Economist Darrick Hamilton’s work shows publicly funded savings accounts for children could reduce income inequality over time. But he said the $1,000 accounts for babies that Congress approved this month were poorly designed and will benefit the wealthy. (Photo by Brandon Bell/Getty Images)  

With fertility rates declining in the United States, Republicans backed a policy tucked inside the megabill President Donald Trump signed earlier this month that they say will help save for children’s futures.

The $1,000 investment accounts established by the government have some passing similarities to baby bonds, a concept proposed by economist Darrick Hamilton more than 15 years ago as a way to reduce income inequality.

But Hamilton told States Newsroom the design of these so-called Trump accounts, which hinge on contributions from a child’s relatives instead of the government, will benefit those who come from wealthier families that have more money to chip in.

“They’re subsidizing the transmission of intergenerational wealth for those that already have wealth in the first place,” he said.

Money plays a significant role in deciding whether to grow a family, according to a United Nations Population Fund report on falling fertility rates released in June.

Fifty-three percent of Americans surveyed said the ideal number of children to raise is two, but 38% said financial limitations led them to have fewer children than they initially wanted. Unemployment or job insecurity, housing limitations and lack of sufficient child care options — also financial factors — rounded out the list.

Policies restricting abortion play a role, too. Some young Americans have sought voluntary sterilizations or delayed having children, citing how pregnancy care has been diminished by the U.S. Supreme Court decision that overturned federal abortion rights.

The U.S. fertility rate reached a historic low: 54.4 births per 1,000 women of reproductive age in 2023, down 3% from the previous year, according to the latest data from the Centers for Disease Control and Prevention.

The GOP that’s branded itself “pro-family” has voiced concerns about fewer people having children in the United States.

A provision included in the tax break and spending cut bill Trump signed into law on July 4 establishes $1,000 savings accounts for babies born between 2025 and 2028. 

Parents, other relatives and friends can contribute up to $5,000 annually, and employers can add up to $2,500 yearly for an employee’s dependent. The Treasury Department will roll out the accounts, which have several tax rules, next year.

Initially, lawmakers included caveats in the policy that said people could only use half of the money for education, home ownership or entrepreneurship when they turn 18, but the final version Trump signed is less restrictive when the account holder reaches adulthood.

Before the bill passed, conservative and liberal tax experts told States Newsroom’s D.C. Bureau that the proposal favors the wealthy and contains so many rules that a 529 savings plan — tax-free accounts that must be used for college expenses — would be a better option for parents saving for their child’s future.

Democrats have pitched their version of these accounts since 2019. The American Opportunity Accounts Act, introduced by New Jersey Sen. Cory Booker and Massachusetts Rep. Ayanna Pressley, would create savings accounts for babies. The legislation was introduced in recent sessions but never gained momentum.

One key difference: Trump accounts rely on individual contributions, while in Booker and Pressley’s proposal, the federal government would contribute up to $2,000 yearly depending on the family’s income. A child born to a family with low income could have a decent-sized launchpad of cash at age 18.

Booker and Pressley’s initiative would be considered baby bonds, according to Hamilton, a professor at The New School and founder of the Institute on Race, Power and Political Economy. 

Hamilton has been writing about how baby bonds could reduce the widening wealth gap since 2010. Since then, several states and cities have enacted baby bonds programs.

He said baby bonds stemmed from “understanding the role of assets in poverty” and studying the work of economists focused on income inequality, the racial wealth gap and how they manifest generationally.

Hamilton’s personal experience shaped his scholarship, too: He grew up in the Bed-Stuy neighborhood of Brooklyn, New York, where he said he was exposed to networks of wealth and poverty. He learned that economic mobility is not about motivations, attitudes or astuteness, but access.

“Individuals from one set of environments will grow into families that can provide a foundation in terms of capital to allow them to get into an asset like a home, like higher education without debt or some capital to start a business,” Hamilton said. “Other individuals will not have access to those things.”

States Newsroom spoke to Hamilton about state baby bonds programs, the pros and cons of Trump accounts, and how investing in children’s futures is connected to reproductive justice.

The following interview has been edited and condensed.

States Newsroom: Baby bond programs have been piloted in 10 places total, including California, Connecticut, Washington, D.C, and most recently Rhode Island. What aspects of the state policies are working?

Darrick Hamilton: The thing that is percolating is the political momentum, as well as a better understanding of the role of the state as it relates to engaging with families, particularly low-income families, one of investment. Narratives are changing, and resources are being invested in children for which we’ll see the full rewards once the children are of age to receive the accounts.

