“Trump Account”: A National Gamble to Reshape American Wealth and Future
In the rapidly changing global economic landscape, a plan called the “Trump Account” is quietly emerging. It is not merely a welfare policy, but a grand social experiment that profoundly changes our understanding of wealth, inequality, and even the future of the nation. It represents a shift from traditional “helicopter money” to disruptive “helicopter equity,” closely linking the economic destiny of the next generation with the performance of capital markets.
If this policy is implemented effectively, it will provide liquidity to the US stock market from now until 18 years from now. In the near future, this would be a positive for the overall market.
From "Helicopter Money" to "Helicopter Equity" Over the past half-century, government intervention in the economy has been commonplace. From Keynesian demand-side management to quantitative easing during the financial crisis, the federal government seems accustomed to stimulating consumption and boosting aggregate demand by directly distributing cash to the public. The tax refund checks of 2008 and the pandemic relief funds of 2020 followed this logic. However, the emergence of the "Trump Account" broke this traditional thinking, introducing the entirely new concept of "helicopter equity." The "Trump Account" is no longer content with solving immediate problems; its ambitions are much greater. It attempts to anchor the economic fate of our next generation directly to the performance of the capital markets through mandatory asset lock-up and the long-term compounding effect. Imagine that every newborn American citizen receives a $1,000 "seed fund" from the federal government. This money is not for immediate consumption but is mandated to be invested in the stock market and cannot be accessed by anyone until the beneficiary reaches adulthood. Furthermore, the Dell family has generously donated $6.25 billion to provide equity-based "seed funds" for children born before this date. This marks the grand project of moving the "ownership society" concept from a political slogan to concrete financial infrastructure. The policy framework and operational mechanism of the "Trump Account" are based on a tax and spending bill that will take effect in July 2025. This bill designs a tax-advantaged investment vehicle, similar to the Ross Individual Retirement Account, but with stricter restrictions on beneficiary age and fund withdrawals. Its core terms include: Beneficiary Scope: Every newborn in the United States with a Social Security number born between January 1, 2025, and December 31, 2028. Federal Seed Funding: A one-time deposit of $1,000 from the U.S. Treasury. Management and Fees: The funds are managed by the Treasury Department, with private financial institutions handling the operations; the annual management fee rate cannot exceed 0.10%. **Fund Lock-up Period:** Funds are locked up until the beneficiary turns 18, unless the beneficiary dies or suffers a serious disability. This 18-year lock-up period aims to fully utilize the compounding effect and ensure that the "capital" nature of the funds is not distorted. However, the bill has a significant generational gap, covering only newborns after 2025, lacking federal funding for children born before that date. This could lead to unequal treatment of children of different ages within the same family. It was at this juncture that the massive donation from Michael and Susan Dyer filled this gap, setting a precedent for direct private capital involvement in the distribution of national welfare. Dell's Algorithm Allocation and Challenges Dell's donations are not universally distributed, but rather targeted through sophisticated geographic and economic algorithms. Children must meet the following criteria to receive the $250 "Dell Seed Fund": They must be 10 years of age or younger (i.e., born before January 1, 2025). They must reside in a zip code area with a median household income of less than $150,000. The $1,000 federal government grant was not received. This forms a three-tiered "helicopter equity" system: Tier 1: Newborns aged 2025-2028 receive $1,000 from the federal Treasury, universally available. Tier 2: Existing children under 10 years old receive $250 from the Dell Foundation, subject to median income restrictions based on residency. Tier 3: Children aged 10 and above or in high-income areas receive no funding. Dell's involvement marks a significant shift in welfare policy logic—from tax regulation to reliance on the "philanthropic capital" of the super-rich. This algorithmic allocation based on postal codes, while aiming to improve the accuracy of funds, also introduces new fairness issues, such as "gentrification misjudgment" and "high-cost traps," potentially excluding some low-income families. Continued Funding and Super Individual Retirement Accounts (SRIs) The long-term effectiveness of the "Trump Account" lies in its ability to continue funding. It allows for an additional contribution of up to $5,000 per year, adjusted for inflation after 2027. Diversified funding sources: Families can use after-tax income for