Pod Insights Optimist Economy Can $1,000 at Birth Make Us a Country of Savers? About this episode “Trump Accounts” might evoke the president’s other side hustles, like gold-plated mobile phones or meme crypto coins. But these investment accounts for children are one of the actually beautiful things to come out of the "One Big Beautiful Bill." More than 30 years in the making, these accounts have previously been pitched as KidSave, Baby Bonds, the ASPIRE Act, 401Kids. They’ve been proposed more than a dozen times by Democrats and Republicans alike. Economist Kathryn Edwards explains the long journey, what the research says about why auto-enrollment is everything, and why the name won't last but the policy should.
Read more:
Every child deserves a Trump Account: Here’s how to make it happen https://thehill.com/opinion/finance/5666963-automatic-enrollment-trump-accounts/?mc_cid=2bfb66311f
Op-ed by Ray Boshara and Michael Sherraden in The Hill [2026].
“Check-the-Box” Enrollment Will Limit Participation in Trump Accounts: Lessons From Asset-Building Research https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1969&context=csd_research — Center for Social Development at Washington University [2025]
Why Automatic Enrollment Is Essential for the Success of Trump Accounts: Lessons from SEED OK https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1970&context=csd_research — Center for Social Development at Washington University [2025]
The (Unknown) Children’s Savings Accounts Federal Policy Landscape https://deepblue.lib.umich.edu/items/f29bd2b6-6b77-4d7d-b146-9d8882b4445c
— Center for Social Development, Washington University in St. Louis [2024]
Support Optimist Economy by donating: https://optimisteconomy.com
Video clips are on the Optimist Economy YouTube channel https://www.youtube.com/@optimist_economy.
Follow us on Instagram at @optimist_economy https://www.instagram.com/optimist_economy or TikTok at @optimist_economy https://www.tiktok.com/@optimist_economy. Or meet other Optimists on our Substack https://optimisteconomy.substack.com/ chat https://substack.com/chat/4604257?utm_source=pub-nav-bar.
Optimist merch provides great utility: https://merch.ambientinks.com/collections/optimisteconomy
Send your economic questions, concerns, or executive orders to [email protected] mailto:[email protected]
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 At Radiolab, we love nothing more than nerding out about science, neuroscience, chemistry.
0:06 Speaker 01 But, but, we do also like to get into other kinds of stories, stories about policing, or-
0:12 Speaker 00 Politics.
0:12 Speaker 01 Country music.
0:13 Speaker 00 Hockey.
0:14 Speaker 01 Sex of bugs.
0:16 Speaker 00 Regardless of whether we're looking at science or not-science, we bring a rigorous curiosity to get you the answers.
0:23 Speaker 01 And hopefully, make you see the world anew.
0:24 Speaker 00 Radiolab, adventures on the edge of what we think we know.
0:28 Speaker 01 Wherever you get your podcasts.
0:31 Speaker 02 A note from production, 401 Kids is so much better than Trump Accounts.
0:36 Robin Rauzi? I think things that are named after the numbers in the tax code are actually not great branding.
0:42 Speaker 02 That's fine. So 401 Kids is out. Robin says, "You're basic."
0:54 Speaker 02 Hello and welcome to Optimist Economy. I'm Catherine N. Edwards, economist.
0:57 Robin Rauzi? And I'm editor Robin Rousey.
0:59 Speaker 02 On this show, we believe the US economy can be better, and we talk about how to get there, one problem and solution at a time.
1:10 Speaker 02 Today on Optimist Economy, we're going to talk about one very special solution that will soon be renamed Trump Accounts.
1:19 Speaker 02 The title of this episode will not be Trump Accounts, because that thing's not long for the world.
1:25 Robin Rauzi? So, first up, some announcements. We had two spiritual sponsors that I want to shout out this week, but one wants to be anonymous, which reminded me to say, if you would like to be anonymous, we'll still take your money.
1:35 Speaker 02 Yeah, definitely.
1:36 Robin Rauzi? We also got a spiritual sponsor-level donation for Maureen in West Marin, California. Thank you, both of you.
1:43 Speaker 02 Now we're going to Redcon.
1:48 Robin Rauzi? Okay. Redcon, which is where we reflect and talk about things we maybe should have brought up before, or things that have come up since.
1:57 Speaker 02 Yeah, so after the last retcon, which was very long, I need to retcon quickly that I talked a lot about Bend It Like Beckham at the start of the season and said, in fact, that I like to watch a movie that's based on the destination of the place I'm traveling to. My sister was like, "That is absolutely my idea. You stole it from me. I even told you to watch Bend It Like Beckham before you left for London. You didn't give me any type of shout out or hot tip."
2:23 Robin Rauzi? Credit to your sister.
2:25 Speaker 02 So I need to give credit to my sister. You know, maybe she would prefer an addendum about all the good ideas I've stolen from her, but unfortunately, we just don't have the time. So we have to move on.
2:35 Robin Rauzi? Moving on. I got a lot of emails about Buffalo, strangely, about how Buffalo can be used as an adjective, meaning like you are from Buffalo, the city. Buffalo is a noun, but also then Buffalo as a verb. And anyway, so I did look it up in my OED. Buffalo is just American slang in terms of being a verb. It's not from the animal. I mean, it might be related to the animal, but it means to overpower, overawe, outwit, or perplex. Dating from 1903, at least in the Cincinnati Enquirer.
3:11 Speaker 02 Okay.
3:12 Robin Rauzi? Okay.
3:14 Speaker 02 Terms and conditions. Did you look anything up?
3:17 Robin Rauzi? I looked up two things this week. First, I looked up Calvinball, which I read in a column this week, and it just said they're playing Calvinball. And I was like, "Am I supposed to know what that is?" And it is a reference to Calvin and Hobbes. Calvin and Hobbes would play a game, and the rule is that the rules have to change every time you play. So this was a reference to, I think, the Supreme Court playing Calvinball.
3:44 Speaker 02 I mean, I really love that.
3:46 Robin Rauzi? Exactly. I thought, "This is a good term. I need to absorb that one." The other one I looked up was identity effect, which I was looking up in relation to the thing we're going to talk about here. But the identity effect is a theory that people hold sort of multiple senses of themselves and that they decide to choose what actions to take based on what feels most congruent with their internal identity. And it's used in this, in the case of what we're going to talk about today, as like having a college-going identity.
