WASHINGTON — A proposal being pushed by President Donald Trump and House Republicans could lead to $1,000 payments for babies born over the next four years. But there’s a catch as the money would not be accessible until the child turns 18 years old.
The bill calls for the creation of tax-deferred investment accounts that would receive the $1,000 payment when a child is born, according to the Associated Press. Interest would accrue in the account over the years and after the child becomes an adult, the money could be withdrawn for certain expenses.
“This is a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up the next generation,” Trump said at a White House event Monday for the proposal. “They’ll really be getting a big jump on life, especially if we get a little bit lucky with some of the numbers and the economy.”
The money could be used toward a down payment for a home, education or to start a small business. If the money is used for other expenses, it will be taxed at a higher rate.
The accounts would be created for all babies, no matter the financial status of their parents. However, to receive an account the bill requires at least one parent to produce a Social Security number with work authorizations, meaning children born to immigrants in the U.S. illegally could be excluded.
Critics of the plan say $1,000 does nothing to help struggling families now and won’t be enough to make an impact 18 years after the account is created. An estimate from the AP says that assuming a 7% yearly return on the money, the $1,000 would grow to around $3,570 over 18 years.
Shimica Gaskins of End Child Poverty California reiterated the point saying that an account that can’t be accessed now isn’t helpful for parents trying to make ends meet.
“Having children have health care, having their families have access to SNAP and food are what we really need … the country focused on,” Gaskins said.
Still, those in support of the bill insist it provides an opportunity for many people to close the gap. Brad Gerstner, a Silicon Valley investor who created the blueprint for the plan says it will help restore faith in capitalism.
“The rise and fall of nations occurs when you have a wealth gap that grows, when you have people who lose faith in the system,” Gerstner said. “We’re not agentless. We can do something.”