SN: Is there anything that could be improved in the places where baby bond programs have been piloted so far? For instance, I know the latest D.C. mayoral budget hasn’t necessarily given funding to the baby bonds program there.

DH: Yes, so there are several places for which there’s been legislative movement, but one needs executive movement as well. As exemplified in Washington, D.C., the municipal legislator made clear what their priority was in terms of passing the law, but the mayor has yet to offer the resources to yield the accounts. That’s a problem.

Big shout out to Connecticut, for instance, and in particular, (former) Treasurer (Shawn) Wooden and Treasurer (Erick) Russell for not only ensuring that the legislation passed, but being diligent in both economically and politically generating the funds — politically building up momentum and movement to command it from the executive branch, and then economically having the wherewithal and the astuteness to be able to best find within the state budget how to fund the accounts.

But the big point is at the end of the day, it is the federal government that really has the capacity to fully fund this in the way that it should be funded.

SN: The tax break and spending cut bill approved by Congress earlier this month includes a provision that sets up $1,000 savings accounts for babies born between 2025 and 2028, and lets them use the money, whatever that may end up being, when they turn 18. What’s your take on these so-called Trump accounts?

DH: Well, they co-opted a good idea in both rhetoric and design. The regressive design is essentially tax shelters akin to the 529 college and education savings plans that will lead to further inequities. The problem of wealth inequality in America is largely one of endowment and capital, rather than the behavior of active savings, so they’re going to further facilitate the capacities of those people that have resources in the first place.

The legislation as is doesn’t address the benefit cliff. A $1,000 seed growing over time would render individuals perhaps ineligible for some of the social safety net programs. That’s a regressive design that I don’t know if they even did it intentionally.

The $1,000 seed in and of itself is not bad. However, if you add on the regressive component, that’s going to grow inequality rather than reduce inequality. And a $1,000 seed, even if compounding over time with interest, is not going to be nearly enough to achieve the goal of the program, which is to allow individuals who otherwise would not have access to something like a home and education without debt, or to be able to start a business.

SN: The Democratic-backed American Opportunity Accounts Act would create $1,000 savings accounts the federal government would add money to annually, depending on the family’s income. How would this proposal affect economic inequality?

DH: I’d say two things. One is the progressive design — it will have an impact on reducing inequality. So it facilitates those that will have the least resources to actually have enough to get into an asset that will appreciate over their lives. It facilitates the capability of wealth-building in a progressive way, in an inclusive way, which is the opposite of what the Trump accounts do. The second part is it will have the added benefit of redressing the racial wealth gap, because if we look at the dimension by which Blacks and whites are most disparate, it’s wealth.

SN: Do baby bonds, in your view, have a connection to reproductive justice?

DH: You can’t isolate these so-called Trump accounts from the larger reconciliation bill that passed in the first place. What they’re investing is trivial compared to the ways in which they’re structuring inequality writ large with the tax code for the wealthy. This is a rhetorical distraction that’s aimed at trying to appear populist, especially when they’re cutting Medicaid, SNAP and other investments that go toward low-income individuals. So that’s thing one. We’d be naive to ignore the political context in which this comes up.

The second part is, again, with the larger package that they’re putting forth. This is almost trying to manage the demography, and if they’re not saying it out loud, they certainly are saying it implicitly. With policies aimed at trying to promote additional births, the subtext is which women are they trying to incentivize to have children or not.

In contrast, what baby bonds do is they invest in the fertility decisions of our people. A good way to promote fertility and family formation is to trust the American people, to ensure that there’s resources directed at them in fair and just ways, and allow them to make fertility decisions for themselves. In other words, part of our humanity should be able to reproduce, to be able to form family formations in ways in which we identify. We need a role of government to facilitate these decisions in ways that are just and inclusive.

Planned Parenthood has about 600 clinics in 48 states, and according to their calculations, more than 1.1 million patients could lose access to care because of a provision in the massive budget bill signed by President Donald Trump last week. (Photo by McKenzie Romero/Utah News Dispatch)

Days after President Donald Trump signed a massive budget bill, attorneys for Planned Parenthood Federation of America and its state members in Massachusetts and Utah filed a lawsuit Monday challenging a provision they say will affect more than 1 million patients who use their clinics across the U.S.

Planned Parenthood says if the defund provision stands, those targeted will be patients who use Medicaid as their insurance at its centers for services including birth control and cancer screenings. The organization says it only uses federal Medicaid funding for abortion in the very narrow cases allowed, including rape, incest, and to save a pregnant person’s life.