4:16 Speaker 02 Okay.
4:18 Speaker 02 Wait, can you, what's another example of an identity effect?
4:21 Robin Rauzi? Like you perceive of yourself as an athlete and therefore you like buy a bunch of sports gear, even though you're really, you're really never going to use it.
4:31 Speaker 02 So you're lazy.
4:33 Robin Rauzi? There's a million ways it gets used. It's a, it's a psychological theory. It's been around maybe 15 years. We'll talk about it in a minute, but it plays into this whole idea of Trump accounts.
4:47 Speaker 02 Okay. Well, in that case, let's take a break and we'll come back. We'll talk about our centerpiece. And in the meantime, and enjoy our non ad ad cross promo that we don't make money from, but
4:57 Robin Rauzi? Or know what it is.
4:58 Speaker 02 Or know what it is, but we put it in the show and now you get to listen to it. We'll be right back.
5:09 Speaker 02 Okay. We should probably talk about savings accounts.
5:10 Robin Rauzi? All right.
5:12 Speaker 02 This is actually a really fun episode for our listeners. So I think we try to every week, talk about the economy in a way, try be in the operative word there. We try to talk about the economy in a way that will make you less depressed about it and our country. And it's like, it's actually quite tough sometimes. Gets harder every week, actually, not because of us, but because of he who shall not be named.
5:37 Robin Rauzi? He who shall name everything after himself.
5:39 Speaker 02 He who shall not be named unless it's named after him. Anyway, our podcast is now called Trump Cast.
5:45 Robin Rauzi? There you go.
5:48 Speaker 02 So there was in the one big beautiful bill, which had so many awful things. It's polling terribly. So now they're supposed to call it like the tax law, the budget law, the whatever law, but it's the one big beautiful bill, signed on July 4th, 2025, when big beautiful things happen. It included something called Trump accounts. Now, if you're anything like a casual follower of the current administration or the man in charge, you would know that if Trump puts his name on something, it could be fraud, like the Trump University, Trump stakes, Trump University, Trump casinos, like man's got a history.
6:27 Robin Rauzi? Crypto.
6:28 Speaker 02 Yeah. So putting money into an account with his name on it has certainly the impression of like, or you could just walk out to the pier and throw it in the water. Because it sounds, it sounds too close to a lot of things that were scam slash bankrupt. Yeah, I don't want to get like libeled.
6:47 Robin Rauzi? No.
6:48 Speaker 02 So I don't know how to say this.
6:49 Robin Rauzi? You don't want to get sued for libel.
6:51 Speaker 02 I don't want to get sued for libel.
6:52 Robin Rauzi? Yeah.
6:53 Speaker 02 Thank God you're here. Robin, I wouldn't even know what I'm going to be sued for.
7:00 Speaker 02 But Trump accounts are actually a really amazing, good thing, and they will be renamed.
7:06 Robin Rauzi? Can we?
7:06 Speaker 02 And that's what we're going to talk about.
7:07 Robin Rauzi? We need to do some table setting.
7:10 Speaker 02 Table setting. Okay, so what is a Trump account?
7:13 Robin Rauzi? What is a Trump account? Why are we talking about it?
7:15 Speaker 02 Yeah. If you don't want to call them Trump accounts, you can call them 530As.
7:20 Robin Rauzi? 530As?
7:21 Speaker 02 Yeah, so the college savings account.
7:23 Robin Rauzi? Because that trips off the tongue.
7:24 Speaker 02 Well, it's not Trump. I mean, I'm doing what I can here.
7:28 Robin Rauzi? We just explain what they are?
7:29 Speaker 02 Yes. They are an investment account that every kid in the country currently under 18 can open up, and they can contribute to it, their parents, their parents' employers, the philanthropists, possibly the government can contribute to, and it's an investment account for children. They can't touch it until they turn 18, and when they turn 18, they can only be used for specific purposes like a house, education, kids, starting a business, but it is a way to give every child in the US an asset when they turn 18.
8:04 Robin Rauzi? So this is sort of like what we know as like, what are they, 529 accounts, which are like college savings accounts, but they can be used for other things, and there are some other differences?
8:14 Speaker 02 Yes. They have different origins. So, in the beginning. Individual retirement accounts is a tax-preferred savings and investment vehicle that what you contribute to an IRA is not subject to the income tax. You get taxed on the way out as regular income. So if I put $5,000 into an IRA every year, I invest that money, and in 30 years when I retire, I take money out, I pay taxes on the income I get from the account, not the income that I put in. That's what makes it tax-preferred, and the investment account is that it can be used to invest in the stock market, in individual stocks, in index funds, what have you.
9:00 Speaker 02 Eventually IRAs got like a sibling, which was 401ks.
9:05 Robin Rauzi? Right.
9:06 Speaker 02 And in that, your employer opens up an account. Similar concept, money is not taxed on the way in. So if you made a hundred thousand dollars and you put ten thousand dollars into a 401k, you're only taxed on ninety thousand dollars of income.
9:20 Robin Rauzi? Your income tax, right.
9:22 Speaker 02 Right, that ten thousand you put in isn't subject to the income tax. You're taxed on the way out. And employers can contribute to it as well.
9:28 Robin Rauzi? Right.
9:30 Speaker 02 What this is, is an IRA that instead of being tied to an employer and instead of being used in retirement, it is given to children as early as birth to accumulate investments before they turn eighteen.
9:46 Robin Rauzi? But they can keep it until they retire, or they can use it any time after eighteen.
9:52 Speaker 02 So the way that the rules are currently written, from the one big beautiful bill, the way the rules are currently written is that you can't withdraw before eighteen without a penalty. And then, once you turn eighteen, you can use it for down payment on your first house, education, on the occasion of the birth of a kid, and I think starting a business. Otherwise, it just accrues.
10:15 Robin Rauzi? It's a little unclear, the business thing, but yeah.
