Proposal for Newborns in Texas to Receive $1,000
AUSTIN — Lt. Gov. Dan Patrick says he wants to give every newborn in Texas $1,000. Patrick posted his idea on X on Wednesday morning, saying he will push for legislation in 2027 that mimics the Invest America initiative — also known as “Trump Accounts” — created this year as part of President Donald Trump’s Big Beautiful Bill.
“If I see a great idea from the President that helps Texans, my first question is always, ‘Why not do it in Texas, too?’” the lieutenant governor said.
Background of the Invest America Initiative
Trump Accounts made news Tuesday after Michael and Susan Dell announced they would give $6.25 billion to the Invest America initiative, amounting to about $250 for every child 10 and under who is ineligible for the Trump accounts. Michael Dell is the founder of Dell Technologies Inc. and is estimated to be the 11th-richest person in the world, according to Bloomberg.
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Proposal Details
Patrick estimated that creating a similar fund for children born in Texas would cost about $400 million a year. He proposed calling it the “New Little Texan Savings Fund.”
“That is about 1% or less of our total state appropriations,” Patrick said. “We will amend the state constitution to add this as a permanent program. This is a great way to return money back to families and to teach the value of savings and compound interest to young Texans.”
Amending the Texas Constitution
Amending the Texas Constitution requires approval from two-thirds of each chamber of the Texas Legislature and a majority of voters.
Reactions to the Proposal
Patrick’s proposal drew backlash from some conservatives.
“This is absolutely horrific and an absolutely terrible, terrible idea – not only at the federal level, but state level as well. This should not pass,” former state Sen. Konni Burton, who represented Colleyville from 2015 to 2019 as a Republican, posted on social media.
However, it drew an endorsement from U.S. Sen. Ted Cruz, who was instrumental in creating the federal Trump Accounts. Cruz called Patrick’s idea, “Fantastic!”
“I’m thrilled to see the Lone Star State and my good friend @DanPatrick taking this even further for Texas kids. Bravo!” Cruz posted on X.
Investment Details
Like the federal program, Patrick proposed investing the $1,000 into the S&P 500.
Had an 18-year-old born Dec. 3, 2007, been given a $1,000 investment in the popular State Street index fund, SPDR S&P 500 ETF Trust (SPY), on the date of their birth and reinvested dividends, that investment would have grown to $6,344, according to the website Stoculator. Taking inflation into account, the investment still would have more than quadrupled if withdrawn on their 18th birthday.
Federal Program Details
The federal program would seed each newborn’s account with $1,000. Parents can contribute up to $5,000 per year, and employers can give $2,500 annually. At age 18, the account holder would be able to withdraw funds to pay for higher education tuition, a down payment on a home or startup costs. The accounts would grow tax-free, but the recipient would have to pay taxes on any gains withdrawn.
Conclusion
The proposal by Lt. Gov. Dan Patrick to give every newborn in Texas $1,000 has sparked both support and criticism. While some see it as a great way to teach the value of savings and compound interest to young Texans, others believe it is a terrible idea that should not pass. As the proposal moves forward, it will be interesting to see how it is received by the Texas Legislature and voters.
Frequently Asked Questions
Q: What is the proposed “New Little Texan Savings Fund”?
A: The proposed “New Little Texan Savings Fund” is a program that would give every newborn in Texas $1,000, which would be invested in the S&P 500.
Q: How much would the program cost?
A: The program is estimated to cost about $400 million a year, which is about 1% or less of the total state appropriations.
Q: What are the requirements for amending the Texas Constitution?
A: Amending the Texas Constitution requires approval from two-thirds of each chamber of the Texas Legislature and a majority of voters.
Q: How would the federal program work?
A: The federal program would seed each newborn’s account with $1,000. Parents can contribute up to $5,000 per year, and employers can give $2,500 annually. At age 18, the account holder would be able to withdraw funds to pay for higher education tuition, a down payment on a home or startup costs.
