About 1.7 million American babies now qualify for $1,000 apiece from the federal government, but Peter Schiff insists they’ll end up paying it back themselves — with interest.
“There is nothing to celebrate,” the economist wrote on X on July 6, the first trading day for the new Trump accounts.
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President Donald Trump had opened that session from the Oval Office hours earlier, remotely ringing the bell for the Nasdaq and the New York Stock Exchange in a ceremony with Treasury Secretary Scott Bessent.
Schiff, chief economist at Euro Pacific Asset Management, has spent years warning that Washington borrows too much, so his complaint here is a familiar one. The government doesn’t have a spare $1,000 sitting around for every eligible newborn, he argues — it raises the money by issuing more debt, which means the same babies collecting the deposit today grow up into the taxpayers covering the interest on it tomorrow. He’d rather Congress cut spending instead.
Those babies are part of Generation Beta, the cohort demographers date from 2025 through 2039. The U.S. Treasury Department told Moneywise that sign-ups have now reached 7 million, after running at roughly 1 million a month across the six months before launch — 1.7 million of those children are eligible for the federal seed deposit. About $1.5 billion has gone into the accounts since July 4, a figure covering both the government’s money and what families have added on top.
What the $1,000 costs, according to Congress’s scorekeeper
If you have a baby at home, here’s how the deal works.
Any U.S. citizen child born from January 2025 through December 2028 who has a Social Security number can claim a one-time $1,000 federal deposit, and a parent or guardian starts the process by filing IRS Form 4547 or using the trumpaccounts.gov portal.
After that, you, your relatives and your employer can put in up to $5,000 a year combined until your child turns 18, though the employer’s share tops out at $2,500.
The Joint Committee on Taxation priced all of this before the One Big Beautiful Bill Act became law. Its July 1, 2025 estimate lists a line called “Trump accounts and contribution pilot program” at $15.2 billion for fiscal 2025 through 2034, and a footnote in the same table breaks out $14.6 billion of that as the deposits going out the door. The tax breaks account for almost none of it, and after 2028 the deposits stop entirely.
Schiff was already on record against the idea a year before launch. In June 2025, when the accounts were still just a proposal, he posted that the plan “isn’t only unconstitutional, it’s a bad idea,” and argued that cutting deficit spending now would spare those babies from repaying the debt later.
The researchers who back his math
Schiff’s framing might sound like a talking point, but the Penn Wharton Budget Model ran the numbers on the law Trump signed and landed in the same place. Every future generation ends up behind, its analysis found, with lifetime losses running from $5,700 for the highest earners to $22,000 for the lowest, because federal debt climbs 17.5% over 30 years and drags down wages and investment along with it.
“Future generations are kind of left holding the bag,” Kent Smetters, who directs the model, told Reuters.
The Treasury pushes back on all of this. A department spokeswoman told Moneywise the accounts “level the playing field by allowing every parent to invest in their children’s future, not just wealthy families with trust funds,” and called the launch “the most popular and successful program launch in government history.”
On the borrowing question, a source familiar with the program’s design explained that the law treats each $1,000 as a refundable tax credit — the same category as the child tax credit — and the IRS pays those under a standing authority Congress granted decades ago. No new spending had to be voted through.
That’s true, and it’s a fair correction to Schiff. But the authority doesn’t earn anything on its own. It draws on the same general fund that’s already running a deficit, so the $14.6 billion the Joint Committee on Taxation counts as cash going out still has to be covered by selling Treasury bonds. Schiff’s complaint survives the technicality.
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What your child actually gets
The account itself is straightforward: the money goes into a low-cost stock index fund, and the law caps fees at 0.10%. Trump predicted the market would climb from here, while Bessent pitched the program as opening a door for families who never invested before. “The American Dream belongs to every child,” he said.
The part families miss is the wrapper. IRS guidance is blunt about it: a Trump account is a traditional IRA opened for your child’s benefit, with withdrawals locked until the year they turn 18. The dollars you contribute yourself have already been taxed once, and their growth gets taxed again later at income rates, where a plain brokerage account would have charged you the lower capital gains rate.
What to do before the money lands
Take the $1,000, because your family declining it wouldn’t shrink the deficit by a dime, and 18 years of compounding is worth having. Just don’t confuse it with a college fund — if school is the goal, a 529 still wins, since qualified withdrawals come out tax-free.
And once your child earns income from a summer job, a custodial Roth IRA is worth a look. A teenager making a few thousand dollars owes little or no income tax, so money goes in cheap and comes out tax-free in retirement, where the Trump account’s growth gets taxed as ordinary income.
To be fair to the program, some of the money behind it was never borrowed at all. Michael and Susan Dell, who stood in the Oval Office on July 6, have pledged $6.25 billion of their own fortune to the accounts, and SpaceX president Gwynne Shotwell said she would donate company shares benefiting more than 2 million children.
Schiff’s argument says nothing against private giving. His stand is aimed at the federal seed money, which was charged to a national credit card these kids never applied for.
Only the front of Gen Beta gets handed anything. The $1,000 stops with babies born after 2028, while the generation runs to 2039. Every child born in those last eleven years inherits the borrowing without ever seeing the deposit that justified it.
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Moneywise contacted the Treasury Department and the Penn Wharton Budget Model for comment. Treasury provided the figures and statement above. Penn Wharton had not responded by the time of publication.
This article originally appeared on Moneywise.com under the title: Peter Schiff warns 1.7 million babies getting $1,000 Trump accounts will repay the $14.6 billion cost themselves
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.