The Republicans’ “One Big, Beautiful Bill” Proposes $1K Investments for Newborns — Can Cash Really Fix Declining Birth Rates?

It might be one of the foremost questions of our times: Why are young people not starting families? There are many reasons for the trend, but one thing is undeniable — it’s happening everywhere. Birth rates have been falling since the ‘60s.

In the US, from 1963 to 2023, fertility rates dropped from 3.32 births to 1.6 births per woman. Socioeconomic shifts often get the credit — more education, access to family planning, and increased empowerment for women are all seen as positives. On the flip, significant increases in the cost of living — especially childcare — are not.

Ask most young adults, and they’ll point to exactly that: money.

Economic types and politicians hear that and think, “We need to change the incentive structure.” But we already know that while $2K is $2K, the Child Tax Credit isn’t causing people to start families (at least, not more than they would’ve anyway, arguably).

So, would more money move the needle?

The incentive play: Enter the Republicans’ “One Big, Beautiful Bill,” which includes a three-year experiment to find out. Forget making the $2K/year CTC permanent — this time, it’s about launching “Trump Accounts” for newborns. Any US citizen born between 2025 and 2028 would receive $1K in an investment account set up for their benefit. Putting aside the self-aggrandizing and unnecessarily politicized name for the accounts, it’s actually a fascinating idea, even though we don’t yet know the finer points of how the accounts will be opened or funded.

• In addition to the $1K from the government, parents could contribute up to $5K per year to the account (though it wouldn’t be tax-deductible unless an employer makes the contribution).
• The funds would be held and invested until the beneficiary turns 18, possibly growing to tens of thousands of dollars — at which point the account begins transitioning to a traditional IRA, with full conversion completed by age 30.

One Big, Beautiful Baby

There is a glaring problem with these “Trump Accounts” — they don’t really solve any endemic problems for would-be parents. Which brings up a bigger question: Is money really the main thing holding down the birth rate? Other countries suggest the answer is no.

• Today’s $2K/year CTC doesn’t come close to covering what a parent — often the mother — gives up by stepping away from a $60K salary. Why would $1K in long-term savings change the equation?
• Pilots of similar programs in European and Asian countries haven’t lifted birth rates either — suggesting that financial considerations aren’t the only element here.

Read the room: Of course, an acute problem facing policymakers — not just in the US, but worldwide — is stoking domestic population growth. According to a July 2024 report, the Congressional Budget Office projected that immigration would drive nearly all US population growth by 2040. That’s a major economic driver. But in the Trump era, immigration attitudes have changed. Instead, other considerations for the solution to the birth rate problem have taken center stage.