10:17 Speaker 02 Yeah, otherwise, it just accrues until retirement. Now, the logic behind this, as well as IRAs and 401ks, is that when you have a long-term investment vehicle that's exposed to the stock market, you make the money off of time, not the market. So it's not that you have to make the most brilliant investment decisions to make money off the stock market. You can make a lot of money.
10:45 Robin Rauzi? Be in it for a long time, yeah.
10:46 Speaker 02 Yeah, so you're basically giving kids like a twenty years head start because, or an eighteen year head start, because you set up an account for them at birth. It has eighteen years to accrue, and then they get that money. And most of the money they've made has come from exposure to just how long the investment has gone on, and less so the investment itself.
11:05 Robin Rauzi? Okay, a couple of quick questions.
11:07 Speaker 02 Sure.
11:07 Robin Rauzi? One is, the Trump accounts, this is a pilot program?
11:11 Speaker 02 They're piloting part of it. So, right now, the way that the Trump accounts are structured, 530A, if that's easier, but the way that it's structured is that any child in the US who's under 18 can sign up for one this year. I think the earliest they can contribute is July of this year, but they can open up the account this year. However, for kids born in calendar year 25, 26, 27, and 28, they are piloting that the federal government contributes $1,000 as seed money.
11:39 Robin Rauzi? Ah, okay. And the parents have to open the account? They're not automatically created?
11:45 Speaker 02 Yes, that is actually the fundamental problem with the accounts as designed right now. So, let's go back.
11:54 Robin Rauzi? Okay, all right, let's go back.
11:56 Speaker 02 Because I'm sure a lot of listeners are like, "Yeah, this was baby bonds, right? We've already, like, this was an idea he stole."
12:02 Robin Rauzi? Who, that was Cory Booker's.
12:04 Speaker 02 That was Cory Booker's. We're gonna go back, way, way back to...
12:08 Robin Rauzi? Assets for the Poor?
12:09 Speaker 02 Assets and the Poor. We're gonna go back to 1991. George H.W. Bush is president. The US is currently in recession, and a professor at Wash U St. Louis, Michael Sheraton, writes the book Assets and the Poor, which is the big blue book I'm holding up right now, A New American Welfare Policy.
12:31 Speaker 02 It's such a good book. But what he proposes in this book is something called Individual Development Accounts, or IDAS. And he, he's trying to make the argument in the book that our current system of welfare, which even in 1991 still looks very similar to what we have now, is all income and consumption maintenance. You can't afford healthcare, the government will provide it for you. You don't have much money, you'll get money from cash welfare, which still existed when he wrote it. And it, it helps you maintain your consumption, but it can actively limit your ability to have assets, because for certain programs, like food stamps or supplemental security income, if you have assets, you
13:12 Speaker 02 cannot get the cash. So, he basically argues that the way to truly change poverty, that actually making...
13:22 Speaker 02 Poor people, stakeholders in the economy, as well as giving them a means out of poverty in terms of savings and investment, would be to have individual development accounts that could start as early as birth for children. He outlines in the book how this would be useful for thinking about a new type of welfare, and it's called asset-based welfare policy. And what he points out is that the US has asset-based welfare for middle-income people and high-income people. They don't have it for poor people because of how 401Ks are gate-kept from employers and how IRAs require someone to be working.
14:01 Speaker 02 And so his point is if you set up a universal account that everyone can get, and the federal government contributes, like the welfare from the federal government is that they only contribute to poor people's accounts, this would radically alter what it means to be poor in the United States. And he writes this in 1991. Now, if you think, wow, Cory Booker, like, he stole your idea. The first congressional proposal in the 1990s, most of these proposals had a Democrat and a Republican sponsor. Some of them were only Democrats, some of them were only Republicans. So it starts off in the 90s with Kids Save. In the mid-2000s, the Aspire Act, Baby Bonds in 2007, and then Plus Accounts,
14:45 Speaker 02 Young Savers Accounts, Roth at Birth, Raise Act, 401 Kids, US Accounts, American Opportunity Accounts, Baby Bonds 2.0. The first Baby Bonds was Hillary Clinton. The second Baby Bonds was Cory Booker. And then 401 Kids. The first 401 Kids was Schuler. The second 401 Kids was Senator Casey from Pennsylvania. And then we get the Trump Accounts.
15:09 Robin Rauzi? So this idea has been around, obviously, a long time and has been proposed over and over and over again. And it is just the force of will of Donald Trump? Like, why did it take this long?
15:18 Speaker 02 Why did it take this long? Well...
15:23 Speaker 02 Trying to think of what is my best way to answer this without signing sassy. So, Sheridan, he proposes this in 1991 and we almost immediately have proposals in Congress to do something similar, but we have states that have adopted this. And his institute at Wash U in St. Louis has been instrumental in setting up, helping states set up their accounts. So it's, you know, it's not successful on the federal level until now, but there were lots of states' policies that informed this. So, one of them was SEED OK.
15:57 Robin Rauzi? That's Oklahoma.
15:58 Speaker 02 It's Oklahoma. Those kids are, I think they're 18 now.
16:02 Robin Rauzi? They've got plenty of time.
16:03 Speaker 02 If they're not 18, they're close. But they set up, the SEED OK was basically this, you know, baby bond 401 kid, Trump account 538, whatever you want to call it. He called them individual development accounts, but now they're, but they were often referred to as-
16:16 Robin Rauzi? There's also CDAs.
16:17 Speaker 02 Child development accounts.
16:18 Robin Rauzi? Child development accounts, yeah.
16:20 Speaker 02 And CSAs, child savings accounts.
16:22 Robin Rauzi? See, this is very confusing.
16:24 Speaker 02 Well, they get, every time someone, every time someone wants to claim it as their thing, they give it to them.
16:31 Robin Rauzi? Which is why we just need to name it.
16:32 Speaker 02 Yeah, you know what? We're going to rename it and then tell people it was our idea.
16:36 Robin Rauzi? Yeah, okay, good plan.
16:37 Speaker 02 But it was originally individual development accounts. Oklahoma, they set it up as a randomized control trial and they had two groups, the treatment and the control. The control group was given the option to opt into the savings account. The treatment group was opted into the account and was given the option to disenroll. And they could follow these two sets of kids for 17 years to see how much, see how much they had saved. I don't think that this should surprise anyone. After 17 years, 100% of treatment group children still hold the asset building accounts compared to 6% in the control group.
