1
00:00:00,280 --> 00:00:07,200
Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

2
00:00:07,960 --> 00:00:09,960
Speaker 2: Hey, it's Sarah Today. On the show, We're going to

3
00:00:09,960 --> 00:00:12,920
Speaker 2: talk about the Trump Administration's plan to give millions of

4
00:00:13,000 --> 00:00:16,320
Speaker 2: babies savings accounts. But first I want to tell you

5
00:00:16,440 --> 00:00:18,720
Speaker 2: about a special news series we at Bloomberg have been

6
00:00:18,720 --> 00:00:21,599
Speaker 2: working on called The Sixth Bureau, about a spy for

7
00:00:21,760 --> 00:00:26,000
Speaker 2: China's elusive intelligence agency and how he got caught. I'm

8
00:00:26,000 --> 00:00:28,280
Speaker 2: here in the studio with Drake Bennett, who covers tech,

9
00:00:28,360 --> 00:00:32,760
Speaker 2: and Jordan Robertson, who covers cybersecurity, the hosts of the show. Hi,

10
00:00:33,200 --> 00:00:36,159
Speaker 2: Hey there, Hey, can you give me the one sentence

11
00:00:36,520 --> 00:00:38,560
Speaker 2: elevator pitch? What is the show about?

12
00:00:38,840 --> 00:00:42,200
Speaker 1: Yes, a wild story about a Chinese spy who ran

13
00:00:42,240 --> 00:00:45,959
Speaker 1: operations all over the world to steal aviation trade secrets

14
00:00:46,120 --> 00:00:48,959
Speaker 1: and eventually got caught and documented a lot of his

15
00:00:49,000 --> 00:00:51,720
Speaker 1: life in a kind of diary that we wound up getting.

16
00:00:51,760 --> 00:00:54,600
Speaker 3: This is someone working out of basic like MSS headquarters

17
00:00:54,680 --> 00:00:57,760
Speaker 3: in China who is sort of masterminding one of these

18
00:00:57,760 --> 00:01:00,160
Speaker 3: spy rings, and so it was just totally unprecedented to

19
00:01:00,160 --> 00:01:01,040
Speaker 3: get this kind of thing.

20
00:01:01,200 --> 00:01:02,840
Speaker 1: And we had never seen We Drag and I have

21
00:01:02,880 --> 00:01:05,920
Speaker 1: both covered China stories for quite some time. We had

22
00:01:05,959 --> 00:01:09,840
Speaker 1: never seen a spy get arrested and leak all of

23
00:01:09,840 --> 00:01:12,240
Speaker 1: this information, and neither had the US government.

24
00:01:12,360 --> 00:01:14,400
Speaker 2: I really can't wait to listen. Thank you guys both

25
00:01:14,480 --> 00:01:16,640
Speaker 2: so much for joining me, and we're excited for the

26
00:01:16,640 --> 00:01:18,000
Speaker 2: rest of the listeners to get to hear it too.

27
00:01:18,080 --> 00:01:18,399
Speaker 1: Thank you.

28
00:01:18,560 --> 00:01:21,240
Speaker 2: Thanks The six Bureau from The Big Take will be

29
00:01:21,319 --> 00:01:24,720
Speaker 2: right here on our show tomorrow and every Friday for

30
00:01:24,760 --> 00:01:28,119
Speaker 2: the next few weeks. And now here's today's episode.

31
00:01:28,720 --> 00:01:33,440
Speaker 3: Here America, if I started investing when I'm sixteen nine seven,

32
00:01:33,840 --> 00:01:36,360
Speaker 3: it could change my fiuchual all our FeAs.

33
00:01:36,560 --> 00:01:39,720
Speaker 2: Between all the advertisements for weight loss drugs and AI

34
00:01:39,840 --> 00:01:42,880
Speaker 2: chatbots that air during this year's Super Bowl, there was

35
00:01:42,920 --> 00:01:46,000
Speaker 2: one commercial you might have blinked and missed. It was

36
00:01:46,000 --> 00:01:50,440
Speaker 2: sponsored by a nonprofit called invest America, promoting a new

37
00:01:50,640 --> 00:01:55,800
Speaker 2: government initiative. This year, every American child gets an investment account.

38
00:01:56,120 --> 00:01:59,360
Speaker 2: The administration is calling them five thirty A Accounts or

39
00:01:59,400 --> 00:02:03,520
Speaker 2: Trump account, their financial savings accounts that can't be touched

40
00:02:03,600 --> 00:02:07,600
Speaker 2: until a child turns eighteen. Starting in July, parents of

41
00:02:07,680 --> 00:02:10,040
Speaker 2: kids under eighteen will be able to sign up, and

42
00:02:10,120 --> 00:02:12,760
Speaker 2: kids born between twenty twenty five and twenty twenty eight

43
00:02:13,160 --> 00:02:16,240
Speaker 2: will get a seed deposit of one thousand dollars straight

44
00:02:16,280 --> 00:02:17,240
Speaker 2: from the US government.

