While the wording is slightly incorrect, considering the issue is not necessarily with children, but 1.8 million undocumented immigrants who have been brought to the United States as children, he is essentially keeping them hostage, saying that he would offer them path to citizenship only if Democrats are willing to create a $25 billion trust fund for border wall (which initially he said would cost $10 million that would be paid by the government of Mexico) and also drastically reduce family-based migration.
According to a White House official the deal is not negotiable.
The 1.8 million people are part of the DACA program (Deferred Action for Childhood Arrivals), also known as Dreamers, who during normal times would be eligible to apply for citizenship. The average age of Dreamers is 24 years. I couldn't say where the 1.8 million number comes from exactly, considering according to Pew Research center there were around 690,000 unauthorized immigrants enrolled in DACA as of Sept. 4. But independent of the exact number, 29% are ages 16-20 and 37% are ages 21-25. So most of them are not exactly children anymore, but that's beside the point.
Illinois Democratic Senator Dick Durbin said that "The White House claims to be compromising because the president now agrees with the overwhelming majority of Americans that dreamers should have a pathway to citizenship." Of course, only in exchange for $25 billion. He also said that "But his plan would put the administration's entire hardline immigration agenda - including massive cuts to legal immigration - on the backs of these young people."
We're not the only ones calling it a hostage situation. Advocacy group for young immigrants, United We Dream, is also calling it "a white supremacist ransom note."