$271,000 by your kid's 18th birthday? Michigan economics prof calls earnings estimates for Trump accounts 'ridiculous,' White House digs in

“They’re ridiculous, they’re dishonest and they’re misleading,” University of Michigan economics professor Justin Wolfers said of the government’s growth projections in a YouTube video.

The program launched July 4, and Trump has been promoting it in campaign speeches ahead of the November midterms while economists pick apart the numbers behind it. So far the administration is standing by its estimates.

How the accounts work

Congress created the accounts in Trump’s tax-and-spending law. Children who are legal U.S. citizens born between Jan. 1, 2025 and Dec. 31, 2028 get a $1,000 deposit from the government if their family applies — a pilot program contribution, a Treasury spokesperson just confirmed to Moneywise — and the money goes into the stock market. You and your employer can then add up to $5,000 a year combined until your child turns 18. The employer’s portion is capped at $2,500, and it doesn’t count toward your taxable income. Charitable donations made to qualified groups of children sit outside the $5,000 cap, the spokesperson said.

Sign-ups had reached 7 million by late July, with 1.7 million children qualifying for the federal deposit, the department had told Moneywise at the time.

TrumpAccounts.gov, the program’s official site, forecasts that a child whose family makes the maximum deposit every year will have $271,000 by age 18 and $13 million by age 55.

What it takes to reach $271,000

Wolfers went through the assumptions in his video. The forecasts count on a 10% annual return holding for decades, about the S&P 500’s long-run average before inflation. They also assume parents deposit the full $5,000 every year until the child turns 18, then $7,000 a year through the child’s 20s. Without the deposits, the same 10% return turns the government’s $1,000 into roughly $6,000 by age 18.

A Treasury Department spokeswoman had told Moneywise in July that the accounts “level the playing field” by letting every parent invest for their children, “not just wealthy families with trust funds.” Wolfers expects the opposite — a program that pushes rich and poor further apart. Only families with $5,000 a year to spare collect the tax deferral and the large balances, he argued, and the employer contribution cuts the same way, since excluding $2,500 from taxable income is worth more in a higher bracket than a lower one.

Darrick Hamilton, an economics professor at the New School who helped develop the baby bonds concept, told The Guardian that most households in the bottom 80% of earners borrow rather than save, so the deposits driving the projections will come from wealthier families. “It’s really an income transfer, not a wealth-building tool,” he said.

The White House digs in

Asked whether the projections reflect what a typical family should expect, White House spokesman Kush Desai told Moneywise the Council of Economic Advisers spelled out the assumptions behind its estimates.

In a statement, Desai said billionaires and multinational corporations including Michael Dell, Ray Dalio and Micron have promised billions from their own fortunes to working-class children’s accounts, money that grows tax-free alongside the government’s $1,000 seed. High-income parents have always had tools to build wealth for their kids, he said, but the accounts are “giving middle class parents the same opportunity — with billionaires chipping in to help.”

“Only a moron would argue billionaires giving money away to working-class kids will worsen inequality,” Desai said.

The Treasury spokesperson pushed back on the inequality argument too, telling Moneywise the benefits are reaching families who need them — 86% of the accounts opened so far are tied to households earning under $200,000 a year, by the department’s count. The spokesperson also pointed out that 38% of Americans own no stock, while these accounts put every newborn in the market from day one.

As for the billionaire money Desai cited, the spokesperson said the Michael and Susan Dell Foundation gift — a one-time $250 deposit for each eligible child in ZIP codes where the median household income is $150,000 or less — was built to reach lower-income families.