45
00:02:18,160 --> 00:02:19,440
Speaker 1: That's free money, you.

46
00:02:20,320 --> 00:02:23,720
Speaker 2: Bloomberg reporter Ben Steverman didn't catch the ad live.

47
00:02:24,040 --> 00:02:26,120
Speaker 3: I missed the Super Bowl this year, so I missed

48
00:02:26,120 --> 00:02:29,800
Speaker 3: it entirely. Yeah, yeah, I just watched a movie instead.

49
00:02:30,560 --> 00:02:34,040
Speaker 2: But Ben says the prime placement shows just how central

50
00:02:34,080 --> 00:02:37,880
Speaker 2: the idea is to the administration's affordability messaging.

51
00:02:38,160 --> 00:02:41,160
Speaker 3: I think that this is about their signaling for twenty

52
00:02:41,400 --> 00:02:44,720
Speaker 3: twenty six, the election this year. We're not just a

53
00:02:44,760 --> 00:02:47,880
Speaker 3: party and an administration focused on helping rich people. We

54
00:02:47,919 --> 00:02:49,160
Speaker 3: want to help everyone.

55
00:02:49,639 --> 00:02:53,720
Speaker 2: This raises questions like how much could these Trump accounts

56
00:02:53,760 --> 00:02:56,800
Speaker 2: help the kids who get them? And who stands to

57
00:02:56,840 --> 00:03:01,320
Speaker 2: benefit most. They're the questions to mious Derek Hamilton has

58
00:03:01,360 --> 00:03:05,600
Speaker 2: interrogated as he weighed the program's promise and potential pitfalls.

59
00:03:05,840 --> 00:03:08,000
Speaker 4: You know, some of the good news is an interest

60
00:03:08,040 --> 00:03:12,600
Speaker 4: in how do we afford financial security in a wider way,

61
00:03:13,040 --> 00:03:15,280
Speaker 4: but the delivery is really problematic.

62
00:03:20,040 --> 00:03:22,360
Speaker 2: I'm Sarah Holder, and this is the big take from

63
00:03:22,400 --> 00:03:26,760
Speaker 2: Bloomberg News today. On the show, What is a Trump account?

64
00:03:27,000 --> 00:03:29,360
Speaker 2: How does it work? And how could it impact the

65
00:03:29,400 --> 00:03:39,320
Speaker 2: financial future of millions of American children. Tucked inside Trump's

66
00:03:39,360 --> 00:03:42,840
Speaker 2: One Big, Beautiful Bill, along with trillions of dollars of

67
00:03:42,880 --> 00:03:46,760
Speaker 2: tax breaks, were fifteen billion dollars earmarked for a new

68
00:03:46,800 --> 00:03:48,720
Speaker 2: program called Trump Accounts.

69
00:03:49,040 --> 00:03:51,560
Speaker 3: The original name was actually MAGA Accounts, and then they

70
00:03:51,600 --> 00:03:54,360
Speaker 3: decided to change the name to Trump Accounts as the

71
00:03:54,440 --> 00:03:56,960
Speaker 3: bill was going through the process, And they actually changed

72
00:03:57,000 --> 00:03:58,920
Speaker 3: a lot of the details about this as it was

73
00:03:58,960 --> 00:04:01,320
Speaker 3: going through. It became generous. I think they realized that

74
00:04:01,360 --> 00:04:03,520
Speaker 3: it was going to be too expensive if they did

75
00:04:03,560 --> 00:04:06,840
Speaker 3: what they were planning to do, so the program's changed

76
00:04:06,840 --> 00:04:11,000
Speaker 3: a lot. But these are basically individual retirement accounts for babies.

77
00:04:11,640 --> 00:04:16,040
Speaker 3: The money is locked up until they're eighteen and then

78
00:04:16,080 --> 00:04:18,719
Speaker 3: they become iras baby is.

79
00:04:18,720 --> 00:04:21,240
Speaker 2: Born between twenty twenty five and twenty twenty eight will

80
00:04:21,279 --> 00:04:24,200
Speaker 2: get a head start on saving with one thousand dollars

81
00:04:24,279 --> 00:04:25,279
Speaker 2: from the US government.

82
00:04:25,680 --> 00:04:29,680
Speaker 3: The other thing that they're hoping people do is that

83
00:04:29,760 --> 00:04:33,680
Speaker 3: they're hoping employers pitch in on behalf of their employees' kids.