The complaint, filed in U.S. District Court of Massachusetts against U.S. Health and Human Services Secretary Robert F. Kennedy Jr. and Medicaid and Medicare administrator Dr. Mehmet Oz, challenges a provision on page 597 of the reconciliation bill. It prohibits Medicaid funding from going to any sexual and reproductive health clinics that provide abortions and received more than $800,000 in federal and state Medicaid funding in fiscal year 2023. That prohibition will last one year from the date the bill was signed.

While there may be a few independent clinics with operating budgets that high, it effectively singles out Planned Parenthood clinics. The entire organization has about 600 clinics in 48 states, and according to their calculations, more than 1.1 million patients could lose access to care because of the change in the law.

“This case is about making sure that patients who use Medicaid as their insurance to get birth control, cancer screenings, and STI testing and treatment can continue to do so at their local Planned Parenthood health center, and we will make that clear in court,” said Planned Parenthood Federation of America president and CEO Alexis McGill Johnson in a public statement.

The organization identified 200 of its clinics in 24 states that are at risk of closure with the cuts, and said nearly all of those clinics — 90% — are in states where abortion is legal. In 12 states, approximately 75% of abortion-providing Planned Parenthood health centers could close. Because of that, some reproductive health advocates have called it a backdoor nationwide abortion ban.

The nonprofit also warned that eliminating Planned Parenthood centers from the Medicaid program would likely also impact patients who use other forms of insurance, if centers are forced to cut their services or close. 

Planned Parenthood argued this section of the bill is unconstitutional because it specifies and punishes them, saying it violates equal protection laws and qualifies as retaliation against free speech rights. 

“The Defund Provision is a naked attempt to leverage the government’s spending power to attack and penalize Planned Parenthood and impermissibly single it out for unfavorable treatment,” the complaint says. “It does so not only because of Planned Parenthood members’ long history of providing legal abortions to patients across the country, but also because of Planned Parenthood’s unique role in advocating for policies to protect and expand access to sexual and reproductive health care, including abortion.”

The complaint also details numerous instances when Trump said he was committed to defunding Planned Parenthood in 2016 and 2017, during his first presidential term, and it highlighted the provisions of Project 2025 that called for the defunding of Planned Parenthood. Project 2025 is the blueprint document drafted by the conservative Heritage Foundation, and the administration has followed many of its directives so far.

According to the lawsuit, Planned Parenthood members have “structural independence,” meaning no member “has control over the operations or decision-making processes of another.” It’s argued in the complaint that 10 members, including plaintiff Planned Parenthood Association of Utah, don’t meet the definition of prohibited entity under the new law, because they do not provide abortion services or did not receive over $800,000 in Medicaid funds during fiscal year 2023. They say these members are not “affiliates, subsidiaries, successors, or clinics” of any prohibited entity because they are separately incorporated and independently governed.

“But these Non-Qualifying Members can take no comfort in the plain text of the statute,” reads the lawsuit. “Defendants will willfully misinterpret the statute to disqualify them from receiving federal Medicaid funding, based solely on their association with PPFA and other Planned Parenthood Members.”

“As the Trump administration guts our public health care system, we know millions will suffer and struggle to get care. We will not tolerate these attacks,” said Shireen Ghorbani, interim president of Planned Parenthood Association of Utah, in a statement. “For over 55 years, we have proudly cared for generations of Utahns, and we will always find ways to meet the health care needs of our communities. Here in Utah, we are used to politicians trying to strip away our rights for political gain. We haven’t backed down before, and we won’t now.”

Defunding will harm general wellness, not abortion care, Arizona clinic owner says

Planned Parenthood also noted in its complaint that the harms could be especially devastating because “even where alternative providers are theoretically available, those providers, who are already stretched to capacity, often do not offer the same comprehensive sexual and reproductive health service options, have long wait times for patients, and cannot accommodate the huge influx of patients who would need to find a new provider of care.”

Some clinics that operate independently of Planned Parenthood will be affected by the law as well. George Hill, president and CEO of Maine Family Planning, said they receive nearly $2 million from Medicaid funds (MaineCare) on a yearly basis, and about half of their patients are enrolled in some form of Medicaid. Hill said they plan to sue as well, but the timing is uncertain at this point. Abortion care makes up about 15% of their overall services, while the rest is routine gynecological and preventative health care, he said.

In the meantime, Hill plans to solicit as much support as possible from individual donors to keep the doors to their 19 clinics open and serving Medicaid patients.

“Whether or how long we’ll be able to do that is another question,” Hill said.

In Arizona, Dr. DeShawn Taylor operates the independent clinic Desert Star Institute for Family Planning. About 75% of the services at Desert Star are abortion related, and while Medicaid (AHCCCS in Arizona) dollars can’t be used for the procedure, Taylor said they could often at least get the initial consultation appointment covered by Medicaid.

