somebody to use their FoodShare benefits,” Clancy said.
Committee Chair Rep. Dan Knodl (R-Germantown) told Clancy to stop, saying that the hearing “isn’t a cooking show.”
Banning additives in school meals
Another bill — AB 226 — would target “ultraprocessed” foods in schools by banning certain ingredients from meals, “Ultraprocessed foods” were one of the top concerns recently outlined by Kennedy and a report the Trump administration commissioned, and Kennedy has expressed interest in banning other additives as well.
Among the additives the bill identifies are brominated vegetable oil, potassium bromate, propylparaben, azodicarbonamide and red dye No. 3, which can be found in candy, fruit juices, cookies and other products.
Moses told lawmakers on the Assembly Education Committee that additives named in the bill are either in the process of being banned by the Food and Drug Administration (FDA) or have been subject of peer-reviewed studies that found links to adverse side effects if consumed in significant enough amounts. For example, Red No. 3 and brominated vegetable oil are both no longer approved for use in food by the FDA.
“Our school lunches should not be filled with substances that negatively affect our students’ health, even including their mental health,” Moses told the committee.
Moses said the bill would “bypass the need for federal action while not forcing schools to risk loss of federal funds to pay for existing school lunch programs.” He also noted that other states, including California, are also working to ban the ingredients.
The bill would go into effect on July 1, 2027.
An earlier version of the bill only included free- and reduced-price meals, but it was amended after concerns from the Department of Public Instruction and the School Nutrition Association of Wisconsin. Both now support the bill.
The Department of Public Instruction said the legislation aligns with positive trends in nutrition.
“With an increased focus on farm-to-school programs and the use of local food, school nutrition programs are helping to improve the nutritional value of meals,” Kim Vercauteren, policy initiatives advisor for the DPI Division for Finance and Management, said in testimony. “Many schools and school nutrition vendors are already committed to providing meals that utilize unprocessed foods, which can be enjoyed without harmful, nutritionally useless additives. These programs not only encourage the use of healthy food, but educate students on healthy lifelong choices.”
Targeted additives not common in schools
Members of the Healthy School Meals For All Coalition told the Wisconsin Examiner that they support the proposal, but also they hope it isn’t the only thing that lawmakers do to help improve school meals. The coalition of school food stakeholders has been advocating for free school meals for all Wisconsin students and for improving the quality of food served to students.
“We appreciate the fact that they’re looking out for the well-being of our students and see the work that we do,” School Nutrition Association of Wisconsin President Kaitlin Tauriainen said in an interview. “We’re hoping that some of these steps will allow us to build more of a bridge so we can understand each other’s point of view — whether that means taking steps to grant more access to food for kids or jumping right into the full meals for all free meals for all, which is something you know we certainly want.”
Tauriainen said that school nutrition professionals are focused on feeding students the healthiest food possible, although the ingredients listed in the bill already aren’t common in school meals.
“I would say the majority of our manufacturers that we’ve talked to don’t have those additives in their food,” Tauriainen, who is the child nutrition coordinator for the Ashwaubenon School District, said. “So it’s really kind of a non-issue.”
Allison Pfaff Harris, farm to school director with REAP Food Group, a Madison-based nonprofit, said she appreciates that the bill is trying to address the school food “supply side.” She said, however, that school nutrition programs need support in moving away from other processed ingredients not mentioned in the bill.
Operating on limited budgets, school nutrition programs “turn to those quicker ingredients, which are going to be more processed foods,” Pfaff Harris said, adding that “not all processed foods have those food additive ingredients.”
Pfaff Harris suggested pairing Moses’ bill with other improvements. She said the “big ask” for the coalition is no-cost school meals, but smaller steps would also be significant. Guaranteeing that the breakfast reimbursement for schools is 15 cents per meal could improve the supply chain and nutrition programs, she said. DPI prorates payments because it lacks funding to pay the full cost; Pfaff Harris said the current reimbursement rate is about 7 cents.