84
00:04:34,200 --> 00:04:37,159
Speaker 3: They're also hoping that philanthropists step up, and they're hoping

85
00:04:37,160 --> 00:04:41,760
Speaker 3: that parents contribute to their kids accounts over time, and

86
00:04:41,800 --> 00:04:44,840
Speaker 3: you could also imagine like grandma and grandpa like can

87
00:04:44,920 --> 00:04:47,280
Speaker 3: contribute on behalf of the kid. So they're hoping that

88
00:04:47,320 --> 00:04:50,200
Speaker 3: this thousand dollars will become much more than one thousand

89
00:04:50,279 --> 00:04:51,440
Speaker 3: dollars over time.

90
00:04:51,839 --> 00:04:54,039
Speaker 2: How will that money be invested.

91
00:04:54,440 --> 00:04:56,240
Speaker 3: The idea is it's going to be in an index

92
00:04:56,279 --> 00:05:01,080
Speaker 3: fund invested in the in US stocks, And the federal

93
00:05:01,080 --> 00:05:04,320
Speaker 3: government has yet to announce who is going to manage

94
00:05:04,400 --> 00:05:06,440
Speaker 3: that money and how it exactly it's going to work.

95
00:05:06,440 --> 00:05:09,200
Speaker 3: But the idea is it's supposed to be low fee

96
00:05:09,800 --> 00:05:14,839
Speaker 3: index funds of some sort. So hopefully this money is

97
00:05:14,880 --> 00:05:17,280
Speaker 3: not eaten up by fees, and that if the stock

98
00:05:17,320 --> 00:05:20,479
Speaker 3: market does well, those gains will actually reach these kids.

99
00:05:20,960 --> 00:05:24,839
Speaker 3: I can say for a house with the trampoline to tramploine.

100
00:05:25,400 --> 00:05:28,400
Speaker 3: One of the real benefits of the idea of investing

101
00:05:28,480 --> 00:05:31,080
Speaker 3: on behalf of a baby is that you have the

102
00:05:31,120 --> 00:05:33,120
Speaker 3: power of compounding. You can put that money in the

103
00:05:33,160 --> 00:05:35,760
Speaker 3: stock market and it could go up potentially ten percent

104
00:05:35,839 --> 00:05:38,960
Speaker 3: a year, and that could grow the money into something substantial.

105
00:05:39,000 --> 00:05:40,680
Speaker 3: If you're able to save over.

106
00:05:40,480 --> 00:05:45,520
Speaker 2: Time, you could get two trampolines. Maybe these accounts will

107
00:05:45,560 --> 00:05:48,400
Speaker 2: be administered by the US Treasury and open for enrollment

108
00:05:48,480 --> 00:05:51,279
Speaker 2: in July, but the administration is also in the process

109
00:05:51,360 --> 00:05:54,520
Speaker 2: of picking firms to serve as trustees for these investments.

110
00:05:54,800 --> 00:05:57,960
Speaker 2: According to Bloomberg Reporting, Robinhood is one of the companies

111
00:05:58,000 --> 00:06:00,760
Speaker 2: that the US government is considering for a key role.

112
00:06:01,240 --> 00:06:04,839
Speaker 3: All this is uncharted territory in terms of keeping track

113
00:06:04,960 --> 00:06:08,440
Speaker 3: of so many like these accounts. It's going to be very,

114
00:06:08,560 --> 00:06:12,440
Speaker 3: very complicated, and let's hope that the computer systems of

115
00:06:12,440 --> 00:06:13,680
Speaker 3: the US government are up for it.

116
00:06:14,760 --> 00:06:17,960
Speaker 2: Launching a program at the scale may be uncharted territory,

117
00:06:18,400 --> 00:06:21,120
Speaker 2: but the idea of the government helping children build wealth

118
00:06:21,120 --> 00:06:25,240
Speaker 2: through investment accounts isn't new or unique to the US.

119
00:06:25,680 --> 00:06:28,680
Speaker 2: The UK offers a similar program that it calls a

120
00:06:28,800 --> 00:06:32,320
Speaker 2: Child Trust Fund, and for years there have been efforts

121
00:06:32,320 --> 00:06:34,520
Speaker 2: at the federal and state level in the US to

122
00:06:34,600 --> 00:06:38,719
Speaker 2: offer parents something called baby bonds, a government funded program

123
00:06:38,760 --> 00:06:42,400
Speaker 2: first proposed by Derek Hamilton, who's a professor of economics

124
00:06:42,440 --> 00:06:45,600
Speaker 2: and director of the New Schools Institute on Race, Power

125
00:06:45,680 --> 00:06:46,799
Speaker 2: and Political Economy.

126
00:06:47,200 --> 00:06:52,680
Speaker 4: In a nutshell, it is a trust account to democratize wealth.

127
00:06:53,160 --> 00:06:57,760
Speaker 4: It affords everybody the opportunity have a nest egg when

128
00:06:57,760 --> 00:07:00,000
Speaker 4: they become a young adult. So that they can invest

129
00:07:00,160 --> 00:07:01,640
Speaker 4: in a vehicle to build wealth.

