Jul. 19—By Dan Boyd
SANTA FE — Tucked deep in the hotly debated Big Beautiful Bill that President Donald Trump signed this month is a provision establishing $1,000-per-child investment accounts for babies born during Trump’s second term.
The White House said the accounts will “chart the path to prosperity for a generation of American kids,” while citing support from several business leaders from around the nation.
But some top New Mexico Democrats who pushed for “baby bonds,” or child-focused investment accounts, during this year’s 60-day legislative session, say they’re not on board with the design of the Trump accounts.
“I like baby bonds — I don’t like MAGA bonds,” state Treasurer Laura Montoya said this week.
“These are definitely not baby bond accounts whatsoever,” she added, saying the provision in the federal bill does not accomplish her goal of bridging the wealth gap for low-income residents.
Once implemented, the “Trump accounts” will provide tax-deferred $1,000 investment accounts for all children born in the United States from 2025 through 2028. Additional contributions of up to $5,000 per year from family members, friends or employers can be added to the accounts.
Matt Lira, a White House official during Trump’s first term who now leads a group that advocates for taxpayer-funded investment accounts for newborns, said the idea behind the accounts has been espoused by policymakers on both sides of the political spectrum.
He said the reason the Trump accounts will be available to all families with new children, regardless of income levels, is to avoid having any stigma attached to the accounts. Such an approach was also used in other government programs like Social Security and allows the new accounts to be discussed in classroom settings, he added.
“You completely destigmatize the program if it’s universal,” said Lira, executive director of the nonprofit Invest America Coalition.
However, New Mexico House Speaker Javier Martínez, D-Albuquerque, called the federal baby bond initiative a “Trump scam” that will benefit wealthier families.
“It’s a big farce,” Martínez said in a Friday interview, while also alluding to federal changes to safety net programs like Medicaid and food assistance in the budget bill. Those changes could lead to more than 90,000 New Mexico residents losing their health insurance coverage, state officials have testified.
“While you might be giving kids $1,000 in one-time money, you’re taking away their families’ ability to feed and clothe them,” Martínez added.
NM’s baby bonds debate
In New Mexico, an Albuquerque nonprofit group recently launched a baby bonds pilot program that involves $6,000 accounts funded by private donations that were established for 15 selected families with young children.
That program, along with others like it from around the nation, prompted attempts to expand the program on a statewide level.
But New Mexico Democrats have disagreed over the proper approach to baby bonds. Dueling bills were proposed during this year’s 60-day session, with neither measure being ultimately approved.
In addition, a separate paid family leave bill that included $9,000 baby rebates for working parents stalled in a Senate committee in the final days of this year’s session amid solvency concerns.
Montoya, a Democrat who is in her first term as state treasurer, told the Journal she plans to push for a state-level baby bond program — likely during next year’s 30-day legislative session — that would involve $7,000 investment accounts per child.
As with the Trump accounts, the money would be invested during a baby’s childhood and could then be used for certain expenses, such as higher education costs, buying a new home or entrepreneurship once the child turns 18.
“You need to make sure you have the financial parameters in place to set people up for success,” Montoya said.
As for the plan signed by the president, Montoya said she believes the “Trump accounts” will benefit wealthier families, who will benefit from the tax perks and will more likely be able to make additional contributions to the accounts.
“If they’re already rich, why do they need $1,000?” asked Montoya, who said baby bonds should be based on income levels, with lower-income residents getting larger initial deposits.
Looking ahead
House Speaker Martínez said it’s unclear whether baby bonds might be on the agenda of the 30-day session that starts in January, as the issue would likely have to be approved for consideration by Gov. Michelle Lujan Grisham.
While he said lawmakers are still studying the federal bill to gauge how much budgetary backfilling might be necessary, he said he still supports a broader state-level baby bonds program.
“It doesn’t change our strategy, it doesn’t change the need for baby bonds in New Mexico,” he said.
However, Lira said the federal program that is set to start in the summer of 2026 could eventually allow state and local governments to add their own programs on top of the federally created accounts.
“Even with relatively small amounts of money invested in these accounts, the benefits are significant and long-lasting,” he said.
Lira also said the fact the baby bond provision was largely overshadowed by other, more controversial components of the Big Beautiful Bill might have worked in backers’ favor.
But he said the idea had been thoroughly studied, citing pilot projects that have been undertaken around the country.
“It felt like an idea whose time had arrived,” Lira said.