Politics
Commentary: Those $1,000 Trump accounts don’t match the hype
Proponents say the Trump accounts will be better than Social Security. Don’t believe them.
Here’s a riddle for you: A conservative Republican senator, a top economic advisor to the Trump White House and a venture capitalist walk into a conference room at a financial conference and claim a new government program will be a boon for all American families.
Question: Do you think these people are looking out for your interests?
If you trust Sen. Ted Cruz, economic advisor Kevin Hassett and millionaire Brad Gerstner to do so, feel free to stop reading here.
Here’s the dirty little secret: Trump accounts are Social Security personal accounts.
— Sen. Ted Cruz (R-Tex.) reveals that Trump accounts are designed to threaten Social Security
If you’re skeptical, read on.
But keep in mind that Cruz (R-Tex.) was last seen in these pages promoting yet another big tax break for the 1%, Hassett appeared the other day on Fox Business arguing that while Americans are spending a lot more on gasoline, “they’re spending more on everything else too” on their credit cards, as if forcing households to max out their credit is a good thing; and Gerstner is, well, a millionaire tech investor.
At their panel discussion on May 4 at the annual Milken conference, Cruz, Hassett, Gerstner and their interlocutor, Michael Milken, talked as though the Trump accounts would be so fabulous for average American families that they would obviate the need for Social Security.
“Here’s the dirty little secret,” Cruz said. “Trump accounts are Social Security personal accounts.”
Milken echoed that thought: “Do you have the right to decide where your money goes, or should you be giving it to the government and [letting] them decide where it goes?”
That gave the game away — this is yet another effort by Republicans and conservatives to end a program they’ve been trying to kill, and to give Wall Street firms a bigger bite of your retirement resources.
Let’s start with a primer about the Trump accounts, which were part of last year’s GOP budget bill and will be open to investment starting on July 4.
The headline pitch for these accounts is that they’ll be seeded with a one-time $1,000 government contribution for children born from 2025 through 2028, unless Congress extends the government donation. Accounts can be opened for children born before or after those dates, but they won’t get the government donation.
Families can add up to another $5,000 in contributions every year until the child reaches 18, but those donations won’t be tax-deductible.
The money must be invested in low-cost stock index funds or exchange-traded stock index funds, and can’t be withdrawn for any reason without penalty until age 18. After that, the funds can be withdrawn without penalty for certain purposes such as educational expenses or the purchase of a first home. The accounts eventually become converted to conventional individual retirement accounts, or IRAs, and distributions will be taxed as ordinary income, though family contributions will be returned tax-free.
That $1,000 donation is the best feature of the accounts. But that may be their only good feature. For almost all the financial goals confronting average American families, such as saving for college or retirement, they’re inferior to tax-advantaged savings plans already on the books.
Like those programs, they’re much more advantageous for wealthier than to low-income families: Wealthier families typically have the wherewithal to make their annual contributions, and get a larger break from the tax deferrals of investment growth within the accounts because their tax rates are higher.
Though their promoters claim that the accounts will level the economic playing field for all families — “helping the bottom 10%,” Hassett said on the panel — that’s not the case. “Clearly, the program is structured to subsidize savings for those who already have the capacity to save, rather than meaningfully closing the wealth gap,” observes Sheryl Rowling of Morningstar.
Another drawback cited by economists and financial planners is that the accounts are locked into corporate equity investments. Before the beneficiary reaches age 18, the investment mix can’t be adjusted. That’s dangerous because portfolio concentrations in corporate shares are inherently risky.
“A high school senior who plans to enroll in college next year cannot change the investment to a lower-risk portfolio,” say, to a mix of equities and bonds, notes Greg Leiserson of the Tax Law Center at NYU. “If the market crashes the summer before she plans to enroll, the Trump Account is of greatly reduced use.”
Trump account promoters have massively overstated the potential wealth gains for ordinary Americans. At the Milken conference, Cruz said that a child with a Trump account will have about $170,000 in it when he or she reaches 18 and $700,000 at age 35. “And very quickly after that, you get into the millions,” he said.
Cruz did acknowledge that those figures apply to households that “contribute regularly.” In fact, they apply largely to households that contribute the maximum $5,000 every year.
The White House estimates of potential returns are based on questionable assumptions about stock market gains over the 18-year periods in which the accounts will grow on a tax-deferred basis.
According to the government’s own estimates, the account of a family taking the $1,000 seed money but making no contributions beyond that would have as little as $2,577 in their account after 18 years if stock market returns come to 5.4% over that period.
The government estimates, however, that the account would hold $730,395 if the family contributes the maximum every year and the stock market returns more than 18%. Another 10 years of growth at that level, and the account would grow to $1.9 million when the child reaches age 28.
The problem with long-term market estimates, such as the ones offered by the White House, is that they’re highly variable. No 18-year periods are the same. One thousand dollars deposited in a hypothetical account invested in a Standard & Poor’s 500 index fund would grow to about $6,600 if its 18-year lifetime culminated in 2025; if the 18 years ended in 2008, however, that deposit would have grown only to $3,960. In the 18-year period that ended in 1960, the account would have grown only to $2,940. What will the next 18 years bring? Who knows?
