Trump Accounts Under the Big Beautiful Bill: Do Federal Seed Contributions to Private Child IRAs Align with the General Welfare Clause?

Introduction to Trump Accounts and the General Welfare Clause

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBA).

Within the almost 1,000 pages of text sits the Trump Accounts: a one-time $1,000 federal contribution into accounts for children born between 2025 and 2028. To apply, parents must elect their children on their tax forms.

These IRA-style investment accounts are initially seeded by a federal contribution. Following the initial seed, they are then supported by private contributions of up to $5,000 per year by the parents, as well as matching contributions offered by employers.

The accounts are slated to be invested in U.S. stock index funds for long-term growth, boasting potential growth of over $300,000 by the age of 18 with max contributions.

Support from major corporations, including Intel, Nvidia, BlackRock, and others, has been overwhelming. Major banks are also stepping up their efforts and preparing to get involved.

Meanwhile, private philanthropists are offering donations and matching contributions that could reach billions of dollars donated to the accounts.

Are the Trump Accounts Constitutional?

In this article, we’ll discuss whether the Constitution, and specifically the general welfare clause, authorizes Congress to use tax revenue for direct federal contributions to private citizens’ investment accounts.

Currently, there are no existing legal challenges to the Trump accounts. However, the absence of a legal challenge does not mean the law is constitutional in letter or in spirit.

While Trump accounts promote self-reliance and market investment, the federal seed money stretches beyond the original intent of the general welfare clause. Even though taxation itself is still disputed constitutionally in some circles, the notion of using tax revenue to service individual/class-specific benefits as opposed to national, enumerated purposes risks federal overreach and dependency.

Understanding the Trump Accounts Policy

What are the Trump accounts?

The accounts are custodial traditional IRAs (§530A), which operate with a $1,000 initial seed from the Treasury, and grow through market investment and annual private/employer contributions up to $5,000. Investments are restricted to low-fee U.S. index funds. Withdrawals are prohibited until age 18, and then traditional IRA rules will apply.

How the Trump accounts work

The Treasury handles the initial setup through a selected trustee/agent after the parents elect their child for the account via Form 4547. Parents are then allowed to rollover the fund to private qualified custodians. Both banks and nonbanks are offering themselves as custodians of the accounts. Not only will the Treasury seed the accounts, but this means private institutions will profit from custody fees, asset growth, and future management.

The rationale behind the Trump accounts

A few major advantages are typically trotted out by defenders of the program.

Financial investment vehicles build wealth in the markets. Such a program reduces future reliance on entitlements.

Not only will accounts receive support from big business and philanthropy initiatives, but the measure will promote private-market innovation and investment, as well as encourage personal responsibility while downplaying reliance on government assistance programs.

But are Trump's accounts constitutional?

The text and historical context of the general welfare clause

Article I of the Constitution specifically lists the responsibilities of Congress. Article I, Section 8, Clause 1 of the Constitution provides Congress’s responsibilities regarding taxes, and says taxation is to “provide for…general welfare of the United States.” The statement itself is not a general power. It is a purpose qualifier.

The phrase originated from the Articles of Confederation and addressed national concerns, including defense and commerce. It did not regard individual aid. Since the document regarded itself as a compact between the states, the only responsibilities and concerns of the federal government were listed within the document.

When the Constitutional Convention worked to craft the Constitution, it took various aspects of the Articles of Confederation. The general welfare clause was one of them.

However, the Founders also treated the Constitution as similar in scope to the Articles of Confederation--it enumerated the responsibilities of the federal government.

In fact, as referenced in the Tenth Amendment, all constitutional responsibilities of the three branches of the federal government are enumerated, or written down. This means that anything not written down is not within the purview of the federal government. Therefore, anything not written down is beyond the scope or responsibility of its duties.

The Founders' Original Intent: Madison's Narrow View 

In Federalist 41, Madison rejects the notion of broad spending as “minsconstruction.” He argues the clause cannot grant unlimited power, or else the enumeration would be rendered meaningless.

