Cofounder, Meta
'I'm under no illusions': Facebook co-founder discusses Trump's new affordability pitch
Co-founder of the Economic Security Project and Facebook co-founder Chris Hughes joined The Weekend: Primetime to discuss "Trump Accounts" and whether they will be of real benefit to families in need.
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#Trump #Politics #Affordability
About Chris Hughes
Chris Hughes, cofounder of Meta Platforms, appeared in a video posted on May 19, 2022, in which he prepared and wrapped gifts to surprise JoJo Siwa for her 23rd birthday. During the video, Hughes demonstrated gift-wrapping techniques, discussed the quality of wrapping paper, and noted that he had purchased personalized golf balls as a present. The video also showed Hughes and Siwa traveling to Palm Springs and playing golf as part of the birthday celebration.
Transcript (18 segments)
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Host0:00
Having a kid is expensive, and don't I know it. Donald Trump's latest pitch for helping you make parenting more affordable. Trump accounts. These are part of his big, beautiful law signed earlier this year. The law gives $1,000 to every newborn so long as their parents open an account, and parents can add an additional $5,000 per year, too. The money is invested in the stock market by private firms, and the child can access the funds when they turn 18. However, there are questions about who this program actually helps. Will it help the lowest income kids who need it the most or mostly serve as a tax shelter for families that are already rich? Joining us now to discuss is Facebook co-founder Chris Hughes. He's now co-chair of the Economic Security Project and author of Fair Shot: Rethinking Inequality and How We Earn. So Chris, thanks so much for joining us.
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Chris Hughes0:44
Yeah, thanks for having me.
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Host0:45
What are your topline thoughts about this program? I know you've been very interested and active in advocating for giving more cash to kids. Do you think that this program will achieve the ends that it is marketed as achieving?
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Chris Hughes0:58
Well, I don't know about that. I think it's a step in the right direction in that every child in the United States who's born between 2025 and 2028 will get that $1,000 that you just outlined. And the important thing is that all of these kids will have accounts that'll be invested in the stock market and that'll compound. The problem is it's $1,000. That's not nothing. But I think most families struggling to make ends meet when they think about saving for college or putting a down payment on a home know that $1,000 is not going to go very far. So I think the opportunity for us as progressives is that we need to build on it and be ready to modify it and to do something more like Senator Booker has proposed where they got this idea in the first place, which is to create these accounts, but then to fund them disproportionately for families that live in low-income zip codes or moms who give birth who are on Medicare. And that way we can close the wealth gap, particularly helping families at the bottom. So I think there's a way to make these more just if we manage it right.
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Host1:58
What are the barriers to accessing this account? And also the concern is the money going to be used in a way that just pumps money back into the stock market and the people who manage it and ultimately not get to the thresholds of actually improving the quality of life for young people.
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Chris Hughes2:14
Yeah, there's a cap on the fee structure which is pretty low. So I'm less concerned about that. The problem is that once you park this money in the account, it will grow over time, but when you take it out, you have a 10% penalty if it's not for a specified use and you pay taxes on it. So it's not like a 529 account or some of these other accounts where parents can save and pay for college. It's actually not that great as an investment scheme. So I don't expect that a lot of middle class or upper class families will even use it as a vehicle for savings because they've got better more tax efficient things. So again that's where it is now. The question is how can we change it to make it better? It should be tax-free. It should grow over time, particularly disproportionately so for the families that need it most.
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Host3:00
Do you think these accounts are at all part of a sort of larger American project to shift a lot of responsibility on to people for planning and saving and solving sort of economic crises as individuals rather than coming up with systemwide solutions to the fears and economic realities that all Americans are living through right now?
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Chris Hughes3:24
Yeah. Personally, I think we have to have both. We have to have that systems change, but we also can invest agency in people and in families. And some of the biggest scholars on this idea are people like Derek Hamilton, Sandy Darity. These folks have worked particularly on the racial wealth gap for a long time. And what they've seen is if you want to close that wealth gap, you got to start early with kids and you got to give them money that will compound with market returns so that they have a chance to catch up to the wealthiest families who are already doing that in the first place. So I think you need both. You need those accounts and you need that system.
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Host3:58
But is anyone taking the other piece very seriously right now?
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Chris Hughes4:00
Well, not this administration, that's for sure. I mean, the context of this in the one big beautiful bill, they're lowering tax rates on the wealthy and taking money from Medicaid and healthcare. So I'm under no illusions that this is coming from the right place. But I do think that the rails, the structure is there and it'll make it easier for us as progressives when we have power again to make it better.
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Host4:24
So you've spoken a lot about inequality and the problems within the American economic system. We're at this point where you have Michael Dell donating $6.25 billion to fund this government Trump initiative. So he's putting his money, he's basically voluntarily taxing himself almost or giving a gift. His motives aside because this is a charitable gift. What does it say about this moment though when inequality is such that you have billionaires giving money back to the government to fund programs like this and we have record deficits.
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Chris Hughes5:09
But there's no political will to tax them. The structure of American capitalism rewards those billionaires making more and more money over time. So while of course the gift is something to be applauded, there will be millions of kids who get money out of this, particularly in low-income zip codes, it's also like a band-aid on the big public policy flaw that we need to think about, which is wealth and income inequality in the country. And $1,000 for every kid is not nothing, but it's not going to get us anywhere close to where we need to go.
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Host5:37
Well, to your point, affordability is obviously the byword of the most recent election, probably of the midterms. We'll see what happens in the next year. And this administration has been really grappling with how to deal with both policy around that and messaging around that. Scott Bessent, the Treasury Secretary earlier today, was on one of the Sunday shows and basically said, 'We're not going to tell Americans how they should feel, but they don't know how good they have it.' What do you make of that kind of messaging? It comes on the heels of the president himself saying it's a hoax. It's offensive. Families can't afford health care, child care, housing is just exploding in cost. And it's not just poor folks, it's middle class families. We see it in the stats, but it's also just the lived experience. Can you take your kids to a baseball game on the weekend? So I think the more the administration keeps saying that, the better it is for Democrats because finally it seems like Democrats are getting the message on affordability as we saw in these elections. Do you see any parallels with how the previous administration handled this?
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Chris Hughes6:35
I mean it sounds a lot like Joe Biden but at the same time the difference is the policies the Biden administration was trying to pursue would have been and were intended to be great for working-class families whereas the policies of this administration are not. Now the rhetoric in both cases is just like well Americans should be happier and I think everybody's tired of hearing politicians tell them how to feel. One of the things that we heard in the leadup to the election, members of this administration were promising was to really tackle the American family. There was a lot of Christian messaging around that, but a lot of other messaging that resonated with people that they were going to try to do something about child care.
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Host7:14
Do you see this administration taking those issues, those matters seriously for American families?
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Chris Hughes7:19
No. And the question is what are the ideas that Democrats can run on? It's not going to be enough to say that they weren't serious about lowering the cost of housing, lowering the cost of child care. We have to be putting forward the kind of ideas that are going to make change in a meaningful fashion. So on housing, we've got to create financing vehicles that make it really easy to build dense apartment complexes quickly. We got to think about modular and industrial policy for housing that can get those single family houses built fast. We have to have an affirmative agenda that responds to what people are saying and it doesn't just point fingers at their failure because the reality is that people are not so happy about Democrats' economic policies and it's up to us to offer something fresh.
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Host8:07
Chris Hughes, thank you so much. Great to have you on tonight.
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Chris Hughes8:09
Thanks for having me. Thank you.