Variability like this, along with the sheer uncertainty of stock market projections for the future, helped sink George W. Bush’s 2005 attempt to convert Social Security into private accounts, which was also pitched as a key to minting millionaires by the millions through the magic of the market.
I asked the White House to respond to these criticisms. Spokesman Kush Desai called my questions “both a stupid and out-of-touch take,” asserting that the accounts are “already shaping up to make a generational difference for working-class children.”
The truth is that if Trump were really intent on taking steps to “strengthen the financial security of American workers” and creating a “path to prosperity for a generation of American kids,” as he claims to be, he and his GOP followers in Congress wouldn’t have scissored away the American safety net, which is what they’ve done.
They wouldn’t have imposed new work requirements and narrowed eligibility standards for food stamps, resulting in the exclusion of more than 3 million people from the program, a decline of 8%. They wouldn’t have cut nearly $1 trillion in funding for Medicaid over 10 years, jeopardizing coverage for 3.6 million young adults. They wouldn’t have allowed Affordable Care Act premium subsidies to expire, resulting in a drop in Obamacare enrollments of about 1.2 million Americans this year compared with last year.
If they really cared about educational opportunities for “a generation of American kids,” they wouldn’t have narrowed eligibility for higher education Pell grants, and wouldn’t slash research grants for universities coast to coast.
So how can families better prepare for college and retirement expenses? For education, 529 plans are probably preferable to Trump accounts. The investment choices are more flexible, withdrawals are tax-free at the federal level and sometimes at state levels if used for most education expenses, and there are no federal limits on contributions (contributions aren’t tax-deductible).
For retirement, advisers have been favoring Roth IRAs. Contributions are not tax-deductible, and this year can be made by couples filing jointly with taxable income up to $242,000 ($153,000 for singles) and are limited to $7,500 a year ($8,600 for those 50 and older). But withdrawals aren’t taxed if you’ve held the account for at least five years and you take the money out after you turn 59 1⁄2.
The bottom line, then, is this. Take the $1,000 if your child is eligible. As Rowling wisely advises, “Any time the government offers free money, you should take it.”
As for the rest, treat any claims offered by Trump account promoters as inherently suspect.
Politics
DOJ expands indictment against SPLC, alleging $4M secretly funneled to KKK and extremist groups
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The Department of Justice last month announced an indictment against the Southern Poverty Law Center (SPLC), alleging that the civil rights nonprofit defrauded donors by secretly paying informants associated with extremist organizations, including the Ku Klux Klan.
A federal grand jury in the Middle District of Alabama returned an 11-count indictment in April charging the SPLC with six counts of wire fraud, four counts of making false statements to a federally insured bank and one count of conspiracy to commit concealment money laundering, according to the Justice Department.
The superseding indictment retains those charges while expanding on the alleged misconduct.
According to the DOJ, the SPLC “secretly funneled” more than $3 million in donor funds between 2014 and 2023 to numerous individuals associated with extremist organizations, including the Ku Klux Klan, United Klans of America, the National Socialist Movement, participants in the Unite the Right rally and the Aryan Nations-affiliated Sadistic Souls Motorcycle Club.
NEO-NAZIS, ‘SADISTIC’ BIKERS AND CHARLOTTESVILLE ORGANIZER: 5 OF THE MOST SHOCKING SPLC INFORMANTS
The Southern Poverty Law Center has widespread influence in education. FILE: Acting Attorney General Todd Blanche, left, and SPLC interim President and CEO Bryan Fair are shown in a split image as the Justice Department pursues charges against the Southern Poverty Law Center. (Nathan Posner/Anadolu via Getty Images; USA TODAY Network via Imagn Images)
The original indictment alleged approximately $3 million in payments between 2014 and 2023.
“The SPLC’s paid informants (‘field sources’) engaged in the active promotion of racist groups at the same time that the SPLC was denouncing the same groups on its website,” the indictment states.
Prosecutors further allege the SPLC opened bank accounts tied to fictitious entities in order to conceal donor funds that were allegedly routed to confidential sources.
MIKE DAVIS: SOUTHERN POVERTY LAW CENTER: A TALE OF A RACISM SCAM
The Southern Poverty Law Center (SPLC) building seen in March 2020 in Montgomery, Alabama. (Barry Lewis/InPictures via Getty Images)
According to the indictment, the SPLC began operating a covert informant network in the 1980s, and between 2014 and 2023 allegedly paid those sources in a clandestine manner.
The DOJ alleges an SPLC employee instead encouraged the pair to remain involved and offered them a monthly salary of $1,200.
The two subsequently agreed to remain in the organization, according to the indictment.
DR. BEN CARSON: I KNOW HOW BAD THE SPLC WAS, IT CAME AFTER ME AND PUT ME AT RISK
Acting Attorney General Todd Blanche spoke during a press conference alongside FBI Director Kash Patel at the Department of Justice on April 21, 2026, in Washington, D.C., following the indictment of the Southern Poverty Law Center. (Nathan Posner/Anadolu via Getty Images)
Prosecutors allege an SPLC employee instructed the individuals to claim they worked for a company called Rare Books and helped college students with research and writing assignments if anyone questioned the source of their income.