The cuts that are coming, Taylor said, will not stop people from obtaining an abortion somehow. But there will be other downstream effects.

“People are already economically depressed,” she said. “What we’re going to see is people are still going to do what’s necessary to get (abortion) care, but what’s going to fall off is their ability to get their preventative care, their contraception, their wellness exams, those types of things.”

Senate Minority Leader Chuck Schumer, D-N.Y., walks back onto the Senate floor after speaking to reporters at the U.S. Capitol Building on June 30, 2025 in Washington, D.C. (Photo by Andrew Harnik/Getty Images)

WASHINGTON — Senate Republicans were closing in Monday on passing their version of the “big beautiful” tax break and spending cut bill that President Donald Trump wants to make law by a self-imposed July Fourth deadline.

But the chamber’s Democrats first kicked off a marathon of amendment votes, forcing their GOP colleagues to go on the record on tough issues, including cuts to health and food safety net programs. As of early evening, Democrats had not prevailed on any votes.

The tactic is used by the opposition party during massive budget reconciliation fights to draw attention to specific issues even as their amendments are likely to fail.

Democrats decried numerous measures in the mega-bill, including new work reporting requirements for Medicaid, the federal-state health insurance program for low-income people and people with disabilities.

Loud opposition has also swelled as legislative proposals shift significant costs of the federal Supplemental Nutrition Assistance Program, or SNAP, to states for the first time.

“I say to our colleagues, ‘Vote for families over billionaires,’” Sen. Amy Klobuchar of Minnesota said on the Senate floor.

The heart of the nearly 1,000-page legislation extends and expands the 2017 tax law to keep individual income tax rates at the same level and makes permanent some tax breaks on business investments and research and development costs.

The bill would also put in motion some of Trump’s campaign promises, including no tax on qualifying tips, overtime or car loan interest, but only for a few years.

The tax cuts are estimated to cost nearly $4.5 trillion over 10 years, and a provision in the bill raises the nation’s borrowing limit to $5 trillion as the United States faces record levels of debt.

Overall, the Senate bill is projected to add $3.25 trillion to deficits during the next decade, according to the latest calculation from the nonpartisan Congressional Budget Office.

Here are some key votes so far:

Planned Parenthood 

Washington Democratic Sen. Patty Murray tried to remove language from the bill that would block Medicaid payments from going to Planned Parenthood for one year unless the organization stops performing abortions.

Federal law already bars funding from going toward abortions, with limited exceptions, but GOP lawmakers have proposed blocking any other funding from going to the organization, effectively blocking Medicaid patients from going to Planned Parenthood for other types of health care.

Murray said the proposal would have a detrimental impact on health care for lower-income women and called it a “long-sought goal of anti-choice extremists.”

“Republicans’ bill will cut millions of women off from birth control, cancer screenings, essential preventive health care — care that they will not be able to afford anywhere else,” Murray said. “And it will shutter some 200 health care clinics in our country.”

Mississippi Republican Sen. Cindy Hyde-Smith opposed efforts to remove the policy change and raised a budget point of order, which was not waived following a 49-51 vote. Maine Republican Sen. Susan Collins and Alaska’s Lisa Murkowski voted with Democrats.

“There was a time when protecting American tax dollars from supporting the abortion industry was an uncontroversial, nonpartisan effort that we could all get behind,” Hyde-Smith said.

Medicaid for undocumented immigrants

Senators from both political parties crossed the aisle over whether the federal government should reduce how much a state is given for its Medicaid program if that state uses its own taxpayer dollars to enroll immigrants living in the country without proper documentation.

The provision was included in an earlier version of the bill, but the Senate parliamentarian ruled it didn’t comply with the complex rules for moving a budget reconciliation bill.

The vote was 56-44, but since it was on waiving a budget point of order, at least 60 senators had to agree to set aside the rules and move forward with the amendment, so the vote failed.

Democratic Sens. Catherine Cortez Masto of Nevada, Maggie Hassan of New Hampshire, and Jon Ossoff and Raphael Warnock of Georgia voted with GOP senators. Maine’s Collins voted with most of the chamber’s Democrats against moving forward.

Texas Republican Sen. John Cornyn asked for the vote, saying he believes the policy change would reduce undocumented immigration.

“Border patrol talks about push and pull factors,” Cornyn said. “One of the pull factors for illegal immigration is the knowledge that people will be able to receive various benefits once they make it into the country.”

Senate Budget Committee ranking member Jeff Merkley, D-Ore., opposed Cornyn’s attempt to get the language back in the bill, saying the policy change would financially harm states that expanded Medicaid under the 2010 health care law for simple mistakes.