130
00:07:01,920 --> 00:07:05,159
Speaker 2: Connecticut's been running a baby bonds program since twenty twenty three.

131
00:07:05,720 --> 00:07:08,719
Speaker 2: Hamilton came up with the idea after seeing how access

132
00:07:08,800 --> 00:07:11,640
Speaker 2: to an elite education shaped his own life path.

133
00:07:12,040 --> 00:07:17,000
Speaker 4: When understanding differences across class, race, gender, etc. It often

134
00:07:17,240 --> 00:07:20,920
Speaker 4: comes down to resources. The learnings was, how can we

135
00:07:21,000 --> 00:07:25,880
Speaker 4: better democratize that investment so that everyone would really be

136
00:07:25,960 --> 00:07:28,840
Speaker 4: able to build the economic security and agency that comes

137
00:07:28,840 --> 00:07:29,640
Speaker 4: along with wealth.

138
00:07:29,920 --> 00:07:33,240
Speaker 2: And in your conception and proposal for baby bonds, how

139
00:07:33,240 --> 00:07:36,280
Speaker 2: are those nesteg accounts funded.

140
00:07:36,560 --> 00:07:40,680
Speaker 4: Federally funded in the ideal scenario similar to social security.

141
00:07:41,080 --> 00:07:43,560
Speaker 4: That's another linkage we can use when we think about

142
00:07:43,640 --> 00:07:47,680
Speaker 4: baby bonds. We have something for us when we reach

143
00:07:47,800 --> 00:07:50,440
Speaker 4: the twilight of our life. We have the federal government

144
00:07:50,520 --> 00:07:55,720
Speaker 4: reserving the economic resource of a pension that's pretty much

145
00:07:55,800 --> 00:07:59,760
Speaker 4: universally established, but we have nothing for young adults begin

146
00:07:59,840 --> 00:08:03,640
Speaker 4: to a life cycle of trying to have economic security.

147
00:08:04,320 --> 00:08:08,280
Speaker 2: What Hamilton is pitching is essentially a savings account created

148
00:08:08,280 --> 00:08:11,400
Speaker 2: for babies by the federal government to give them a

149
00:08:11,440 --> 00:08:15,040
Speaker 2: head start on financial security in their young adulthood. Sounds

150
00:08:15,040 --> 00:08:19,280
Speaker 2: a lot like Trump accounts, right, but Hamilton says there

151
00:08:19,320 --> 00:08:21,200
Speaker 2: are some key differences.

152
00:08:21,640 --> 00:08:26,320
Speaker 4: Unlike baby bonds that are intended to provide everyone in

153
00:08:26,400 --> 00:08:30,240
Speaker 4: a democratized way and opportunity to build wealth, the Trump

154
00:08:30,320 --> 00:08:34,280
Speaker 4: account sadly in the delivery, will enhance inequality in the

155
00:08:34,280 --> 00:08:34,880
Speaker 4: long run.

156
00:08:38,720 --> 00:08:41,560
Speaker 2: We get into criticisms of the program and do some

157
00:08:41,720 --> 00:08:53,000
Speaker 2: math after the break. One of the key selling points

158
00:08:53,000 --> 00:08:57,000
Speaker 2: of Trump accounts is that they're universal. Any US citizen

159
00:08:57,120 --> 00:09:00,000
Speaker 2: can sign up, but that also means they're not design

160
00:09:00,120 --> 00:09:04,720
Speaker 2: and to offer more advantages to families who have fewer resources.

161
00:09:05,000 --> 00:09:09,960
Speaker 3: Derek Hamilton's baby bonds or other almost democratic proposals. In

162
00:09:10,120 --> 00:09:12,960
Speaker 3: places like Connecticut, a larger share of the money is

163
00:09:12,960 --> 00:09:16,280
Speaker 3: set aside for poor kids, and that would help, he says,

164
00:09:16,640 --> 00:09:20,880
Speaker 3: narrow inequality, narrow the racial wealth gap. The idea is

165
00:09:20,920 --> 00:09:23,960
Speaker 3: that that would give poor kids the sort of the

166
00:09:24,000 --> 00:09:27,880
Speaker 3: same start in life that richer kids get in terms

167
00:09:27,920 --> 00:09:30,440
Speaker 3: of help from parents, help with down payments, help with

168
00:09:30,480 --> 00:09:31,559
Speaker 3: college educations.

169
00:09:32,200 --> 00:09:34,880
Speaker 2: The idea being there are some kids who basically have

170
00:09:35,000 --> 00:09:38,880
Speaker 2: a savings account built in when they're born because of

171
00:09:38,920 --> 00:09:40,520
Speaker 2: the wealth of their parents.