17:16 Robin Rauzi? 6%? So if the parents had to opt in, only 6% do, but if you create it automatically, no one leaves.
17:24 Speaker 02 Or they had closed the accounts beforehand. So maybe they signed up, but then like took the money and didn't bother putting any more in because they didn't see the point of it or didn't have the money for it. But auto-enrolling kids and putting a thousand bucks into it.
17:37 Robin Rauzi? Yeah.
17:37 Speaker 02 A hundred percent of them still had the assets 17 years later. So those seed OK kids for Oklahoma.
17:44 Robin Rauzi? Yeah.
17:45 Speaker 02 The OK kids are either 17 or 18. And the next stage of this research project is on what they're going to spend the money.
17:54 Robin Rauzi? Yeah.
17:55 Speaker 02 Yeah. What they do with the money, which they got a thousand bucks, you know, when they were zero years old and were opted into this account and a hundred percent of them still have it. I think when I read the paper, they said one person opted, like one family opted their kid out and everybody else stayed in. Okay, so that was Oklahoma. There also was one in Rhode Island that started in 2010. They did an incredible amount of messaging, had seed money, but you had to sign up and they got just over 50% of kids enrolled. Maine started up as an opt-in as well, but they switched to opt-out because it worked better and it was much cheaper to administer.
18:38 Speaker 02 And California and Pennsylvania are starting their own child savings account and they are both opt-out. So it's taken a while for federal policy to come in. And I should say, his proposal was really successful in other countries.
18:52 Robin Rauzi? Oh, really?
18:52 Speaker 02 Yeah, and other countries have thought, were like, this is a great idea, we should do it. And America's like, wait a minute. But have you thought about pulling yourself up by your bootstraps and not helping poor people and giving them a systemic disadvantage? Have you thought about that? And they're like, no, we haven't, we're just going to start it. So other countries, like lots of other countries have started these accounts, not the US. And I should say, like, I don't really love the name Trump accounts, but Sheridan, at the start of this year, The Hill, the newspaper that follows what's going on in Congress, he wrote an opinion in The Hill that said, every kid needs one and you can make this good. This is an incredibly good policy, you just have to do it right. I guess one of the reasons why I wanted to tell optimists about this is that there is
19:33 Speaker 02 such good policy out there proposed by people who don't let like politics and pride get in the way of pushing for a good policy. And it feels like we are in a political quagmire where nothing good can ever happen. But if you go down a level, you'll find a lot of people who are fighting for very good policy and they don't have like loyalty to party first. Or like if it doesn't come from a Democrat, it's not going to happen and we won't support it. People who care about policy don't always operate the way that people who care about politics do. And they will do policy above politics, whereas, you know, political leaders will put politics above policy.
20:15 Speaker 02 So I, I wanted to bring this up to say that there are like really good people fighting for very good things that would help America. And, I mean, I can't imagine writing in a proposal in a book in 1991 of like, hey, we should have this child development account, like we should have savings accounts, we should do this for kids, we should asset build and change poverty. And then 35 years later, have Trump be like, it's my account, I put my name on it, it's Trump account. And to actually like literally the next day, go out and say, this is great. This is okay. Like those people exist and we're going to get really good policy from them. And here's the part that kills me, Ted Cruz is like instrumental in getting Republicans to care about this.
20:59 Speaker 02 And that one cuts real deep. I do not like Ted Cruz. I have met him. He's worse than person. I don't know. But he, he got basically like Republican Silicon Valley people were like, this is a great way to expose Americans to like the real economic mobility, which is the stock market. The stock market.
21:23 Robin Rauzi? Beyond the visceral response that Trump putting his name on everything could just sort of creates in me, I have to say I'm kind of, I have felt dubious about this idea for a number of reasons. And I am not an expert and I am not, not an economist, but it's not that I don't think that the federal government should be helping children or that they should be helping people who are poor. But first of all, I just kind of like, I'm kind of creeped out by the idea that we want to shovel this money into the stock market and create little investors. That's getting back to the notion of the identity effect. So the identity effect piece of this, when I was reading about it, is that if you create these accounts, there's a question, a research question, as to whether it creates in the
22:07 Robin Rauzi? child a sense of identity that they are college bound. And that these accounts, particularly the 529 college savings accounts, are most effective when you are trying to sort of push on both buttons. You're, you're creating the accounts and the money, but you're also creating the identity and so that those two things work in parallel. There's a, you know, a question like, if you give the kids money, do they begin to think that they are college bound? Or is it because the families think that their kids are college bound and so they open these accounts?
22:38 Speaker 02 Mm-hmm. You know, interestingly enough, college savings account in these 529s where these are investment accounts, they're like retirement accounts, but for college, those accounts have a separate origin story, which they came out of state governments trying to come up with ways to help students in their state afford college tuition. And then they were given like broader mandate in 1996 or '97. But I get, I get what you mean. If you give every child an investment account at birth, like what are they like when they turn 18? What kind of expectations does it build? Is that what you mean?
23:18 Robin Rauzi? Well, I guess there's that. But I also think that our sense of who we are as Americans and our national identity is constantly like we're consumers. And, you know, I don't know that it's any best better to be like, oh, we're inherently investors, you know?
23:34 Speaker 02 So, so, holding up the blue book, Sheridan says it builds the identity of being a saver. And that even in the 80s, there was evidence that you kind of build the idea of saving into a kid and that savings is how, and that the investment in the stock market is like a secondary part of you have to save and over a long time. I mean, right now, the Trump accounts are limited. They can't be invested in stocks. They have to be invested in an index fund.
24:04 Robin Rauzi? In index funds.
24:05 Speaker 02 And it has to have an incredibly low cost. They could basically can have no maintenance fees in order for it to be eligible for a 530 investment. It has to be a low-cost index fund.
24:13 Robin Rauzi? But it could go into, it could have gone into treasury bonds or something, right?
24:17 Speaker 02 Yeah, they could have done, they could have done something safer. The notion of an index fund is that it's a cheap way to invest and you basically gain when the market gains as opposed to betting on the success of a single company. You're kind of betting on long-term the success of the US stock market.
