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Commentary: Trump wants you to invest your 401(k) in crypto and private equity. Should you bite?

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Commentary: Trump wants you to invest your 401(k) in crypto and private equity. Should you bite?

Trump is opening the door to risky ‘alternative investments’ such as crypto and private equity in 401(k) plans. But employers have had good reasons to keep them out of their plans.

If you believe Labor Secretary Lori Chavez-DeRemer, American 401(k) accounts are about to get much better.

Thanks to President Trump’s “bold new vision of a new golden age for America,” Chavez-DeRemer wrote in the Wall Street Journal on March 30, her agency is taking steps to open these crucial retirement accounts to a raft of new investment options, such as cryptocurrencies and private equity funds.

Her goal, she wrote, is to “unwind regulatory overreach and litigation abuse that have stifled innovation.” Her instrument is a proposed regulation that in effect would provide a safe harbor for plan sponsors — that is, employers — to offer those options in their employees’ plans without risking lawsuits or government scrutiny over whether they’re sufficiently prudent for workers to choose.

We have seen a number of proposals from private equity funds where the returns are really not calculated in a manner that I would regard as honest.

— Warren Buffett (2019)

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Notwithstanding Chavez-DeRemer’s assertion that this change would be all to the good for workers, the truth is that she and Trump are acting at the behest of alternative investment promoters, who have long slavered for access to the nearly $14 trillion in assets held in 401(k)s and other such defined contribution retirement plans.

Far be it for me to offer anyone investment advice. But there are a few things that Trump and DeRemer aren’t telling you about these proposed new options. Namely, the dangers they present to unwary small investors.

The first clue that something is being hidden appeared in DeRemer’s op-ed, in which she blamed “Washington bureaucrats” and “plaintiff lawyers” for stifling the financial innovation that people supposedly have been clamoring to put in their retirement accounts.

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You know who rails against “Washington bureaucrats” and “plaintiff lawyers”? Businesses that are fearful that government regulators and juries will clamp down on their wrongdoing. These critiques are often described as efforts to get government off the backs of the people. What they don’t explain is that once government has climbed off, big business will saddle up.

(As I’ve reported, among the businesses that have recently been demonizing plaintiff lawyers is Uber, which is pushing a ballot measure in California that would all but shut the courthouse doors to some passengers injured during Uber rides.)

So let’s examine the unacknowledged issues with “innovative” alternative investments. Private equity firms are known for buying companies that are either held privately, or are public companies due to be taken private. In many cases, they turn profits for their investors by cutting payrolls and reducing services at their portfolio companies, then draining what’s left until there is nothing left. Cryptocurrencies, as I’ve written, are a scam all their own.

We’ll start with the implicit and explicit rules guiding employers when they decide what investment choices to offer workers in their 401(k)s.

“Employers are fiduciaries, which means they must make decisions about retirement investments that are in their employees’ best interest,” observes Eileen Applebaum of the Center for Economic and Policy Research. “They must be prudent in curating a menu of retirement plan options for their workers. And they have been successfully sued for lack of prudence by workers whose retirement accounts held high fee, illiquid, risky investments that failed to perform.”

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The fiduciary standards are developed in part by government bureaucrats. And the successful lawsuits? They’re brought by plaintiff lawyers.

In 2021, the Biden-era Labor Department warned that most sponsors of 401(k) plans and other defined contribution plans “are not likely suited to evaluate the use of [private equity] investments” in those plans. The administration shied away from outlawing such investments outright in 401(k)s. Nevertheless, employers understandably saw the warning as a yellow light, if not a flashing red light.

As of 2024, only about 4% of plan sponsors offered alternative investments, Applebaum reported. The threat of litigation also stayed their hand; 66 lawsuits were filed against plan sponsors that year, according to Encore Financial, a personal finance firm. High fees and other fiduciary failures were at the heart of most of the cases.

This isn’t the first time that Trump has tried to wedge private equity investments into 401(k)s. In 2020, during his first term, then-Labor Secretary Eugene Scalia issued an opinion that the mere presence of private equity investments among 401(k) choice was not in itself a fiduciary violation.

Scalia said his goal was to “remove barriers to the greatest engine of economic prosperity the world has ever known: the innovation, initiative, and drive of the American people.”

