In Focus delivers deeper coverage of the political, cultural, and ideological issues shaping America. Published daily by senior writers and experts, these in-depth pieces go beyond the headlines to give readers the full picture. You can find our full list of In Focus pieces here.
President Donald Trump floated the idea of giving money to new parents, but the closest he came was giving spending money to 18-year-olds in the year 2043.
The baby bonus lost out to baby bonds.
Trump Accounts created by the One Big Beautiful Bill Act provide $1,000 for each baby born in 2025 and through the end of 2028, but there’s a catch: That money goes into a tax-privileged account that the parents cannot touch. The child doesn’t get the money until age 18.
There’s a lot to be said for these accounts: They can turn working-class and middle-class young adults into little capitalists, instead of the little Communists we see on today’s college campuses, and in the 2050s, these accounts could help 20-somethings buy a home and start a family.
On the other hand, parents need money when their baby is born, not 18 years later. The baby bust, the delay in family formation, and the collapse in marriage rates are a crisis today. If the federal government has $1,000 to spend for every baby born next year, there’s a good case to be made that the parents should get the money right away.
The baby bonus
“The president wants America to be a country where all children can safely grow up and achieve the American dream,” White House press secretary Karoline Leavitt said in April. On that score, Trump was asked about a $5,000 payment upon the birth of a child. “Sounds like a good idea to me,” the president replied.
This is the idea of a baby bonus. It’s an old idea, and many other countries provide something like this. For instance, France gives families about $1,000 when their child is born. Some U.S. employers also provide something similar — one tech company, Public Square, in 2022 announced a $5,000 baby bonus.
The United States doesn’t have a baby bonus. Instead, we have a child tax credit, worth $2,200, and while much of that — $1,700 — is “refundable” and thus essentially a government grant, parents still receive this money through their annual tax filing.
That means that for a baby born in January 2026, the parents don’t get the $2,200 until they file their 2026 taxes in 2027, which may be 15 or 16 months after the child is born.
In contrast, a baby bonus can be understood as a year-zero child tax credit.
The first years of a child’s life, and especially the very first year, are the time when parents need the most financial help.
First, there are extraordinary medical expenses associated with pregnancy, labor and delivery, and having a newborn. Also, there are more diapers per day and generally more baby gear needed when the child (especially the first child) is new.
Secondly, many parents lose income during their child’s first years because they take time off work. Maybe the mother takes unpaid family and medical leave, maybe she dials down their hours, or maybe she exits the workforce to be a stay-at-home mom. Maybe to be around for those precious months, the father forgoes overtime or doesn’t put in the extra hours needed to get the performance bonus.
Alternatively and additionally, many couples pay for childcare in the early years before the child is school age.
Also, people tend to have babies in their 20s and early 30s, when their earnings are lower, and their wealth is much lower than in later years.
The average American in their early 20s earns about $40,000 a year. From age 25 to 34, the average income is just under $60,000. That rises to about $70,000 by age 50 — about the time the children are fleeing the nest and starting their own lives.
It’s true that professionals aren’t having babies early in their careers anymore, but that’s even more reason to incentivize family formation with a concrete, visible, immediate benefit such as a baby bonus.
That’s one reason former President Joe Biden’s temporary expanded child tax credit was larger for children under age 6. Likewise, Republicans who have proposed larger child tax credits, such as Rep. Blake Moore (R-UT) and Sen. Jim Banks (R-IN), have proposed a credit for young children that is 40% larger than the credit for older children.
Ideally, a family would get a baby bonus equal to or greater than the child tax credit upon the baby’s birth, or even before.
Would a few thousand dollars actually convince anyone to have a baby? All the research suggests yes — a little bit, at least. Mostly, baby bonuses seem to convince couples to have babies sooner, but they also seem to boost long-term birth rates by a small amount.
But being pro-natal is not a priority for Trump. Although Vice President JD Vance said, “I want more babies in the United States of America,” the president has been mixed on that question. He’s focused more on macroeconomics and his legacy. On those scores, his variation on the baby bonus may seem more appealing.