Many of the Founders defined the "general welfare" as the national good of the states as a unified whole. They did not typically consider the term to mean an open system of funding for individual projects of the citizens.

Instead, the Founders' philosophy of limited government, states’ rights, liberty, and a rejection of direct taxation were all signs that the Founders never intended the general welfare clause to become an all-encompassing responsibility of Congress to pay for every concern and issue.

In fact, Congress, in 1796, denied Savannah, Georgia, federal funds after fires ravaged the city due to the narrow reading of the general welfare clause. Many representatives suggested personal donations for the cause, leaving federal revenues available for national causes.

Are Trump Accounts Constitutional Under the General Welfare Clause?

Today, most Americans believe Congress’s responsibility under the general welfare clause is to freely give money both to US citizens and to people all across the world. With politicians leveraging legal overreach through legislation and the courts, the notion that federal funds are indeed necessary for personal pet projects and missions has become the norm.

But that doesn’t make such actions any less unconstitutional.

Using $1,000 of tax revenue to seed Trump accounts is a specific benefit to certain families and children. Not only is it not an act of general welfare for the nation (though some people may argue vague, unsubstantiated claims about a general welfare result), but it risks further erosion of federalism, an increase in the massive federal debt, and a blurring of public-private cooperation.

Even though conservatives typically support private markets, investment, self-reliance, and private incentives, the use of federal tax revenues directly benefits not only individual citizens but also the private custodians who will profit from the accounts through fees and growth.

Isn’t the Trump account just another social program?

Some argue that since America has initiated programs in the past, including stimulus checks, welfare programs, government assistance, and healthcare/insurance support, the precedent shows the Trump accounts are indeed constitutional. Such is the assumption of case law.

Furthermore, many argue that the absence of direct challenges proves that the Trump accounts sit on comfortable constitutional ground.

But as Thomas Paine said in Common Sense, "A long habit of not thinking a thing wrong, gives it a superficial appearance of being right, and raises at first a formidable outcry in defense of custom. But the tumult soon subsides. Time makes more converts than reason."

The established use of social programs, government assistance, and other projects by the federal government only further proves how far the nation has traveled from the original intention of the Constitution. Sadly, the Founders faced fights over the meaning of the general welfare clause almost immediately after ratification.

Implications for Constitutional Fidelity and Future Policy 

Expansion of government programs using tax revenue to service individual citizens normalizes government overreach. Not only that, but it raises conservatives’ comfort level with the idea that the federal government’s purse is a giant entitlement program looking to support one off the hard work of another.

Spending must be restrained to the enumerated powers of the Constitution. The American budget is ballooning. Debt is piling up. The citizenry clamors for more money in their pockets because they have been conditioned to believe that government is so intertwined in their lives that financial support is a responsibility of Congress.

The problem is that Congress not only believes its role is to hand out money, but it also believes it has the freedom, or worse yet, the duty, to take it from the citizens.

Each day, Congress takes money from Americans and then turns around to promise those same dollars to other Americans.

The Defense

Americans must not think an action is right purely because, for so long, they saw it as not wrong. The only way to defend against such government overreach is education and action. Those who understand the wayward direction of our nation must educate and encourage the next generations, providing them with the resources and direction to begin to chip away at such egregious overreach.

Conclusion: Are Trump's accounts constitutional?

While the Trump accounts may appear attractive to even many conservatives, the fact remains that the initial seed funding of the Trump accounts is not Constitutional.

A program like the Trump accounts may be innovative. It may even be a beneficial action, but better options exist. Tax credit to corporations, organizations, and individuals who financially support the initiative would retain a sense of constitutionality and still provide a financial incentive for the private sector to get involved.

Conservatives rightfully support the efforts of the private market and the individual in building self-reliance and economic strength. But unlike progressives, conservatives must refrain from believing the ends justify the means.

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