24:33 Robin Rauzi? Right.
24:34 Speaker 02 You know, something that I think about all the time is people who are basically in an asset-building welfare program for rich people who talk about how poor people need to understand personal finance.
24:48 Robin Rauzi? Yeah.
24:49 Speaker 02 And they say like, anyone can get an IRA, you know, anyone can do this. Like, you just need to understand personal finance and you could be rich too, even as they are being like handheld through asset building.
25:00 Robin Rauzi? Exactly, at their employers where they have little seminars for them to open their 401K.
25:04 Speaker 02 Yeah, like, here's what you should put your 401Ks. Not for nothing, 401Ks were also quite unsuccessful as retirement savings vehicles until they became opt-out instead of opt-in. And now the majority of 401K offerings of like, your employer starts a 401K for you unless you explicitly tell them not to.
25:22 Robin Rauzi? That's right. And that's fairly recent, right?
25:25 Speaker 02 Yeah, that was, that came out of like, a lot of the 80s and 90s. There was a ton of opt-in, opt-down research for 401Ks. So I know that People who take pride in their own financial ability and literacy will say, I would have opted in, but like stats say it's not a sure bet. You might not have. Sharadhan brings up this really fascinating example of what makes someone a saver. And he talks about the US versus Japan. And during the Great Depression and into World War II, the US had really high savings rates. And Japan was a country that had very low savings rates. But after World War II, we didn't have a Marshall Plan for Japan. We weren't going to help them rebuild. And they needed access to capital.
26:09 Speaker 02 So they changed their income tax structure to move to a high income tax state that gave tax breaks for interest from savings accounts. And they became a very high saving country. So he kind of pokes at this notion of like cultural thrift. Some countries save better than others. The French are such great savers. The Americans are not because we care about consumption. And he's like, you know, a lot of this is very
26:36 Robin Rauzi? It's structural.
26:37 Speaker 02 Structural of just what, what are you encouraged to do? And how are you helped? So we don't know if Americans are good at saving because we do a lot of things to tell them not to save.
26:48 Robin Rauzi? Like tell them to spend.
26:50 Speaker 02 Yeah. And we don't give them the same type of structural support for savings that other countries have. And it's like, all of these things are manipulable by policy. So, you know, the identity effect, I guess, is ours for the taking. We could make it into this is a savings, like we're a country of savers. You know, granted, there's like an equal high chance that someone turns 18 and like cashes this out right away. But
27:15 Robin Rauzi? There's a penalty right now.
27:17 Speaker 02 There's a, yeah, if you don't spend it on certain things. So there's some, there's some nanny state of you have to spend it on like qualified investments. But You know, there's gonna be kids who
27:27 Robin Rauzi? College, those things that we mentioned earlier.
27:30 Speaker 02 Yeah, and there's gonna be kids who turn 18 and buy a dumb house. Like, that will happen.
27:35 Robin Rauzi? They might buy a dumb house, or they might take the penalty and buy a car.
27:39 Speaker 02 Yes, like, they'll do something like that, but I guess the the point of the policy is to give them an asset and let them determine how it is returned. Or how it is ultimately serves your, like, long-time financial life. And I think the the stigma that poor people have is that they don't know how to save and invest. When the reality is that they are very much limited from doing so, and the way that you are very much encouraged and can do so easily when you're richer.
28:07 Robin Rauzi? Are you worried at all about this actually, I don't know, kind of making wealth inequality worse? I mean, I can sort of see, it's like a new additional way, in addition to like 529s, for wealthy parents to sock away pre-tax money for their kids, for grandparents to contribute, for employers to contribute, where people who don't have employers who are gonna contribute, don't have generational wealth, don't have, I mean, they're gonna have something, but it's going to be fractional.
28:40 Speaker 02 Yeah. I'm very worried about it. I think that just like how it's, if it's not opt-out, this won't work. I mean, it'll do something, but it won't work to counter income inequality. It won't work to connect the poor to our society via asset building. That, none of that happens if it's opt-in. It has to be opt-out in order to really be successful, because then it truly
29:01 Robin Rauzi? It gets a little confusing about the opt-in, opt-out, but like, yeah, how about automatically enrolled?
29:05 Speaker 02 Automatically enrolled, yes.
29:08 Speaker 02 Do your parents have the chance to enroll you, or do they have the chance to disenroll you?
29:14 Robin Rauzi? That's even worse, that's
29:15 Speaker 02 Okay, is it voluntary versus mandatory? That's worse because it's not mandatory, you can always opt-out. Okay, hold on. Auto-enrolled versus
29:26 Robin Rauzi? Yeah, auto-enrolled versus, you know, choice to disenroll. Auto-enrolled versus
29:33 Speaker 02 Voluntarily enrolled?
29:34 Robin Rauzi? Yeah.
29:35 Speaker 02 Auto-enrolled versus not that?
29:39 Speaker 02 What is a good
29:40 Robin Rauzi? Let's workshop this.
29:41 Speaker 02 Good antonym for auto enrollment of our individual development child saving account baby bonds for one kid.
29:47 Robin Rauzi? I know, but I think just saying like, you know, if it's opt out, it's good. You're like, no, wait, I thought opting out is bad.
29:52 Speaker 02 Auto enrolled versus self enrolled. Sophie, I like that.
29:56 Robin Rauzi? Sophie for the win.
29:56 Speaker 02 Sophie for the win. Thank you, production. Make us sound good and smart. Yeah. So like the success of these accounts will hinge on auto enrollment versus self enrollment. It has to be auto enrollment to really make a difference. That's part one. The second part is conditional on having auto enrollment. Where do the contributions come from?
30:22 Robin Rauzi? Yeah.
30:23 Speaker 02 You know, the, the original vision was the government contributes into the accounts of poor children.
30:29 Robin Rauzi? Right.
30:31 Speaker 02 That's not what's happened this time. It's a one.
30:35 Robin Rauzi? It's everybody. The $1,000 for
30:37 Speaker 02 Yeah.
30:38 Robin Rauzi? The pilot.
30:39 Speaker 02 It's $1,000 for everybody, otherwise up to $5,000 per year. So there's some clipping of this and that there's a cap on how much you can put in. It's five grand a year.