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Until then, individuals were effectively barred from the investments by a Securities and Exchange Commission rule allowing only “accredited” investors — those who could show annual income of more than $200,000 or net worth of $1 million or more, not including their homes.

I didn’t offer an opinion then about the wisdom of these investments, but wrote only that “if I were inclined to invest my 401(k) money in private equity, I would hope that my family would arrange to have my head examined.”

My reasoning then was that private equity funds produce limited disclosure, or no useful disclosure at all; there are no commonly accepted formulas to measure their returns; and they’re subject to management fees immensely higher than conventional stock, bond or money market funds.

No less an experienced investor than Warren Buffett warned his own shareholders away from the sector, I pointed out.

“We have seen a number of proposals from private equity funds where the returns are really not calculated in a manner that I would regard as honest,” Buffett said at the May 2019 annual meeting of Berkshire Hathaway, which held his corporate investment portfolio.

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Since then — indeed, since the Great Recession of 2007-2009 — the private equity sector has been promoting itself as a source of financial returns superior than those of conventional stock portfolios while glossing over cavils such as Buffett’s.

The promoters boast that their funds have low correlations with public markets — that is, when the public markets falter, the private markets gain; that they’re skilled at finding bargains among targeted businesses; and that they impose profit-gaining efficiencies on their acquired businesses.

In recent years, however, the private equity argument has faded. “Current data raises questions concerning these predicate assumptions,” wrote Nori Gerardo Lietz of Harvard Business School in 2024. Private equity fund performance, she observed, has “eroded materially.”

That’s true. From 2022 through the first three quarters of 2025, according to the research firm MSCI, private equity firms turned in annualized returns of 5.8%, while the Standard & Poor’s 500 index of public firms yielded 11.6%. Institutional investors such as public employee pension funds have begun to ask whether the sector deserves their money.

In the last year, the Yale University endowment and the public employee pension fund of New York City have sold off billions of dollars in private equity investments, some at a discount to their stated values. (To be fair, the California Public Employees’ Retirement System, or CalPERS, has remained a fan, attributing its recent improvement in overall returns to a strengthened investment in private equity.)

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The doubts being voiced by these major investors has turbocharged the push by the private equity sector to reach into individual retirement accounts. By some measures, however, individual investors have even less tolerance for some of the features of private equity than do institutions. Unlike publicly traded stocks, these investments are illiquid, meaning they can’t be sold at will and they can’t be reliably priced.

As for crypto, the other major alternative investment being touted by Trump, its shortcomings are well documented.

In contrast to conventional stocks and bonds, they don’t represent stakes in anything concrete and as a result are extremely volatile.

Bitcoin, for instance, ran as high as $126,000 in October; as of Thursday it was priced below $72,000. Among other queasy-induced crashes, bitcoin lost 35% of its value in less than four weeks between mid-January and early February, falling from $96,929 on Jan. 13 to $62,702 on Feb. 4.

These are all factors demanding notice from small investors contemplating adding these sectors to their retirement funds. For that reason, some retirement professionals doubt that even the Trump administration’s favor will persuade many plan sponsors to open their doors to alternative investments. Trump’s regulators may be taking a hands-off approach to these sectors, but plaintiff lawyers aren’t likely to back off.

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For individual investors, these are sectors that were made for the phrase “caveat emptor.” If you don’t know your Latin, it means “buyer beware.”

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Crop Undercount Raises Questions About Reliability of U.S.D.A. Data

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Crop Undercount Raises Questions About Reliability of U.S.D.A. Data

The Agriculture Department projected last July that farmers would harvest 86.8 million acres of corn in autumn. The projection was repeatedly revised upward until, in January, the department found 1.3 million more acres of corn — an area larger than Delaware — and concluded that the final amount harvested was 91.3 million acres.

“It was a miss. No other way to call it,” said Seth Meyer, who served as the department’s chief economist until leaving in December.

The 5 percent undercount may seem small, but it was the department’s worst projection in recent memory. It came as the Trump administration was cutting staff at the Agriculture Department and as President Trump’s trade war raised prices for equipment and hurt exports.

Some people in agriculture have become increasingly worried about the reliability of department data. That skepticism could lead to a breakdown of the historically close relationship between the department and farmers it serves, they said.

“U.S.D.A. always had a great relationship with its farmers,” said Mr. Meyer, who now leads the Food and Agricultural Policy Research Institute at the University of Missouri. “That seems to have weakened.”