“What this amendment says is that if one person, despite state law, through a bureaucratic mistake, is receiving funds, then the whole state pays the price and has their rate on expanded Medicaid changed from 90% to 80%,” Merkley said, referring to the percentage paid by the federal government.

Reduction in funding for Consumer Financial Protection Bureau

An amendment to stop a nearly 50% reduction in funding for the Consumer Financial Protection Bureau was blocked by Republican Sen. Tim Scott of South Carolina, who chairs the Senate Committee on Banking, Housing and Urban Affairs.

Sen. Elizabeth Warren, a Democrat who championed the CFPB after the 2008 financial collapse, attempted to bring the amendment to the floor saying the agency “is the financial watchdog to keep people from getting cheated on credit cards and mortgages and Venmo and payday loans and a zillion other transactions.”

“When this financial cop can’t do its job there is no one else in the federal government to pick up the slack,” Warren said.

Scott blocked her using a budget point of order, saying the reduction still provides “ample funding” for the agency. Democrats tried to waive that procedural tactic, but failed following a 47-53 vote.

An original provision to completely zero out the budget for the CFPB was not included because it did not meet the reconciliation process’ parameters.

Medicaid hospitals and maternal mortality

Senators voted 48-52 to reject Delaware Democratic Sen. Lisa Blunt Rochester’s proposals to send the legislation back to committee to remove language cutting certain funding for Medicaid, which she said would negatively impact “vital hospital services, especially labor and delivery rooms.”

“Today, Medicaid is the single largest payer of maternity care in the United States, covering 40% of births nationwide and nearly half of the births in our rural communities,” Blunt Rochester said. “Obstetric units, particularly in rural hospitals, are closing at alarming rates, actually creating maternity deserts.”

No Republicans spoke in opposition to the proposal, though Maine’s Collins voted in support. 

Supplemental Nutrition Assistance Program

New Mexico Democratic Sen. Ben Ray Luján offered a motion to commit the bill back to committee in order to remove all changes related to the Supplemental Nutrition Assistance Program, or SNAP. It was rejected following a 49-51 vote, though Alaska Republican Sens. Dan Sullivan and Murkowski voted in favor.

“I’m offering my colleagues the opportunity to step away from these devastating cuts, to show our fellow Americans that in this country we care for our friends, family and neighbors who need support,” Luján said.

Senate Agriculture Chairman John Boozman, R-Ark., opposed the proposals, saying that SNAP is “on an unsustainable path wrought with mismanagement and waste.”

“This program has devolved into viewing success as enrolling more individuals to be dependent on government assistance,” Boozman said. “SNAP is long overdue for change.”

Medicaid work requirements

Senators voted 48-52 to reject a proposal from Delaware Democratic Sen. Chris Coons that would have sent the bill back to committee to remove language requiring Medicaid enrollees to work, participate in community service, or attend an educational program at least 80 hours a month. Alaska’s Murkowski was the only member of her party to vote in favor of the effort.

Democrats have expressed concern for weeks that some people would lose access to Medicaid if they forgot to complete paperwork proving that time commitment or didn’t understand how to show the government they met the new requirement.

“It is cruel and dishonest to bury patients, kids and seniors in paperwork and then blame them when they lose their health care, all to further rig our tax code for the very wealthiest,” Coons said.

Kansas Republican Sen. Roger Marshall urged opposition to the proposal, saying that working helps people.

“My question is, don’t you think a job brings value, that it brings dignity?” Marshall said. “Do you not think it brings purpose and meaning to life?”

Rural hospitals and Medicaid

Maine’s Collins and Alaska’s Murkowski both voted for a proposal from Massachusetts Democratic Sen. Ed Markey that would have removed parts of the bill changing Medicaid.

But even with some bipartisan support, the changes were rejected on a 49-51 vote that would have technically sent the bill back to committee for three days to implement the changes.

“My Republican colleagues’ so-called Medicaid cuts replacement fund is like giving aspirin to a cancer patient,” Markey said. “It is not enough. It is pathetically inadequate to deal with the health care crisis Republicans are creating here today on the Senate floor. No billionaire tax break or Donald Trump pat-on-the-back is worth the risk of people’s lives.”

Senate Finance Committee Chairman Mike Crapo, R-Idaho, spoke out against the proposal, saying that rural hospitals have long had financial challenges and that it was clearly “intended to derail this very bill.”

“Unfortunately for far too long some rural hospitals have struggled to achieve financial stability, even with a wide-range of targeted payment enhances,” Crapo said. “These issues pre-date the consideration of the reforms that we are including in the legislation today.”