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Who could benefit the most from Trump's investment accounts for children · DEEP INSIGHT

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  Speaker 1: Well, Trump accounts are officially open. They're the first federal
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  Speaker 1: tax advantaged investment accounts for kids. President Trump celebrated the
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  Speaker 1: launch this morning in the Oval Office.
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  Speaker 2: These children are going to have actually accounts. They're going
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  Speaker 2: to learn about finance a little bit.
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  Speaker 3: They can watch it.
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  Speaker 2: We're going to all watch it grow together.
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  Speaker 1: Some eighty seven companies, foundations, individuals, and states have announced
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  Speaker 1: contributions to the accounts. The question is can they deliver
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  Speaker 1: the benefits over the long haul that are being promoted.
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  Speaker 1: Our economics correspondent Paul Solomon walked through the basics after
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  Speaker 1: the new accounts became law. Here's an updated look at
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  Speaker 1: what you need to know.
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  Speaker 4: Trump accounts will be the first I guess you could
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  Speaker 4: say real trust funds for every American child.
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  Speaker 2: To which tech billionaire Michael Dell added, we believe the
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  Speaker 2: smartest investment that we can make is investment in children.
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  Speaker 2: So what exactly are these so called Trump accounts? Part
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  Speaker 2: of last year's One Big Beautiful Bill Act. Their taxed
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  Speaker 2: advantage savings accounts invested in a low cost stock index fund.
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  Speaker 2: They're available for every American child up to age eighteen.
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  Speaker 2: Families opt in through a tax form and can contribute
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  Speaker 2: five thousand dollars annually for kids born between twenty twenty
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  Speaker 2: five and twenty twenty eight. Uncle Sam salts away one
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  Speaker 2: thousand dollars. Now more than six million children have been
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  Speaker 2: signed up, but only about one point four million we're
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  Speaker 2: young enough to qualify for the government money. Philanthropists, employers,
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  Speaker 2: and states can also contribute to the accounts. Susan and
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  Speaker 2: Michael Dell were the first of many contributors.
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  Speaker 3: Moms and dads adding five ten bucks a week, you know,
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  Speaker 3: kids saving the little money in the summertime. Philanthropists like
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  Speaker 3: the Dells, States like the State of Texas, has said
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  Speaker 3: they're going to add one thousand dollars to these accounts.
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  Speaker 2: Silicon Valley entrepreneur Brad Gersner helped make the idea a reality.
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  Speaker 3: The objective here is to get the seventy percent Americans
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  Speaker 3: who feel left out and left behind by capitalism into
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  Speaker 3: the game. To make everybody a capitalist from birth, sharing
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  Speaker 3: in the great upside of the American economy.
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  Speaker 5: US savings bonds now watch how.
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  Speaker 2: They grow now. Putting money away for a kid was
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  Speaker 2: pretty common back when folks like me and Teresa Gilarducci
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  Speaker 2: were babes in the woods.
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  Speaker 4: I use my own example of what happened when my
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  Speaker 4: grandmother gave me a little baby bond.
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  Speaker 2: She eventually became a prominent economist, a left wing one
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  Speaker 2: who's long promoted something like government trust funds from birth.
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  Speaker 2: She even wrote a proposal for.
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  Speaker 4: Them, along with Kevin Hassett, who's on the other side
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  Speaker 4: of me on the political spectrum.
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  Speaker 2: Kevin Hasset, President Trump's top economic advisor. Given her politics,
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  Speaker 2: how could she pair up with him?
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  Speaker 4: We came together as an economist, and we know that
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  Speaker 4: wealth gives people security and power.
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  Speaker 2: She and Hassit, despite their different politics, have now been
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  Speaker 2: meeting with Brad Gersner. That comes as no surprise to
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  Speaker 2: early wealth building expert Ray Bishara.
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  Speaker 6: I've been working on this idea twenty years, and it's
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  Speaker 6: been bipartisan over those twenty years. It's important to remember
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  Speaker 6: that the bottom half of the population owns only two
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  Speaker 6: point five percent of the nation's twelfth and only one
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  Speaker 6: percent of stocks and bonds. We have a long way
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  Speaker 6: to go to build well for the bottom half of
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  Speaker 6: the population. Trump accounts designed properly, can.
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  Speaker 2: Do that design properly, But that's only the first problems
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  Speaker 2: is policy expert Amy Matsui.
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  Speaker 5: We already have extremely significant wealth gaps by income, by race,
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  Speaker 5: by gender, and the way that this policy is structured,
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  Speaker 5: it's not going to narrow them. It has the potential
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  Speaker 5: to widen them.
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  Speaker 4: How So, because the practical aspects of these accounts will
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  Speaker 4: mean that the families that are very well off will
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  Speaker 4: benefit much more than anybody in the bottom ninety percent,
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  Speaker 4: Most families will not be able to contribute the five
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  Speaker 4: thousand dollars for the tax advantage.
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  Speaker 5: A family who's been able to steadily contribute the maximum
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  Speaker 5: would have almost two hundred thousand dollars in assets, and
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  Speaker 5: in contrast, a family that has the thousand dollars and
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  Speaker 5: has the six percent rate of return may have something
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  Speaker 5: more along the lines of two or three thousand dollars.