“This is one piece of the puzzle, but it’s a small piece in the giant puzzle,” Pfaff Harris said.
Pfaff Harris said the discussion about healthy meals is also challenging because there have been recent federal decisions cutting resources that help schools serve fresh ingredients. Wisconsin was set to receive $11 million in funding for “Local Food for Schools” programs, but it was cut by the Trump administration.
“You’re having these bills introduced, which is a good thing, but … from my perspective, if we really wanted to make a difference in school nutrition programs and help them to be able to do more scratch cooking and semi-scratch and fresh ingredients, it’s getting that funding back,” Pfaff Harris said.
Rep. Francesca Hong (D-Madison) asked Moses about free school meals and other proposals, saying it could improve his bill.
Moses said her suggestions seemed like a completely different bill altogether.
“It doesn’t matter to me if it’s reduced or people are paying for it. I want [the meals] to be safe …” Moses said. “Essentially, it’s not the intent of this bill.”
A “SNAP welcomed here” sign is seen at the entrance to a Big Lots store in Portland, Oregon. (Getty Images)
The U.S. House Agriculture Committee approved, 29-25, Wednesday evening its portion of Republicans’ major legislative package that includes a provision that would shift to states some of the responsibility to pay for a major nutrition assistance program.
The bill would require states, for the first time, to cover part of the cost of Supplemental Nutrition Assistance Program, or SNAP, benefits that provide $100 billion per year to help 42 million Americans afford groceries. The measure would also shift more of the administrative cost to states and increase work requirements for recipients.
Republicans are planning to combine the measure with legislation from 10 other committees in a budget reconciliation package that allows the Senate to avoid its usual 60-vote threshold.
House Agriculture Chairman Glenn “GT” Thompson said the panel’s bill and its estimated $290 billion deficit savings over a 10-year budget window were necessary for the larger legislative package to extend tax cuts and increase border security and defense spending.
The package would “prevent the largest tax increase in American history on our families, farmers and small businesses, and (would) deliver critical funding necessary for the Trump administration to continue their work keeping Americans safe,” the Pennsylvania Republican said in an opening statement.
Federal Fallout
As federal funding and systems dwindle, states are left to decide how and whether to make up the difference. Read the latest.
“Our reconciliation instructions provide the opportunity to restore integrity to the Supplemental Nutrition Assistance Program, or SNAP, to make sure that this essential program works for the most vulnerable and functions as Congress has intended.”
Republicans on the panel said throughout a marathon committee meeting, which started Tuesday night and wrapped up more than 26 hours later following an overnight break, that the added work requirements and accountability measures for state governments were overdue reforms.
The panel’s GOP majority approved the bill over unified opposition from Democrats, who argued that the measure would unfairly cut benefits to needy families to pay for tax cuts for high earners, undermine the panel’s bipartisan tradition of fusing crop subsidies with nutrition assistance and overburden state governments that can’t afford to take on the additional cost.
Ranking Democrat Angie Craig of Minnesota called the measure “the largest rollback of an anti-hunger program in our nation’s history” which would be felt deeply across a broad swath of recipients.
“We will see children going to bed without dinner, more seniors skipping meals to afford their medicine, more parents sacrificing their own nutrition, so their kids can eat,” Craig said. “Every single one of us knows (the cuts) will take food away from families at a time when working folks are struggling with higher costs.”
State contributions
The bill would make states pay for up to 25% of SNAP benefits, which are currently entirely covered by the federal government, starting in 2028.
States would be required to pay at least 5%, with the rate rising with a state’s payment error rate. The highest state cost-share would be triggered by a state reaching a 10% or higher error rate.
Even at the lowest state cost-share, the provision would add $4.7 billion overall to annual state obligations, according to an analysis published Wednesday by the center-left think tank Center for Budget and Policy Priorities.
But only seven states would have qualified for the lowest cost-share in fiscal 2023, the most recent year for which data is available. The national error rate was 11.7% and more than two dozen states and territories had error rates higher than 10%.