172
00:09:40,600 --> 00:09:43,000
Speaker 3: Right, I mean, they get a baby bond essentially because

173
00:09:43,040 --> 00:09:45,720
Speaker 3: their parents are wealthier, their grandparents are wealthier, They just

174
00:09:45,800 --> 00:09:47,959
Speaker 3: there's somebody in their network that they can rely on.

175
00:09:48,480 --> 00:09:51,559
Speaker 3: Whereas the really the knock on Trump accounts is that

176
00:09:51,679 --> 00:09:55,000
Speaker 3: this could potentially, depending on how this plays out, this

177
00:09:55,080 --> 00:09:59,560
Speaker 3: could potentially be really a benefit for affluent families in

178
00:09:59,559 --> 00:10:03,160
Speaker 3: some case that some poor families might not even know

179
00:10:03,320 --> 00:10:06,440
Speaker 3: exists and might not even learn remember to access a

180
00:10:06,559 --> 00:10:07,440
Speaker 3: might not sign up for.

181
00:10:07,880 --> 00:10:10,160
Speaker 2: Why is it a universal program instead of a means

182
00:10:10,200 --> 00:10:11,800
Speaker 2: tested program?

183
00:10:12,080 --> 00:10:14,120
Speaker 3: The Trump administration doesn't seem to want to think of

184
00:10:14,160 --> 00:10:18,600
Speaker 3: this as purely for low income kids. They want to

185
00:10:18,640 --> 00:10:22,440
Speaker 3: think of it as getting all Americans to save more

186
00:10:22,520 --> 00:10:26,079
Speaker 3: money and put more money in the stock market especially

187
00:10:26,640 --> 00:10:31,320
Speaker 3: and help the broad swath of the country benefit more

188
00:10:31,400 --> 00:10:34,040
Speaker 3: from economic growth when the stock market goes up.

189
00:10:34,320 --> 00:10:38,680
Speaker 2: Derek Hamilton points out that the program's universality could have downsides.

190
00:10:39,240 --> 00:10:42,880
Speaker 4: If you literally gave everyone the same resource throughout society,

191
00:10:43,360 --> 00:10:48,080
Speaker 4: you're effectively raising asset prices in a way that won't

192
00:10:48,120 --> 00:10:50,760
Speaker 4: achieve what it is you're trying to achieve, which is

193
00:10:50,800 --> 00:10:54,160
Speaker 4: to provide those didn't need it more to have greater access.

194
00:10:54,720 --> 00:10:57,840
Speaker 2: And while everyone is eligible for the accounts, some families

195
00:10:57,920 --> 00:11:02,480
Speaker 2: might have even more opportunities to grow their cash. Employers

196
00:11:02,520 --> 00:11:05,400
Speaker 2: like JP, Morgan Chase, and Blackrock have already pledged to

197
00:11:05,440 --> 00:11:08,199
Speaker 2: contribute on behalf of their workers children.

198
00:11:08,080 --> 00:11:11,439
Speaker 3: We haven't yet heard like McDonald's or Walmart or you know.

199
00:11:11,440 --> 00:11:13,679
Speaker 3: It's the sort of the other employers step up.

200
00:11:13,800 --> 00:11:17,000
Speaker 2: Philanthropists are expected to step up too. At the Trump

201
00:11:17,000 --> 00:11:20,360
Speaker 2: Account Summit in January, Trump touted a six point twenty

202
00:11:20,440 --> 00:11:24,160
Speaker 2: five billion dollar investment from the billionaires Susan and Michael Dell,

203
00:11:24,600 --> 00:11:26,160
Speaker 2: the founder of Dell Technologies.

204
00:11:26,880 --> 00:11:29,360
Speaker 3: Send up, Michael, What a great guy.

205
00:11:30,840 --> 00:11:33,559
Speaker 2: The Dell's hope to seed twenty five million accounts for

206
00:11:33,679 --> 00:11:36,480
Speaker 2: kids ten and under who aren't already eligible for the

207
00:11:36,480 --> 00:11:39,720
Speaker 2: government money targeted and zip codes where the median income

208
00:11:39,880 --> 00:11:42,079
Speaker 2: is below one hundred and fifty thousand dollars.

209
00:11:42,440 --> 00:11:46,079
Speaker 3: Michael Dell's generosity is obvious, like six billion dollars is

210
00:11:46,120 --> 00:11:48,360
Speaker 3: a lot of money to give away. But when you

211
00:11:48,480 --> 00:11:52,040
Speaker 3: spread that six billion dollars over millions and millions of kids,

212
00:11:52,080 --> 00:11:55,040
Speaker 3: you're talking about two hundred and fifty dollars each, which

213
00:11:55,280 --> 00:11:57,520
Speaker 3: really just doesn't move the needle for a lot of kids.