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  Speaker 2: But Teresa Gilarducci remains hopeful.
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  Speaker 4: The Trump accounts surely can be restructured.
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  Speaker 2: But here's a real question will they be.
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  Speaker 4: The technocrats around populist policies would absolutely endorse a tweak
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  Speaker 4: of these accounts so they don't just serve the top
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  Speaker 4: one percent or top ten percent.
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  Speaker 2: Her tweak of choice eliminate tax advantage for families earning
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  Speaker 2: over two hundred and fifty thousand dollars per year to
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  Speaker 2: make the program more progressive. She expects Brad Gersner will
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  Speaker 2: be sympathetic and to listen to him. He maybe I
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  Speaker 2: started this well.
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  Speaker 3: My oldest child was thirteen year old coming out of
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  Speaker 3: COVID twenty twenty one, and I showed them the custodio
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  Speaker 3: accounts that I had opened at birth and added to
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  Speaker 3: over the years, and they had compounded into a fair
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  Speaker 3: bit of money. And my oldest son, Lincoln said to me, Dad,
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  Speaker 3: this is incredible, But what about all the other kids
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  Speaker 3: who don't have these? And that really was the conversation
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  Speaker 3: around our dinner table that led to the birth of
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  Speaker 3: invest America.
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  Speaker 2: And now here's another problem, a teenager and money. What
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  Speaker 2: happens when he or she turns eighteen and suddenly there's
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  Speaker 2: a windfall.
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  Speaker 4: I used to be a Boy Scout counselor for the
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  Speaker 4: personal finance Merit Batch, and I talked to many teenage boys,
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  Speaker 4: you know, over the years about their finances. I bet
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  Speaker 4: that ninety percent of the teenagers that you talked to
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  Speaker 4: will say that they would buy a car or somehow
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  Speaker 4: fix their car.
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  Speaker 2: What did she do with the grandma bond.
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  Speaker 4: The bond that my grandmother gave me was cashed in
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  Speaker 4: to pay our back rent.
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  Speaker 3: As a father of a seventeen year old and a
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  Speaker 3: fourteen year old, you know, I think about that all
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  Speaker 3: the time.
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  Speaker 2: And so the new law tries to address the problem.
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  Speaker 3: He says, at eighteen, kids can use up to twenty
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  Speaker 3: five percent of this to buy a home, start a business,
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  Speaker 3: go to college. If they don't use the money for
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  Speaker 3: that purpose, it automatically rolls into an IRA and is
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  Speaker 3: subject to the IRA rules. So yes, you can't take
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  Speaker 3: it out, but it will be subject to a stiff
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  Speaker 3: penalty if you take it out at that point in time.
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  Speaker 2: But college, that isn't for most Americans, right, two.
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  Speaker 4: Thirds of people don't go to college, and so if
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  Speaker 4: they take the money out to buy a car, they
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  Speaker 4: have to pay a penalty. So you're actually penalizing people
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  Speaker 4: who don't go right from high school to college, and
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  Speaker 4: so that has to be changed.
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  Speaker 3: They can use this money to go to a trade school.
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  Speaker 3: They can use this money to study a profession that
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  Speaker 3: isn't a typical for year education community college, to start
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  Speaker 3: a small business.
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  Speaker 2: Okay, but what about this potential final snag.
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  Speaker 5: Trust in government agencies is pretty low, and for families
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  Speaker 5: who don't have a lot of financial literacy or a
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  Speaker 5: portfolio of their own, they may be unwilling or reluctant
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  Speaker 5: to take the steps to open accounts for their children,
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  Speaker 5: even if they could receive that thousand dollars of seed
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  Speaker 5: money from the government.
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  Speaker 2: Rad Gersner says he's keenly aware of the problem.
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  Speaker 3: Failure for me would be if we had a bunch
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  Speaker 3: of accounts that were not claimed by the bottom third
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  Speaker 3: of the economic ladder. We have to make sure that
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  Speaker 3: we make it seamless for these people to know about
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  Speaker 3: the accounts, to get excited about the accounts, and to
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  Speaker 3: claim the accounts.
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  Speaker 2: So what's the bottom line right now? Pittfolls galore. But
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  Speaker 2: these accounts are, says longtime proponent Ray Bushara.
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  Speaker 6: The down payment on a big idea that canon and
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  Speaker 6: should be improved over time. And it's important to look
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  Speaker 6: at history here. The Social security one of our most
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  Speaker 6: successful social policies, started out largely excluding women and minorities.
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  Speaker 6: But today it's one of the most inclusive success for
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  Speaker 6: programs that we have these.
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  Speaker 4: Trump accounts, since they are completely wide open for an
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  Speaker 4: eighteen year old to spend, will will not achieve the
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  Speaker 4: goals that right now President Trump and Michael and Susan
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  Speaker 4: Dell say they want it to achieve. It needs reform,
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  Speaker 4: but better than nothing, better than nothing, And.
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  Speaker 2: If reforms do happen in myriad ways, and if money
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  Speaker 2: pours in from myriad sources, potentially much better for the
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  Speaker 2: PBS News are Paul Solomon.
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