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The Agriculture Department publishes thousands of reports annually on everything from county-level sorghum planting to China’s hardwood market. But its estimates of crop size are some of the most closely read reports. Traders use information from the reports to immediately buy and sell commodities, affecting the prices that farmers receive for their crops. Farmers use the information to make decisions about how and when to try to sell their crop for the most money.

Department officials haven’t offered an official explanation for the miss, but many outside it point to staffing cuts and lower survey response rates.

The Agriculture Department lost 23,000 employees in 2025, as Elon Musk’s Department of Government Efficiency slashed jobs across the federal government. The National Agricultural Statistics Service, which produces crop reports, was one of the hardest-hit divisions; it lost 34 percent of its staff, going to about 500 employees from around 800.

The corn miss prompted Farm Journal, an agricultural publication, to ask respondents to its monthly survey whether they remained confident in department data. Most of the farmers, ranchers and economists polled responded “no.”

“People trade the reports whether the reports are true or not,” said Shay Foulk, who farms 1,500 acres and runs a seed business near Peoria, Ill. Since farmers are trading in commodity markets against sophisticated managed funds and trading algorithms, he said, “the farmer just feels they are at a disadvantage if those numbers are inaccurate.”

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For years, the department has struggled with fewer farmers returning its surveys, one of the key data sources for crop production reports. The response rate for recent surveys was around 40 percent, according to the department, down from around 60 percent a decade ago.

“When farmers lose trust in the agency, they don’t want to participate as much, and so there is a direct line between low staff and low participation and incorrect data,” said Senator Amy Klobuchar of Minnesota, the ranking Democrat on the Senate Agriculture Committee, in an interview.

In March, Democrats on the Agriculture Committee wrote a letter to Scott Hutchins, the under secretary for research, education and economics at the Agriculture Department, concerned about the reliability of the department’s data. They also said the department’s proposed relocation of employees from Washington to hubs around the country “threatens to worsen the loss of key institutional knowledge and staff capacity.”

Mr. Hutchins, who was appointed by Mr. Trump last year, said in an interview that farmers still trusted the agency but had “well-founded frustrations” with the corn misestimate.

Asked whether losing employees had anything to do with the miss, he said, “Absolutely, unequivocally no.” Mr. Hutchins added that the department’s ability to develop new efficiencies had been “enhanced tremendously” by the departures, and that it was using more remote sensing abilities and artificial intelligence to collect data.

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“I don’t understand what all of the additional staff might’ve been doing for us to still produce the same outcome with the current staff that we have,” he said.

Mr. Hutchins did say he was worried about the department’s entering a data doom loop if response rates continued to fall. “It is kind of a self-fulfilling prophecy,” he said. “The fewer surveys we have, the larger the standard error we will have in estimates.”

The corn miss was a major topic of conversation last week at the semiannual Agriculture Department data users’ meeting, held at the Federal Reserve Bank of Kansas City. It is normally a low-key event attended by departmental economists, academics, agricultural company representatives and others, where heads of different divisions preview new data products and answer esoteric methodology questions. But this time, there was a heavy focus on heightening transparency and increasing survey response rates.

Lance Honig, the acting director of the department’s statistics division, suggested that 2025 was an anomaly. Because of the large amount of corn planted and record yields, the normal statistical models were off.

“I would suggest that the 2025 crop season was a bit different than anything we had seen in, oh, I don’t know, what would that be — 80, 90 years,” Mr. Honig said.

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The Agriculture Department recently put out a request for information for commentary and ideas about its data products. It is also planning to increase the number of farmers surveyed for its acreage reports, pending approval from the Office of Management and Budget for the higher cost to send out more surveys.

One meeting attendee, Bill Lapp, a food industry consultant, suggested that surveys be made mandatory for those receiving money from the government’s bailout package for farmers. “For $12 billion, can’t you get them to fill out a damn postcard a couple of times a year?” he asked in a question-and-answer session.

Farmers have a deep and direct relationship with the federal government, which sustains much of their business. Farmers participate in crop insurance and conservation programs, apply for grants and receive disaster assistance and ad hoc payments. The Agriculture Department projects that government payments will account for 29 percent of farm income this year.