That means in practice the costs to states would be much higher. The three most populous states — California, Texas and Florida — alone would have combined to owe more than $5.7 billion under their 2023 error rates and 2024 benefit amounts.
Republican members said the requirement would incentivize states to better manage their programs.
“Unlike every other state-administered entitlement program, SNAP benefit is 100% funded by the federal government, resulting in minimal incentives for states to control costs, enhance efficiencies and improve outcomes for recipients,” Thompson said.
Impact on state budgets
Democrats said states could ill afford to take on additional costs, meaning the bill would result in cuts to the program or other critical services.
“The massive unfunded mandate this bill forces on states just passes the buck onto state legislatures, forcing them to slash local programs and services, cut benefits, kick vulnerable people off SNAP or raise taxes,” Craig said. “We already know states can’t afford it.”
The change would force difficult decisions for states, several Democrats said.
In Ohio, the state would be on the hook for an additional $534 million annually, Democrat Shontel Brown said.
“That’s not to expand benefits or improve outcomes, that’s just to maintain the status quo.” she said. “To cover the costs, Ohio, along with every other state, is going to have to make brutal tradeoffs. It’s going to mean cutting K-12 education funding, scaling back opioid and mental health treatment programs, reducing Medicaid coverage or putting off critical infrastructure repairs.”
Republicans countered that the provision would bring much needed accountability to state administrators, which would make the program fairer overall.
Alaska had an error rate of nearly 60% in fiscal 2023. Without mentioning that state, Derrick Van Orden, a Republican whose home state of Wisconsin was among the few states with error rates under 6%, said the costs associated with such numerous errors shouldn’t be covered by states with lower rates.
“Overpayments, waste, fraud and abuse have plagued programs like SNAP,” he said. “There is a state that has a 59.59% overpayment rate and my Wisconsinites are not going to pick up that slack.”
States’ error rates include fraud, but it makes up a small share of a category that also includes inadvertent underpayments and overpayments, Michigan Democrat Kristen McDonald Rivet said.
SNAP has a fraud rate of less than 1% and work requirements already exist, McDonald Rivet said. Republicans’ efforts to target fraud and add work requirements wouldn’t reach the cost savings they sought, she said.
“Are there error rates in the states? Sure,” she said. “Should we address it? Absolutely. But the idea that we are going to find $300 billion of cuts — $300 billion of cuts — on that small percentage of people who are not working that are already required to or error rates in the states is just a flat-out lie. What we are really doing is cutting food for people.”
Administrative costs
The bill would also increase states’ share of the cost of administering the food assistance program.
Under current law, states and the federal government evenly split the cost of administering the program. The bill would have states shoulder 75% of administrative costs.
Democrats, including the ranking member of the panel’s Nutrition, Foreign Agriculture, and Horticulture Subcommittee, complained that would compound the problems created by the new cost structure for SNAP benefits.
“States will be forced to budget more for SNAP benefits with less for administrators,” Rep. Jahana Hayes of Connecticut said. “With fewer administrative staff, it is inevitable that errors will increase.”
Work requirements
Another section of the bill would expand the number of participants subject to work requirements to receive SNAP benefits.
The proposal would raise from 54 to 64 the age at which a person no longer has to meet work requirements. It would also lower from 18 to 7 the age at which caring for a child exempts a person from work requirements.
Democrats raised and introduced several amendments meant to address the provision, but were outvoted each time.
Kansas Republican Tracey Mann said the changes were not only about improving SNAP efficiency, but would make the program’s rules fairer for those it was meant to serve.
“It is wrong to jeopardize the benefits of the single mom taking care of kids too young to be in school or the disabled or elderly in order to subsidize someone who is perfectly capable of making an honest income but isn’t willing to join the workforce,” Mann said.
“These changes will ensure that individuals are served by the program as it was intended — not as a couch that you can sit on as long as you want, but as a true safety net that gets you back on the ladder of opportunity and back into a job.”
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