A new bill introduced by U.S. Sen. Ted Cruz, R-Texas, would give every American newborn a cash investment from the federal government at birth. The Invest America Act would create a private, tax-advantaged account for each newborn, funded with an initial $1,000 contribution.
What is the Invest America Act?
The House of Representatives included it in a budget package from the House Ways and Means Committee on Monday, May 12.
“Every child in America will have private investment accounts that will compound over their lives, enhancing the prosperity and economic participation of the vast majority of Americans,” Cruz said.
The government would call the accounts MAGA accounts, short for “Money Accounts for Growth and Advancement,” and would link them to the Social Security number of every child born from the beginning of 2025 through the end of 2028.
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In 2024, 28% of Americans didn’t have $1,000 saved for emergencies, retirement or investing.
Parents, relatives, friends or businesses can add up to $5,000 a year to each account. The money would be invested in a low-cost fund that follows the S&P 500 and could grow without being taxed until the child turns 18. Any money taken out after that would be subject to capital gains tax.
In an interview with CNBC on Tuesday, May 13, Cruz said the account would accrue money and turn the younger generation into stakeholders.
“If you have a baby that is born this year that starts with the initial $1,000 seed contribution, over the next 18 years, if $5,000 a year is contributed at 7% growth, by the time they’re 18, they have $170,000 in this account,” he said.
Financial outlook of most Americans
Cruz’s proposal comes at a time of financial uncertainty for many Americans. A 2024 Forbes survey found that about 28% of people polled have less than $1,000 saved, including for emergencies, investing or retirement.
Americans earned a bit more in March, with personal income rising 0.5%, according to the Bureau of Economic Analysis. After taxes, people also spent more while saving less, with the savings rate dropping to 3.9%.
CEOs on board with MAGA accounts
Several top company CEOs have voiced support for the proposal. Businesses like Uber, Dell, Nvidia, Oracle and Altimeter Capital have said they’re willing to invest in the MAGA accounts of their employees’ children.
“Invest America accounts put every child in the front row of our economy. When the power of compounding meets the energy of young minds, we’re not just growing portfolios — we’re fostering the next generation of builders, dreamers and doers who will keep America leading the world,” said Michael Dell, founder, chairman and CEO of Dell Technologies.
Is this concept new?
Lawmakers on both sides of the aisle, including Democratic Sen. Cory Booker, N.J., and Republican Sen. Todd Young, Ind., have pitched similar child investment account ideas.
The MAGA accounts are a broader take on state-run baby bond programs, like one in Connecticut that gives $3,200 to babies born under Medicaid. Those programs are typically limited by income and don’t allow extra contributions.
The Joint Committee on Taxation estimates the program would cost about $17.3 billion over the next 10 years. Lawmakers included the MAGA accounts plan in what they call the “one big beautiful bill,” which still needs approval from both the House and Senate.