These programs run on data obtained from farmers. They must certify the number of acres they plant with the Farm Service Agency in order to participate in income support programs. To get crop insurance, farmers must give their financial information to the Risk Management Agency. So when they are also mailed surveys asking detailed questions about their crops, some farmers get annoyed, because they believe the department has, or should have, the data.

Mr. Foulk, the Illinois farmer, said farmers were in part disgruntled with the federal government because of their declining influence. On tariffs, biofuels policy and the farm bill, farmers haven’t gotten what they wanted lately.

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“We had the privilege of having this outsized voice, and now we’re not as loud,” he said.

Farmers are unlikely to stop participating in Agriculture Department programs that directly benefit them, no matter how they feel, said Mr. Meyer, the former agency economist. But their very viability is underpinned by data and analysis.

“Supporting data collection has historically and continues to support the things that directly impact them,” he said.

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California billionaire tax proposal attracts 1.5 million signatures. Here’s what happens next

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California billionaire tax proposal attracts 1.5 million signatures. Here’s what happens next

California, home to the ultra-rich in Silicon Valley and Hollywood, is embroiled in a heated fight over whether to tax billionaires to fund healthcare.

This week, supporters of the proposed billionaire tax began submitting nearly 1.6 million signatures, nearly twice the number needed to qualify for the November ballot.

Election officials now need to verify that the signatures are valid for the initiative to land on the ballot.

The proposal would impose a one-time tax of up to 5% on taxpayers and trusts with assets valued at more than $1 billion, with some exclusions, such as property.

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Supporters of the tax, including the Service Employees International Union-United Healthcare Workers West, say it would raise $100 billion, offsetting federal funding cuts to healthcare. A small portion of the funds would also go toward education and state food assistance.

If the proposal makes it to the ballot, it sets the stage for an intense, costly battle over whether the state’s billionaires should pay for services that lower-income residents depend on. Some tech moguls have pushed back against the idea and threatened to move. Some have already moved.

Voters will probably be bombarded with political ads and arguments from opposing sides as the battle intensifies.

Here’s what could happen next:

What are supporters arguing?

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Supporters of the billionaire tax are tapping into people’s frustrations about healthcare and wealth inequality. They’ve pushed back against the idea that billionaires can avoid the tax by moving, noting that it applies to billionaires residing in California as of Jan. 1, 2026.

“When funding is cut, it brings a world of pain,” said Mayra Castañeda, an ultrasound technologist and a member of SEIU-United Healthcare Workers West, in a statement. “It means longer ER waits, fewer healthcare workers, rural hospitals shutting down, delayed care and lives lost that could have been saved.”

Vermont Sen. Bernie Sanders has backed the idea.

“At a time of massive income and wealth inequality, the richest people in our country must start paying their fair share of taxes,” he posted on social media site X on Monday.

What are opponents arguing?

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Opponents say the tax could harm California’s economy and leadership in innovation without addressing the state’s financial woes.

“Because the state relies so heavily on high-income-earner tax revenue, this measure could lead to reduced budget revenue in the long term as highly mobile wealthy individuals leave the state to avoid this new tax,” said Rob Lapsley, president of the bipartisan California Business Roundtable.

The Legislative Analyst’s Office said last year that it is hard to predict the exact amount the state will collect because of factors such as fluctuating stock prices, which affect wealth. In a December letter, the office said the state would probably collect tens of billions of dollars from the wealth tax, but it could also lose other tax revenue.

California Gov. Gavin Newsom opposes the wealth tax proposal. Earlier this year, he told Bloomberg he had concerns about how the proposal had been drafted. He also expressed fears that wealthy taxpayers will move out of the state.

“The impact of a one-time tax does not solve an ongoing structural challenge,” he told the news outlet.

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How much are opponents spending to fight the billionaire tax proposal?

Billionaires are spending millions of dollars to fund groups that are fighting the proposal or promoting other solutions they say would address wealth inequality.

In late December, PayPal and Palantir co-founder Peter Thiel contributed $3 million to the California Business Roundtable, which is opposing the billionaire tax, according to spending data filed with the secretary of state.

In March, former Google Chief Executive Eric Schmidt donated $1 million to that group. Other tech executives have contributed hundreds of thousands of dollars this year. It’s unclear how much of that money goes toward opposing the tax since the donation was made to the entire group.