214
00:11:58,600 --> 00:12:02,520
Speaker 2: Beyond these questions of equity and impact, then says there's

215
00:12:02,559 --> 00:12:05,360
Speaker 2: another big asterisk attached to these accounts.

216
00:12:05,600 --> 00:12:09,720
Speaker 3: The tax treatment is less favorable than college savings accounts,

217
00:12:09,960 --> 00:12:13,360
Speaker 3: five twenty nine plans and other tools. The money that

218
00:12:13,440 --> 00:12:17,480
Speaker 3: comes out of a Trump account at the end of

219
00:12:17,520 --> 00:12:22,160
Speaker 3: the process is treated and taxed as ordinary income. So

220
00:12:22,240 --> 00:12:24,320
Speaker 3: if you were some money was given on your behalf

221
00:12:24,320 --> 00:12:27,240
Speaker 3: and then it grows, those investment gains are going to

222
00:12:27,240 --> 00:12:29,800
Speaker 3: be treated as ordinary income to you, and you're gonna

223
00:12:29,800 --> 00:12:32,439
Speaker 3: have to be taxed on them, whereas five twenty nine

224
00:12:32,480 --> 00:12:36,240
Speaker 3: college saving plans. Usually the money is tax free if

225
00:12:36,400 --> 00:12:39,680
Speaker 3: it's spent on a qualified expense like education. You also

226
00:12:39,720 --> 00:12:42,440
Speaker 3: have to remember when people throw out the math on

227
00:12:42,520 --> 00:12:45,760
Speaker 3: how much money this is going to eventually become, don't

228
00:12:45,800 --> 00:12:49,160
Speaker 3: forget about inflation. Even if this grow. If you got

229
00:12:49,240 --> 00:12:51,240
Speaker 3: really lucky in the stock market and you left it

230
00:12:51,280 --> 00:12:53,800
Speaker 3: in long enough and it became twenty thousand dollars, which

231
00:12:53,800 --> 00:12:57,240
Speaker 3: would be a real stretch. Remember that's twenty thousand dollars

232
00:12:57,280 --> 00:13:00,760
Speaker 3: in twenty five years, not twenty thousand dollars now. So

233
00:13:00,800 --> 00:13:02,040
Speaker 3: it's going to buy a lot less.

234
00:13:02,480 --> 00:13:05,000
Speaker 2: A graphic on Trump accounts dot gov says that if

235
00:13:05,040 --> 00:13:07,480
Speaker 2: you open an account for your child today with just

236
00:13:07,600 --> 00:13:11,600
Speaker 2: the thousand dollars government deposit and make no further contributions.

237
00:13:11,920 --> 00:13:14,400
Speaker 2: The account would hold two hundred and forty three thousand

238
00:13:14,440 --> 00:13:16,960
Speaker 2: dollars by the time the kid is fifty five years old.

239
00:13:17,920 --> 00:13:20,160
Speaker 2: But inflation really changes the math.

240
00:13:20,679 --> 00:13:22,640
Speaker 3: I think you have to remember that fifty five years

241
00:13:22,679 --> 00:13:25,120
Speaker 3: is a really long time and a lot can happen

242
00:13:25,160 --> 00:13:27,560
Speaker 3: in that timeframe, and so the stock market can do

243
00:13:27,720 --> 00:13:30,240
Speaker 3: very well, but the dollar can also lose a lot

244
00:13:30,280 --> 00:13:33,080
Speaker 3: of value, so you end up with a much smaller

245
00:13:33,280 --> 00:13:35,319
Speaker 3: amount than you would really imagine.

246
00:13:35,520 --> 00:13:37,920
Speaker 2: Yeah, what is two hundred and forty three thousand dollars

247
00:13:37,960 --> 00:13:41,360
Speaker 2: in fifty five years from now? Inflation?

248
00:13:41,640 --> 00:13:43,440
Speaker 3: I was trying to I was trying to do the math,

249
00:13:43,480 --> 00:13:45,800
Speaker 3: and it was like, if you look at how much

250
00:13:45,880 --> 00:13:48,640
Speaker 3: inflation we've had in the last fifty five years and

251
00:13:49,040 --> 00:13:51,600
Speaker 3: you kind of last it forward to the next fifty

252
00:13:51,600 --> 00:13:56,320
Speaker 3: five years, it's something like thirty thousand dollars. Now, like

253
00:13:56,720 --> 00:13:59,720
Speaker 3: that's good, but again, like it's more than a thousand

254
00:13:59,760 --> 00:14:01,320
Speaker 3: dollars when we're talking about a fifty five year old,

255
00:14:01,320 --> 00:14:04,200
Speaker 3: we're talking about retirement expenses. One of the ideas of

256
00:14:04,400 --> 00:14:06,360
Speaker 3: these programs is that they're going to help a twenty

257
00:14:06,400 --> 00:14:09,199
Speaker 3: three year old get a good start in life and

258
00:14:09,240 --> 00:14:11,520
Speaker 3: maybe be able to go to a vacational class or

259
00:14:11,559 --> 00:14:14,320
Speaker 3: something like that that really jump starts them. If you're

260
00:14:14,320 --> 00:14:17,200
Speaker 3: waiting till you're fifty five. There is a lot of

261
00:14:17,200 --> 00:14:19,520
Speaker 3: other things that probably should have happened in the wealth

262
00:14:19,520 --> 00:14:21,080
Speaker 3: building department in between.

