WASHINGTON, D.C. —Today, Rep. Dean Phillips (D-MN) introduced the American Dream Accounts Act – a historic down payment to help every child in this country realize the American Dream.

The American Dream Accounts Act would establish within the Social Security Administration a $5,000 account for every American child, to be invested in an index fund, grow with compound interest, and vest upon graduation from high school, achievement of a GED, or waiver for disability. Assuming a 10% annual rate of return – comparable to the historic performance of the S&P 500 – beneficiaries will receive a windfall of approximately $25,000, which can be used as they wish to kickstart their next chapter – to grow a nest egg, place a down payment on a home, for education or living expenses, or to start a small business.

Students will track the performance of their portfolios with a mobile application and the Department of Education will develop best practices for teaching financial management, investing, and entrepreneurship education in public schools.

“Fulfilling the promise of our great nation requires that everyone have a chance at the American Dream. This legislation provides every American child the opportunity to flourish and realize their full potential,” said Rep. Phillips. “Investing pays dividends, and it is time to bet on the American values of self-determination and opportunity for all by passing the American Dream Accounts Act.”

“A financial head start shouldn't be reserved for the privileged few. The American Dream Accounts Act will empower every child with the resources to pursue their aspirations, leveling the playing field for long-term prosperity." -- Jim Pugh, Executive Director, Universal Income Project

“America remains the land of opportunity, but living the American Dream often requires financing.  Whether the goal is college, buying a home, or launching a business, start-up capital helps turn opportunity into reality. Every American child deserves to share in our nation’s promise, and American Dream Accounts will serve as a down payment on that promise. The Center for American Entrepreneurship is proud to support the American Dream Accounts Act and thanks Rep. Phillips for his leadership.” -- John Dearie, Founder and President, Center for American Entrepreneurship

“Innovative policy approaches are needed to leverage federal resources in ways that meaningfully impact financial literacy, accessible savings and investment opportunities, and exposure to entrepreneurship as a path to career success and wealth building among younger generations of Americans. The American Dream Accounts Act combines educational tools with ‘skin in the game’ as a means to help future generations develop the foundational and practical know-how about saving and investing, with the goal of using seed resources to further build wealth through options such as starting a business. SBE Council applauds Congressman Phillips for his forward and innovative thinking in developing the American Dream Accounts Act, which is multi-faceted in helping to support a range of positive outcomes for future generations, and positive economic activity for our nation.” -- Karen Kerrigan, President & CEO of the Small Business & Entrepreneurship Council      

Representatives Juan Vargas (D-CA) and Shri Thanedar (D-MI) are original cosponsors of the American Dream Accounts Act.

The text of the bill is available here. A section-by-section can be found here.

BACKGROUND:

The Past: Unprecedented moments require unprecedented ideas

The idea of the “American Dream” emerged during one of the darkest periods in American history – the Great Depression. As millions struggled to afford basic necessities like food and shelter, President Franklin Delano Roosevelt signed the Social Security Act into law, making the sacred promise to seniors that we would help them live their golden years with dignity. 

The Problem: We are at a crossroads

Today, we recognize Social Security as an essential component of American prosperity, but there currently exists no comparable program to help the next generation kickstart their adult lives. As Americans continue to struggle with the cost of housing, education, and raising a family, this moment calls for a scaled commitment to improving affordability in this country. It's time we provide a historic down payment that helps every child realize the American Dream.

The Solution: American Dream Accounts

Here’s how it works:

• $5,000 American Dream Account for every newborn and child naturalized before age 18
• Invested in an S&P 500 or comparable index fund
• Managed by the Social Security Administration
• $10,000 bonus for national service through the Peace Corps or AmeriCorps
• Upon high school graduation, achievement of a GED, or waiver for disability, the account vests and the beneficiary can access approximately $25,000, based on compounded annual growth of 10%
• American Dream Account mobile application for portfolio tracking and investing and financial management tools
• Best practices for teaching financial management, investing, and entrepreneurship in public schools created by the Department of Education and disseminated to states

The Promise: Self-determination and opportunity for all

To create transformational change, we must provide the resources necessary to set up every young American for success. Let’s bet on the ambition and determination that drives our country forward. By passing the American Dream Accounts Act, we will: 

• Stimulate markets and the economy
• Alleviate the cost-of-living crisis 
• Increase access to homeownership
• Ignite entrepreneurship and access to capital 
• Cut student debt 
• Lift millions out of poverty
• Close racial wealth gaps
• Help families build generational wealth
• Reduce the need for down-stream support services