Trump accounts
The One Big Beautiful Bill Act includes a new benefit of $1,000 for every child born in 2025, 2026, 2027, or 2028, but this isn’t a baby bonus. The child gets the money, not the parents, and the child can’t touch that money until they become an adult.
The money seeds a Trump account. This is a new type of savings account, which is basically a Roth IRA for children that they can access at age 18.
These new accounts have plenty going for them, and my colleague, Washington Examiner economics columnist Tiana Lowe Doescher, wrote a thorough defense of them.
Every minor in America can get a Trump account (those born before 2025 will not get the free $1,000 from the taxpayers). Parents, grandparents, godparents, or any adult can contribute to a child’s Trump account, up to $5,000 a year per child. Individual donors cannot write off their contributions, but the parents’ employer can. It’s basically an untaxed fringe benefit.
Like a Roth IRA, though, the growth is untaxed. This allows the children to benefit from the magic of compounding growth. If a newborn cobbled together $5,000 from his parents, his grandparents, his father’s employer, and Uncle Sam, and that account grew at about 7.5% a year, he would have more than $15,000 around high school graduation.
For decades, policy experts have pushed this idea, which used to be called baby bonds.
The benefits here are many. It is an easy tool for grandparents and employers to support young families. Nonprofit organizations or state governments could use these as tools to support at-risk youth or children growing up in poverty, so as to try to end the cycle of intergenerational poverty.
Many conservatives also hope these accounts, by giving children a stake in the economy and wealth of their own, will create a million little capitalists.
Stages of life
The conservative, pro-family objection to the Trump accounts is this: If the federal government has $1,000 to spend for every baby born in 2025, 2026, 2027, and 2028, it would be better to let the parents have and spend that money at the moment the baby is born, rather than creating a savings account the children can spend on spring break in college.
A savings account for little Jimmy is cold comfort to a 25-year-old mother who needs to buy a double stroller now that she has two children. The economy is already geared toward 50- and 60-somethings, and so transferring wealth out of mother and father’s family-formation years toward their near-retirement years is not so useful.
The baby bust is a crisis today. Birth rates are at record lows and falling. All recent experience shows us that low birth rates lead to even lower birth rates. Very low birth rates in turn bring about all sorts of suffering, starting with the economic harms during the transition — a very high ratio of retirees to working-age adults — and continuing to cultural maladies of all sorts. A culture that is not renewing itself, is old, and is not visibly passing itself down from generation to generation is a sick culture.
At its best, such as in the case my colleague Lowe describes in her column, the Trump accounts are a pro-family force in the 2050s and 2060s. If the babies of 2025 don’t blow their stash in Cancun at age 20, maybe they can save it up to buy a house and start a family at age 25. That’s a real consideration, because the chief way in which affordability problems are driving down birth rates involves the affordability of buying a new house.
But we are nearly 20 years into our baby bust. When we are 40 years into low-and-falling fertility, will 18-year-olds really think, “I’m going to keep building this nest egg so I can start a family?”
In the world of 2050, with even less marriage than today, where childlessness is the norm, especially for 20-somethings, it’s hard to imagine that a high school or college graduate would see a five-figure pile of cash as the seed money for a family.
Pregnancy is contagious. A family-focused culture will have more families, and an individualistic, materialistic culture will have fewer families. It’s all self-reinforcing. This suggests we need to start nudging the culture in a pro-family way today.
TIMOTHY P. CARNEY: SUPPORT FOR LARGER CHILD TAX CREDIT SPREADS TO SENATE GOP
A thousand dollars at birth won’t make anyone rich, and it’s hard to imagine a couple choosing a baby (or marriage) because of a baby bonus even twice that large.
But the research suggests that baby bonuses provide a nudge that makes a tiny difference on the margins. If we found a dozen such nudges, it could reverse our current downward momentum and orient our culture toward family tomorrow, rather than turn a shrinking number of children into capitalists in two decades.