Since January, tech executives, venture capitalists and business leaders have donated roughly $93 million to a nonprofit called Building a Better California, according to data on the secretary of state’s website. A large chunk of that funding came from Google co-founder Sergey Brin, who donated $57 million to the nonprofit. Executives from DoorDash, Ripple, Stripe and other companies have also contributed to the group.

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Building a Better California’s website outlines policies it supports, such as expanding affordable housing and more transparency in state government. The group has told donors that it offers “near-term and longer-term protection against wasteful government spending and any and all new taxes on personal property and personal assets.”

Brin, who relocated to Nevada last year, told the New York Times that he fled “socialism” when his family left the Soviet Union in 1979, and he doesn’t “want California to end up in the same place.”

Are there other proposals that could kill the billionaire tax?

Yes. Another initiative, known as the “Improving Transparency, Effectiveness & Efficiency in California Government Act,” could nullify the billionaire tax act.

It would prevent new taxes from being exempt from a voter-approved state spending limit, in contrast to the billionaire tax measure.

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Supporters of the transparency act, including Building a Better California and Inland Empire Economic Partnership, plan to submit about 1.5 million signatures to county election officials this week.

If voters approve conflicting ballot measures, the one with more yes votes would take effect.

How much have groups spent on a ballot measure in the past?

Hundreds of millions of dollars has been spent on ballot measures in the past. In 2020, a record $200 million was spent on Proposition 22.

The initiative, funded by Uber, Lyft, DoorDash and other businesses, allowed gig companies to classify their workers as contractors rather than employees.

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With the battle over the billionaire tax expected to heat up, spending on both sides is likely to climb.

Times staff writer Seema Mehta contributed to this report.

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Rising Fuel Prices Could Force Excruciating Choices on Economic Policies

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Rising Fuel Prices Could Force Excruciating Choices on Economic Policies

With the flow of energy through the Middle East still mostly blocked and oil prices rising, policymakers in Europe are confronting the immediate impact of higher costs and trying to decipher the potential economic damage of a prolonged conflict.

On Thursday, officials at the European Central Bank and Bank of England are expected to hold interest rates steady, but investors are betting that each central bank will raise rates at least twice later this year. Economists and lawmakers will be watching closely for signs about how the central banks will respond to jumps in inflation.

The effective closing of the Strait of Hormuz, a vital waterway for fuel and other commodities off Iran’s southern coast, has sharply increased energy prices. Brent crude, the international benchmark, has pushed well above $100 a barrel, while European natural gas prices are nearly 40 percent higher since the United States and Israel attacked Iran at the end of February.

The war had an almost immediate impact on European inflation, increasing gasoline prices at the pump, airfares and other fuel-intensive activities. In Britain, the annual inflation rate climbed to 3.3 percent in March and is expected to stay around 3 percent through the second quarter, a percentage point above the central bank’s target. For the 21 countries that use the euro, inflation averaged 2.6 percent in March, up from 1.9 percent a month earlier.

But for the central banks, the question is whether higher prices will ripple through the economy and eventually push up wages, potentially setting off a spiral of escalating prices that would warrant aggressive rate increases like those in 2022. For now, analysts say there isn’t enough information on how the war, seemingly in a holding pattern, will affect the economy. While President Trump has extended a cease-fire in the region, traffic through the strait remains sparse.

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At the same time, the concern about inflation is being weighed against the possibility that the war damages economic growth. In that scenario, policymakers wouldn’t want to tighten financial conditions. Consumer sentiment in Germany, the eurozone’s largest economy, dropped to its lowest level in three years, data this week showed. This month, the International Monetary Fund said the bloc’s economy would grow 1.1 percent this year, but that assumed a relatively quick resolution to the war and the recovery of global energy markets.

“The E.C.B. will stay in ‘wait and see’ mode, at least for now,” analysts at HSBC wrote in a note. But “the risk of prolonged energy supply disruption, coupled with risks of second-round effects on inflation,” increase the probability of the central bank’s raising interest rates later.

It’s a dilemma facing central banks farther afield as well. This week, the Bank of Japan voted to hold interest rates steady, but it was a split decision with several officials preferring an increase in rates. The central bank raised its inflation forecast while warning that economic growth is likely to slow this year.

On Wednesday, the Federal Reserve also held interest rates steady. It acknowledged the war’s effect on the economy, saying inflation had ticked up because of the “recent increase in global energy prices.”

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