30:48 Robin Rauzi? That's that anybody else can put in.
30:51 Speaker 02 Yeah.
30:52 Robin Rauzi? Some exceptions for big charities or whatever.
30:55 Speaker 02 Yes, but I think the real question comes down to how will the federal government tilt the scale in terms of the investment that it makes?
31:04 Robin Rauzi? Right.
31:05 Speaker 02 And I think that will change how this account works because there's no, like, there's no really like clipping the wings of very wealthy children, like their parents, their grandparents, their parents employers, possibly even their grandparents employers would start contributing on their behalf and they will, it's like a trust fund for the middle class, which is great, but that's a voluntary trust fund because they could afford it. It's what can we do for people who can't afford it? That's, I think, the real long-term key is what does the federal government do to actually build these assets?
31:37 Robin Rauzi? Yeah. I mean, I read that some of the companies that were right, were out of the gate saying they're going to contribute were like, I don't know, Chase, BlackRock. I was like, yeah, that's going to help.
31:47 Speaker 02 Yeah, a bunch of kids who have really no, they're so boxed out of the market. The children of BlackRock.
31:53 Robin Rauzi? BlackRock employees.
31:55 Speaker 02 Yep, yep, but I mean, you know, one of the things that Trump accounts have said that they would take like philanthropic contributions. So Michael Dell of Dell Computers has pledged that he will invest in accounts for people in his community. So you could imagine-
32:15 Robin Rauzi? No, I think he's doing it nationwide.
32:17 Speaker 02 Oh, he's doing nationwide?
32:17 Robin Rauzi? It's like 250 bucks to every kid or something. It's some crazy amount of money.
32:23 Speaker 02 And those computers are just okay.
32:28 Speaker 02 The current administration is leaning towards like philanthropic, you know, supplements. Someone like Michael Dell comes in and you can do that in your local community of like all the kids in Houston who are in an H I S D Title I campus, we're going to donate to their Trump account, right? Like they're setting it up for philanthropic contributions, which are never as generous, never as reliable, never as fair as the federal government giving it to the lowest income. So I think that it's a fair question of what we want this policy to accomplish. If we want it to accomplish truly changing what it means to be poor and grow up poor and what kind of advantages kids have when they're rich, it comes down to these types of decisions. The thing to keep in mind though is that none of this is set in stone.
33:13 Robin Rauzi? Right.
33:14 Speaker 02 Like we could have 10 years of people doing like, wow, so it turns out philanthropies are, you know, very good at finding lower income kids, but not good at finding poor kids. We need to have the federal government step up.
33:26 Robin Rauzi? Right. I mean, I think about the dearth of philanthropy in parts of rural America, right? Like it's, you know, there's, there's wide gaps and holes. That's not a, it's a, it's a whole filled blanket.
33:39 Speaker 02 It's a, it's a, it's the quilt.
33:41 Robin Rauzi? Yeah.
33:42 Speaker 02 Right? The quilt that's torn to shreds. America. Hold on, that's not Optimist.
33:48 Speaker 02 We have got to workshop these metaphors.
33:51 Robin Rauzi? We really do.
33:52 Speaker 02 I guess that one way to think about philanthropy and related, we have yet to raise philanthropic funding and get someone to sponsor the show through a big foundation gift, but it is really like a teacher's pet situation. They like you, they decide you it's worth it, they will give you money. If you can imagine someone who's not a pet, doesn't get to be the one that they like, you know, you could end up with people being left behind. So this system can be designed to leave people behind, or it can be designed to not leave people behind. That is a policy choice. It's also one that we can change. Like getting this started is one thing, making it better is another. I, I think frequently of the Social Security Act of 1939.
34:35 Robin Rauzi? Do you now? Like daily, as you make breakfast and drink coffee.
34:40 Speaker 02 Yeah. The Social Security Act of 1939 is my Roman Empire. The, the Social Security Act of 1935, which is when the program begins, that program was just wage insurance for only workers, didn't cover their family. And before they even started paying out benefits for social security, the 39 amendments dramatically altered the program to be a truly insurance program for the family who lost a worker. So you didn't have spousal benefits, you didn't have child benefits, it was just...
35:15 Robin Rauzi? When it started in 1935, and those got added in 1939.
35:18 Speaker 02 And the, the program that we know it and some of the features that have made it truly transformative for families in America, is not just that it helps a worker in retirement, but that it helps families who've lost a worker. And I think about this with something like Trump accounts of like, hey y'all, we don't got to keep it like this. We can 1939 Social Security Act, these Trump accounts.
35:41 Robin Rauzi? 2029 it just...
35:42 Speaker 02 Uh huh. 2029, we could change the name, right? So right now, it is self enrollment. And it's, it's a form that you can fill out, you can add a checkbox on your taxes.
35:53 Robin Rauzi? Tax forms, yeah.
35:54 Speaker 02 But as, as, you know, the...
35:57 Robin Rauzi? We've discussed this, why taxes are not like the way all social policy should be done as a mechanism.
36:03 Speaker 02 Yes, roughly 10% of children live in a non-filing household. So if you're self-enrolling Trump accounts through the tax system, you are at a minimum going to miss 10% of kids. Now, they're opening up other ways to do it, not through taxes. But again, like, we had stimulus checks, as Sheraton brings up in his op-ed in The Hill, where he talks about these accounts. We had stimulus checks during the pandemic that roughly 10 million people didn't claim because they didn't have a regular tax filing and they didn't know to go get them. So like, the government offering you money you didn't get because you just didn't know to fill out the form, add that to a like, investment account that doesn't have any money in it, like, you're not going to enroll.
36:48 Robin Rauzi? And it's called a Trump account, which I'm going to guess is going to turn some people off.
36:52 Speaker 02 Yeah.
36:53 Robin Rauzi? So Catherine, if a kid is auto-enrolled, but their parents just don't ever do anything with this account, how are they to know that it exists even when they're 18? How are they going to get it?
37:03 Speaker 02 It's a fair question, right? You should get statements mailed to you. It'll be tied to your social security number, not like your parents' address. So it's the accounts in your name. Yeah, I think it's broader messaging, right? Like, you tell high school seniors.