263
00:14:21,640 --> 00:14:23,360
Speaker 2: I mean, and the other thing that we've touched on

264
00:14:23,440 --> 00:14:26,000
Speaker 2: before is taxes. You know, two hundred and forty three

265
00:14:26,000 --> 00:14:30,120
Speaker 2: thousand dollars would also be taxed once you take it out.

266
00:14:30,000 --> 00:14:33,400
Speaker 3: Right right, and those taxes will be complicated. But these

267
00:14:33,520 --> 00:14:36,080
Speaker 3: do not have the same tax advantages as some of

268
00:14:36,120 --> 00:14:38,640
Speaker 3: the other programs that are out there. Financial advisors say,

269
00:14:38,680 --> 00:14:40,600
Speaker 3: you know, like a five to twenty nine plan is

270
00:14:40,640 --> 00:14:44,480
Speaker 3: probably a better investment for your kids college if it's

271
00:14:44,840 --> 00:14:46,760
Speaker 3: you putting them money, right.

272
00:14:46,640 --> 00:14:50,200
Speaker 2: So maybe sign up for the account, get the one

273
00:14:50,240 --> 00:14:55,640
Speaker 2: thousand dollars, and watch it grow. But adding more money

274
00:14:55,680 --> 00:14:57,720
Speaker 2: to the account won't have the same effect as it

275
00:14:57,720 --> 00:15:00,920
Speaker 2: would if you were contributing to a five twenty account exactly.

276
00:15:01,120 --> 00:15:04,920
Speaker 3: Even people who are skeptics of Trump accounts say, there's

277
00:15:05,000 --> 00:15:08,280
Speaker 3: no doubt that if your baby is eligible for this,

278
00:15:08,400 --> 00:15:10,760
Speaker 3: you should sign up and you should access this money.

279
00:15:10,800 --> 00:15:13,840
Speaker 3: There's just no doubt, Like, that's free money for you. Now,

280
00:15:13,880 --> 00:15:16,080
Speaker 3: Should you save your own money in a Trump account?

281
00:15:16,360 --> 00:15:19,800
Speaker 3: Maybe not? Like, actually probably not, according to the financial

282
00:15:19,800 --> 00:15:23,360
Speaker 3: advisors we've talked to. And again, maybe this is a

283
00:15:23,400 --> 00:15:27,200
Speaker 3: first step, like maybe this is an area of bipartisan

284
00:15:27,240 --> 00:15:30,800
Speaker 3: agreement going forward that there can be compromises on and

285
00:15:31,240 --> 00:15:34,560
Speaker 3: people can work something out, because it does seem like

286
00:15:34,640 --> 00:15:39,800
Speaker 3: both parties understand the need to do something about wealth inequality.

287
00:15:40,240 --> 00:15:43,360
Speaker 3: The question is which of these solutions is really going

288
00:15:43,440 --> 00:15:46,240
Speaker 3: to make a difference in an actual kid's life.

289
00:15:46,960 --> 00:15:50,400
Speaker 2: Affordability has been a major concern for Americans and Trump's

290
00:15:50,400 --> 00:15:53,120
Speaker 2: first year back in office, and it's top of mind

291
00:15:53,120 --> 00:15:55,760
Speaker 2: for the administration heading into the twenty twenty six mid

292
00:15:55,880 --> 00:15:59,360
Speaker 2: term elections. Ben says Trump accounts are just one of

293
00:15:59,400 --> 00:16:03,080
Speaker 2: many policies and Trump's one big, beautiful bill pitched to

294
00:16:03,280 --> 00:16:05,680
Speaker 2: working and middle class families.

295
00:16:05,520 --> 00:16:09,000
Speaker 3: No tax on tips, no tax on overtime, a bigger

296
00:16:09,080 --> 00:16:12,960
Speaker 3: senior deduction, and the Trump accounts. I think that this

297
00:16:13,120 --> 00:16:16,720
Speaker 3: is about their signaling for twenty twenty six, the election

298
00:16:16,840 --> 00:16:20,320
Speaker 3: this year. We're not just a party and an administration

299
00:16:20,400 --> 00:16:23,160
Speaker 3: focused on helping rich people. We want to help everyone.

300
00:16:23,440 --> 00:16:25,640
Speaker 2: Could this move the needle on affordability.