contributions, enjoying tax-deferred benefits. Employers can contribute up to $2,500 annually to employees' children's accounts, not counted as taxable income, forming new tax-free payroll benefits. Local governments and other charities can also contribute without affecting the annual cap. This structure is essentially a "super personal retirement account" for minors. When the beneficiary turns 18, the account converts to a traditional personal retirement account, and the funds can be used for higher education, first-time home purchase, or starting a business. Withdrawals for non-specific purposes are subject to income tax and even penalties. This dual mechanism of "lock-in" and "tax benefits" enforces long-term capital accumulation. Forced Investment and Market Impact: A Bet on Asset Inflation The most striking feature of the "Trump Account" is its mandatory investment directive: the bill requires funds to be invested in index funds that track the U.S. stock market, such as the S&P 500. This ties the future wealth of millions of American children to Wall Street performance and introduces a massive, price-insensitive passive buying spree into the market. The “inelastic market hypothesis” suggests that the demand elasticity of the stock market is far lower than conventional assumptions. Every dollar of capital inflow could potentially increase the total market capitalization by five dollars or more. We can estimate that if approximately 3.5 million newborns are born in the US each year, federal seed funding would inject $3.5 billion into the market annually. Adding Dell's donation and additional contributions from millions of families, this would create a continuous and massive flow of funds. These inflows are not influenced by valuations but are determined by laws and birth rates, and will continue to buy S&P 500 stocks regardless of market booms or busts. This mechanism may exacerbate the "head effect" in the market, causing new funds to flow disproportionately to giants like Apple, Microsoft, and Nvidia. Academic research has confirmed that passive investment significantly inflates the prices of large-cap stocks, and this inflation is often decoupled from fundamentals. Therefore, the "Trump account" may inadvertently become a booster for the stock prices of giant companies, strengthening market concentration. The "Trump account" is also a gamble on asset inflation. While "helicopter money" triggers consumer goods inflation, "helicopter equity" directly impacts asset prices. Critics argue that the policy essentially subsidizes asset holders, artificially increasing stock demand and pushing up asset prices even with a constant or reduced supply. This creates a self-reinforcing feedback loop: federal funds and household savings are forced to buy stocks, driving up stock prices; corporate management, seeing rising stock prices, is more inclined to reward shareholders through stock buybacks rather than dividends; buybacks reduce the supply of outstanding shares, which, combined with the continued buying demand from accounts, further drives up stock prices. This is essentially a national gamble: it bets that this financial engineering can continuously create paper wealth and will not experience a catastrophic valuation correction at some point in the future.
Sequence Risk for Beneficiaries and New Challenges in Philanthropic Governance
For beneficiaries, the biggest risk in this gamble lies in“sequence risk”. Unlike Singapore's Central Provident Fund (CPF), which provides a guaranteed interest rate, the “Trump Account” transfers all market risk to individuals. Consider the “2043 problem”: if a market crash occurs when children born in 2025 reach adulthood in 2043, their “national dowry” will shrink instantly. Current legislation does not explicitly include an automatic liquidation mechanism similar to “target date funds,” which exposes beneficiaries to extreme tail risk. The Dell family's involvement goes beyond mere donations; it represents a new model of "philanthropic governance." By setting a zip code threshold of "median income of $150,000," the Dell Foundation is effectively performing quasi-governmental functions, determining who is eligible for welfare. While this big data governance is precise, it also suffers from flaws such as "gentlemanly misjudgment" and a "high-cost trap." When national welfare policies rely on private philanthropists to fill gaps, the nature of the social contract changes. Welfare ceases to be a legal right based on citizenship and becomes a charity based on the goodwill of the wealthy. This model may solve funding problems in the short term, but in the long term, it may weaken the stability and predictability of the public welfare system. Lessons from International Experience: The UK, Singapore, and Baby Bonds To better understand the pros and cons of the "Trump Account," we can compare it within the framework of global asset-based welfare policies. Lessons from the UK's Child Trusts: Between 2002 and 2011, the UK's child trusts, though automatically established, left over 758,000 accounts unclaimed by the time the children reached adulthood, involving £1.4 billion. This serves as