37:19 Robin Rauzi? Your peers all have one, I guess, that might help.
37:20 Speaker 02 And there's also like, lots of things that happen when you turn 18. Like, we do motor voter, because when you go get your driver's license, you register to vote. So like, you do a motor voter of like, okay, you're 16 years old, you're a motor voter saver, and here's information about this account that you'll get in two years. There's lots of ways to do information interventions and educational interventions for kids as they age. And then, of course, if they don't know about it, and they don't touch it, and they wake up and they're 35, and they're like, oh, my God, did you guys know that there was an account, but I had one? Then the money's just waiting for them having accrued in some index fund. It's not like a use it or lose it at 18. Some of the projections on this are like, this is actually just a way to get people retirement, and they can retire really early, so.
38:04 Robin Rauzi? Yeah, that'd be nice. Good for them.
38:07 Speaker 02 I I am very optimistic that this policy will be good. For a couple of reasons. One, a Republican passed it and he put his name on it. So it becomes a little bit of a like the legacy.
38:18 Robin Rauzi? They're bought into it.
38:19 Speaker 02 The Treasury Department release is like they've tied it to the 250th anniversary of the country. And the whatever it's called, the.
38:28 Robin Rauzi? I was looking that up the other day.
38:29 Speaker 02 Quad bi-tenial, quad- just quadrennial.
38:32 Robin Rauzi? We were like the duo sesquiquete. Yeah, I don't know. What do you call a 250th anniversary? Semi-quintennial.
38:44 Speaker 02 Semi-quintennial. So they've made this like their, the release from the Treasury Department was like, this is the crowning achievement of the Trump administration's semi-quintennial celebration. And you can start contributing to the accounts on July, I think it's July 4th, 2026. So it's, it is like they have, they have absolutely claimed this as theirs, which is like, you know what? That's like totally fine, but we're going to change the name and like make the rules better. And the Democrats who have been working on this for like 35 years and also the Republicans who have been working on this for 35 years can make this better. It's, you know, the getting passed can sometimes be the hardest part, but it doesn't, policy doesn't end there.
39:25 Robin Rauzi? Yeah. You know, it's, it's funny, this, this reminds me a little bit of something you said last season about, isn't it better to know the policies? And that you want to support and push for a policy, not a politician, you know? This is something that's good despite the politician and despite the name.
39:44 Speaker 02 Yeah, yeah. I was about to say, yeah, exactly. But you were telling me something I said, so I don't be like, yeah, exactly what I said. Up, up, up high. High five to this girl from this girl. Here we go. Yeah, I didn't want to do that, but I, I think that that's.
40:00 Robin Rauzi? But you did.
40:00 Speaker 02 I did, exactly. My sister is going to be sitting here. I'm, I'm, I'm envisioning her eating popcorn, being like, this is so you. Exactly what I said is like the good thing. So exactly, and she's going to make, she's going to be, she's going to be so much for this. However.
40:19 Robin Rauzi? I mean, I did say it, you know.
40:20 Speaker 02 It's helpful, but I, I guess optimist out there.
40:26 Speaker 02 Don't take the part about me quoting myself as the takeaway here and referring back to like, see the things I said before for what you need to know. But I think that this is a great example of good policy beating bad politics. I don't know if you're not in the policy circles, if you would have known that this was proposed in 1991, that it's been through iterations across various states, that we've, we've done, you know, treatment and control group, research experiments on it. The name and the origin can be so ephemeral to how the thing actually plays. So, yeah.
40:59 Robin Rauzi? Okay.
41:00 Speaker 02 Listeners, we would love to hear your questions about this. And I know for a fact that if you optimists have any questions, in particular for Sharad and the team in St. Louis that are still actively working on this, I know for a fact they're listening because I emailed them before the episode.
41:17 Robin Rauzi? What?
41:17 Speaker 02 Yeah, I was like, well, there's a guy who works there who I've known for a while. And he was like, well, send me the episode because I want to make sure we all listen to it. So they're gonna listen.
41:26 Robin Rauzi? And send you a lot of corrections.
41:27 Speaker 02 And send me corrections. So we'll do a retcon of this episode for all the things that I got wrong that the, that the team at St. Louis with Sharad and friends points out. It's called the Center for Social Development. Really great people at Wash U St. Louis. But if you have questions for them, for me about this, you know, please send them in because this is something I truly believe that we have a lot of ability to exercise as voters that you tell your member of Congress, like, change the name and auto enroll. That's a really like niche thing to call your member of Congress about. But this is something that can make a big difference. Anyway.
42:05 Robin Rauzi? Right. So yeah, email us at [email protected] .
42:14 Speaker 02 All right, we're back. We end the show with executive orders, sometimes petty, sometimes meaningful ways that we would change the world in a relatively anti-democratic way because it just comes from us. So, Robin, what is your executive order this week?
42:30 Robin Rauzi? Well, it's not mine. It's from Tamara DeRoe of Corona, California, who wrote in with her anti-shrinkflation executive order. Her order was that ingredient items, now she includes meat, I think meat can be whatever weight it should be, but that canned foods, yeast, anything you're cooking with should come in some sort of standard sizes, like not one and three quarters cups of chocolate chips, or 15 ounces of ricotta cheese. This happened to me actually in reverse the other night. I was making dinner and I was like, am I crazy? Or is this an enormous amount of spaghetti sauce? And it wasn't just that Costco made me buy two jars, they made me buy two jars that are 28 ounces instead of 24. Standard sizes, please.
43:11 Robin Rauzi? And if you're doing a shrinkflation, you can do that, but you have to call it out on the packaging in big, like the big sticker for six months.
43:19 Speaker 02 Okay, so I'm going to rename this the deli rule. And it's just, it's got, it's got to come in one of the containers, right? It's, you know, you've got four sizes of deli containers, and that's all of the foods you get in a deli comes in one of those containers. Everything has to come in a deli container. You've got four sizes and it's all you can do. And then maybe something else for tomato paste, because like...
43:41 Robin Rauzi? Who needs a can of that?
43:43 Speaker 02 The tube, I think, actually works quite well, but I don't know how you...
43:46 Robin Rauzi? Also, you can freeze tomato paste.