301
00:16:25,720 --> 00:16:27,720
Speaker 3: I guess I would just say, like, I don't think

302
00:16:27,800 --> 00:16:32,600
Speaker 3: one thousand dollars for these millions of babies is really

303
00:16:32,800 --> 00:16:35,479
Speaker 3: going to move the needle on wealth inequality in America.

304
00:16:35,720 --> 00:16:38,560
Speaker 3: But it is nice that we're having this conversation. It's

305
00:16:38,640 --> 00:16:43,160
Speaker 3: nice that we're like thinking about creative approaches to this

306
00:16:43,280 --> 00:16:47,000
Speaker 3: problem and what might really move the needle going forward,

307
00:16:47,040 --> 00:16:48,920
Speaker 3: and how we might build on this and change it

308
00:16:48,960 --> 00:16:53,720
Speaker 3: going forward, and how we might get everybody saving potentially

309
00:16:54,200 --> 00:16:57,600
Speaker 3: and working toward some kind of goal that narrows wealth

310
00:16:57,640 --> 00:17:00,280
Speaker 3: inequality a little bit. We have a tax system is

311
00:17:00,320 --> 00:17:04,320
Speaker 3: actually very advantageous to wealthy people in this country, and

312
00:17:04,600 --> 00:17:07,240
Speaker 3: we have lots of tax incentives in the law around

313
00:17:07,320 --> 00:17:10,199
Speaker 3: retirement and five twenty nine plans and other things that

314
00:17:10,320 --> 00:17:12,680
Speaker 3: really are favorable to upper middle class people too.

315
00:17:13,000 --> 00:17:15,800
Speaker 2: And these Trump accounts come as there are broader cuts

316
00:17:15,800 --> 00:17:16,920
Speaker 2: to the social safety net.

317
00:17:17,160 --> 00:17:20,480
Speaker 3: I mean, one thousand dollars is potentially a month's utility

318
00:17:20,520 --> 00:17:22,960
Speaker 3: build this cold winter. I mean, it's a good amount

319
00:17:22,960 --> 00:17:25,920
Speaker 3: of money. But there's a lot of challenges that middle

320
00:17:25,920 --> 00:17:28,199
Speaker 3: class and working class families are facing right now in

321
00:17:28,280 --> 00:17:32,080
Speaker 3: terms of affordability. And this is in some ways. It's

322
00:17:32,119 --> 00:17:34,359
Speaker 3: a little bit of a frustrating conversation because there's a

323
00:17:34,400 --> 00:17:38,480
Speaker 3: lot of emphasis on this symbol of the Trump accounts

324
00:17:39,080 --> 00:17:41,960
Speaker 3: when the reality behind the symbol is like a little

325
00:17:41,960 --> 00:17:42,520
Speaker 3: bit smaller.

326
00:17:44,320 --> 00:17:47,000
Speaker 2: Derek Hamilton doesn't see the five point thirty a Trump

327
00:17:47,000 --> 00:17:51,040
Speaker 2: accounts as the right solution to narrow inequality, but he

328
00:17:51,080 --> 00:17:52,919
Speaker 2: does see potential in the symbol.

329
00:17:53,560 --> 00:17:57,200
Speaker 4: You know, we often maintain or manage poverty rather than

330
00:17:57,720 --> 00:18:01,920
Speaker 4: investing in the capabilities of those indis with lower resources.

331
00:18:02,320 --> 00:18:06,080
Speaker 4: So I hope that this ushers in a new genre

332
00:18:06,160 --> 00:18:10,120
Speaker 4: of public policy where we flip the equation. Rather than

333
00:18:10,160 --> 00:18:13,399
Speaker 4: trying to maintain people, we invest in them. So to

334
00:18:13,400 --> 00:18:16,160
Speaker 4: the extent we consider baby bonds or five point thirty

335
00:18:16,160 --> 00:18:20,560
Speaker 4: eight investments accounts in people's capabilities, that's a good thing.

336
00:18:27,440 --> 00:18:30,399
Speaker 2: This is The Big Take from Bloomberg News. I'm Sarah Holder.

337
00:18:30,760 --> 00:18:33,400
Speaker 2: To get more from The Big Take and unlimited access

338
00:18:33,440 --> 00:18:37,240
Speaker 2: to all of Bloomberg dot com, subscribe today at Bloomberg

339
00:18:37,320 --> 00:18:40,880
Speaker 2: dot com slash podcast Offer. If you liked this episode,

340
00:18:41,000 --> 00:18:43,639
Speaker 2: make sure to subscribe and review The Big Take wherever

341
00:18:43,680 --> 00:18:46,560
Speaker 2: you listen to podcasts. It helps people find the show.

342
00:18:47,040 --> 00:18:49,040
Speaker 2: Thanks for listening. We'll be back tomorrow