a warning that the "optional" mechanism of the "Trump Account," coupled with an 18-year amnesty period, could prevent millions of low-income children who need it most from accessing this wealth. Singapore's Mandatory Integration of the Central Provident Fund: Singapore mandates a contribution rate as high as 37% of wages and closely links funds to essential infrastructure such as housing and healthcare, offering a risk-free guaranteed interest rate of 2.5% to 4%. In contrast, the Trump Account lacks this life-cycle integration and risk protection, resembling more of an isolated savings account than a social security system. The Ideological Conflict of Baby Bonds: The Baby Bonds proposal, put forward by Democrats such as Cory Booker, advocates for tiered grants based on family wealth to reduce income inequality. The Trump Account, however, provides equal federal seed funding while allowing wealthy families to contribute an additional $5,000 annually for tax-free growth. Critics argue that this effectively uses public funds to create a tax haven that benefits the wealthy, ultimately potentially exacerbating rather than narrowing the wealth gap. We can extrapolate this using mathematical models: if the annualized return is 7%, a child from a low-income family, even with $1250 in seed funding, might only have about $4200 in their account after 18 years if they are unable to contribute. Conversely, a child from a high-income family, receiving $1000 in federal seed funding and contributing the maximum of $5000 annually, could have an account value approaching $200,000 after 18 years. This represents a potentially massive difference of 46 times.
Welfare Cuts and Future Scenario Projections
Critics worry that the establishment of the "Trump Account" is not simply "addition," but a prelude to future welfare "subtraction." Policymakers may use the excuse of "everyone having a stock account" to cut Social Security or other welfare spending. Existing reports indicate that related legislation includes provisions to cut Medicaid and food stamps. This means exchanging "future pie" for "present bread," an extremely dangerous exchange for families on the verge of survival. Based on current data and historical experience, we can conduct wargame simulations of three scenarios for the future of the "Trump account": Scenario A: The Golden Age of Ownership Society (Bull Market Scenario): Premise: Strong US economic growth over the next 20 years, AI technology leading to a leap in productivity, and an annualized return of over 8% for the S&P 500. Outcome: Widespread asset appreciation, reduced class conflict, and increased support for capitalism among young people. Political Impact: The Republican Party's "investor class" strategy has achieved a resounding success, consolidating the political landscape of the right wing. Scenario B: The Lost Two Decades (Stagflation Scenario): Premise: The US is trapped in prolonged stagflation, or stock market valuations, inflated by passive investment, experience a sharp correction. Inflation offsets nominal returns. Outcome: Account purchasing power shrinks, severely impacting ordinary households. Political Impact: The "national scam" narrative prevails, public trust in the financial system collapses, and populism rises. Scenario C: Administrative Quagmire and Dormant Assets (UK Scenario): Complex forms hinder low-income families from opening accounts, and private management institutions lack the incentive to serve small accounts. Results: Millions of accounts remained dormant, with Wall Street financial institutions eroding "ownerless assets" through management fees. Political Impact: The policy was perceived as a regressive fiscal subsidy, sparking criticism of bureaucracy and financial predation. Conclusion: Locking in the Future: A Bet on Equity and Opportunity. The "Trump Account" and the underlying "helicopter equity" concept represent a profound restructuring of the logic of American national governance. It attempts to transform every citizen into a stakeholder in the capital market through the power of financial compounding. The core of this bet lies in three assumptions: Market Assumption: The US stock market will always be an efficient machine for wealth creation, not a casino. Behavioral Assumption: All families, regardless of wealth, possess the knowledge and patience to manage long-term assets. Social Assumption: Asset ownership can replace income redistribution as the ultimate solution to inequality. Dell's donation fueled the plan, but also exposed its vulnerability in relying on private capital to repair public institutions. If successful, it could create a generation of middle-class individuals with assets; if it fails, it will bury the economic security of an entire generation in the fluctuations of stock charts. This is no longer simply "throwing money around," it's "throwing equity around." It not only redefines welfare but also attempts to redefine the relationship between citizens and capitalism. In this 18-year lock-up period, what's locked up isn't just capital, but also American society's entire imagination of the word "opportunity."
Weiliang
Miyuki
Weatherly