43:48 Speaker 02 And you can forget about it and leave it in there, and then they fall to the bottom, and then the bottom of your freezer is red, and you've wondered if you've murdered someone and forgot about it. But it turns out you just had tomato paste, and then a little bit of a leak, and then you never do it again. So, lot of options.
44:04 Robin Rauzi? Lot of options. I don't know what your executive order is.
44:07 Speaker 02 My executive order is that air machines for tires at gas stations need to accept a form of payment that's not quarters.
44:15 Robin Rauzi? What, you mean like for, like, yeah, an air pump?
44:18 Speaker 02 Yeah, you have an air pump, you need to put air in your tires, and it's like, here is a metal box that you put quarters in, and allegedly, after putting in a certain number of quarters, this machine will turn on. You have no way of knowing if it works, unless it says, like, broken.
44:33 Robin Rauzi? Also, how long it's going to take.
44:34 Speaker 02 Or how long it goes, or like, how much time do you have?
44:38 Robin Rauzi? Exactly. Have you ever run around your car, like, trying to hit all four wheels?
44:42 Speaker 02 Oh, I've absolutely eaten, like, over the, like, just, like, I don't have any more quarters. I've put in so many in the machine, I don't even remember how many it took. It just at some point chugged on. And I'm running around like an idiot trying to put...
44:55 Robin Rauzi? Yeah.
44:56 Speaker 02 Trying to put air in my tires.
44:57 Robin Rauzi? Costco does sell you overly huge things of tomato sauce, but they do have free air pumps.
45:05 Speaker 02 Costco made me do it.
45:06 Robin Rauzi? Costco for the win. Yeah.
45:08 Speaker 02 Costco for win. My other executive order, I'm just gonna sneak in to keep up our Olympics theme, is that during the Olympics, you can't play bad sports TV in bars and restaurants.
45:17 Robin Rauzi? Yeah, just Olympics. No.
45:19 Speaker 02 Just Olympics. Why is this so hard?
45:20 Robin Rauzi? Division two college basketball.
45:22 Speaker 02 Or MLB TV reporting on like when spring training will start in a month. And I'm watching MLB talking about like potential starting pitchers for two and a half months from now. And I was like, I'm sorry, can I watch a person propel themselves down an ice tube?
45:40 Robin Rauzi? Skeleton, please.
45:42 Speaker 02 What is going on here?
45:43 Robin Rauzi? Yeah.
45:44 Speaker 02 You have to put on the Olympics during the Olympics.
45:48 Robin Rauzi? I also think, okay, this makes, this reminds me of my other executive order, which is that there should, there should just be a free broadcast channel where you can watch all the Olympics. I know people pay to get broadcast rights, et cetera, but we should just all be able to watch everything.
46:04 Speaker 02 I'm telling you, KET Olympics.
46:06 Robin Rauzi? And KET Olympics is also a good idea. Okay.
46:10 Robin Rauzi? Finally, it's time for spiritual sponsors, as we have made multiple references to. We don't have any financial sponsors for our show yet. So we get through the week with our spiritual sponsors. Catherine, do you have a spiritual sponsor?
46:24 Speaker 02 My spiritual sponsor is the US Women's Bob Flood Team, who took home gold and bronze, but I just happened to be watching Bob sledding. And then when they won, I was crying harder than they were. The most I've ever cried is whenever the last time I watched the Olympics. Like, I just, it brings, it absolutely hits whatever they're going for. They bring it out of me. I sobbed. Her kids were there. Both of them had kids there. And I was like, it's okay.
46:55 Speaker 02 So maybe my spiritual sponsor is just watching people. Athletes with kids, watching people win at the Olympics. Like, it's fun when they're from the US, but even when they're from another country, just watching people like.
47:06 Robin Rauzi? Did you watch that skater from Kazakhstan?
47:08 Speaker 02 Yes. Oh, my God. The part where he's just like looking and he looks confused and then it dawns on him that he's gonna medal and he's like. And then when he wins the gold, it's just like breakdown crying. Yeah.
47:21 Robin Rauzi? And also, I thought that, what's his, God, now I'm not gonna remember his name, Ilya.
47:26 Speaker 02 Malinin?
47:26 Robin Rauzi? Yeah. I thought, class act. You know, he had a horrible performance and he walked right up to that guy and congratulated him. And I thought he handled himself with a lot of grace.
47:38 Speaker 02 Sportsmanship.
47:39 Robin Rauzi? Yeah, sportsmanship.
47:41 Speaker 02 I love when people from other countries hug and they know each other. And I'm like, look, they're friends.
47:46 Robin Rauzi? Yeah.
47:46 Speaker 02 Yet more people hanging out without me.
47:50 Speaker 02 Yeah, all the hugging of like the athletes from other countries and they know each other and they're on their tour to get all, everything. My spiritual sponsor, once again, is just the Olympics. I just tried to make it something else. But it's the Olympics again. It's the Olympics again. What's your spiritual sponsor?
48:05 Robin Rauzi? My spiritual sponsor is the Pacific Surfliner, which is the Amtrak train that runs from San Diego to San Luis Obispo, which I took last weekend up to San Luis Obispo, treated ourselves to business class, has a great snack box that they hand out and you just like sit there and watch the ocean go by. It is 1,000 times better than sitting on the freeway.
48:26 Speaker 02 Wonderful. Thank you, Pacific Surfliner. Train the fun.
48:31 Robin Rauzi? Yeah, it's great.
48:38 Robin Rauzi? Sophie Lalonde edits the Optimist Economy podcast and Andy Robinson creates our online videos. You can see them on TikTok, Instagram, YouTube, or LinkedIn. Snap out to both of those guys.
48:47 Speaker 02 Snap out to both of those guys. If you are interested in chatting with other optimists, we have a chat on, a subscriber chat on Substack. And of course, thank you to everyone who donates to keep our editor and producer paid. We are at optimist economy.com, optimist dot economy at gmail dot com. And that's the end. I don't remember what I say at the end anymore.
Previous Social Security Upgrades for Retirement's Realities Next Boomers Didn’t Ruin Everything. Really. Page updated October 31, 2026 · transcript and summary are machine-generated