The indictment alleges donor funds were used to pay both individuals through SPLC accounts.
According to prosecutors, the pair were also reimbursed for expenses related to Ku Klux Klan activities, including cross-burning events and associated costs such as wood and fuel.
One of the individuals is also accused of recruiting new members using donor-funded payments. The indictment further alleges the SPLC knew donor funds were used to purchase materials for Ku Klux Klan garments.
In a statement to Fox News Digital, attorney Abbe Lowell, who represents the SPLC, denied the allegations.
A composite image shows Acting Attorney General Todd Blanche overlaid on photographs of the Department of Justice and FBI headquarters in Washington, D.C. (Valerie Plesch/Bloomberg via Getty Images; Graeme Sloan/Bloomberg via Getty Images)
“This apparent superseding indictment attempts to shore up the flaws in the initial charges, but it changes nothing,” Lowell said.
“The SPLC did not lie to its donors, it did not mislead banks it did business with, and its informant program prevented violence and saved lives,” he continued.
“It appears the Justice Department shared the indictment with media before it was unsealed by the court – another example of the government’s troubling handling of this case.”
“We will be addressing these irregularities with the court and look forward to presenting the truth at trial,” he added.
NONPROFIT REVENUE TOTALS SURGE AMID GROWING SCRUTINY AFTER MAJOR FRAUD CASES
SPLC interim President and CEO Bryan Fair speaks during a wreath-laying ceremony at the Southern Poverty Law Center Civil Rights Memorial in Montgomery, Ala., on March 5, 2026. (Jake Crandall/Advertiser / USA TODAY NETWORK via Imagn Images)
The superseding indictment also notes that the SPLC’s reported revenue increased from roughly $38.7 million in 2010 to more than $129 million in 2023, an increase of approximately 233%.
According to the filing, the organization’s net assets grew from approximately $238 million to nearly $787 million during the same period.
The SPLC is a longtime nonprofit organization that says it combats white supremacy and extremism through research, reporting and monitoring efforts intended to assist law enforcement and the public.
During a news conference announcing the original indictment, Acting Attorney General Todd Blanche alleged the SPLC paid members of extremist groups so it could generate “work product” documenting their activities.
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“To that end, [SPLC] was doing the exact opposite of what it told its donors it was doing – not dismantling extremism but funding it,” Blanche said.
Fox News Digital’s Alexandra Koch, David Spunt, Jake Gibson and Alec Schemmel contributed to this report.
Buoyed by a new Congressional map favoring their party, California Democrats were eyeing Tuesday’s primary elections as a critical first step toward flipping a handful of House seats and taking back power in Washington.
Results from California’s massive and slow-moving election process were not immediately clear late Tuesday, as polls closed and mail ballots continued to be processed and counted. Still, Democrats were bullish about their chances of advancing candidates to November’s general election in all five districts that were redrawn in their favor as a result of last year’s Proposition 50 ballot measure.
“The path to winning back the House starts with voting in the June 2nd primary,” the California Democratic Party posted online Monday.
Meanwhile, California Republican Party Chairwoman Corrin Rankin urged Republican voters to make their own voices heard too.
“Like President Trump said, we need to make it too big to rig,” Rankin said on “The Benny Show.” “We need to swamp the vote.”
One of the most closely watched races was in the redrawn 22nd Congressional District in the Central Valley, where incumbent Rep. David Valadao (R-Hanford) is facing challenges from moderate Assemblymember Jasmeet Kaur Bains (D-Delano) and progressive college professor Randy Villegas.
Another closely watched race was in the redrawn 48th Congressional District in San Diego and Riverside counties, where Rep. Darrell Issa (R-Bonsall) decided to retire rather than run for reelection, and where Republican San Diego County Supervisor Jim Desmond — who is endorsed by Trump — is running against a pack of Democrats.
Prop. 50 — which Californians passed with nearly 65% of the vote a year ago — was California Democrats’ response to Texas Republicans redrawing their state’s Congressional maps in the GOP’s favor, at President Trump’s behest. It was also the only major Democratic counterpunch in the wider mid-decade redistricting brawl that has spread across the country in the last year.
Experts expect the redistricting battle to deliver a net gain of a handful or more House seats to Republicans. But Democrats could gain even more ground given Trump’s lousy approval ratings and the long history of midterm election losses for the president’s party.
Combined, those factors make the battle for control of the House incredibly close, which in turn makes the five seats up for grabs in California pivotal — and potentially decisive.
Tuesday’s primaries won’t determine if any of those five seats will indeed flip parties in November. However, the primaries will define those head-to-head races to come and better inform the odds of Democrats toppling Republican incumbents, experts said.
In addition to flipping the seats currently held by Valadao and Issa, Democrats are hoping to pick up three additional seats.
In the 1st Congressional District — which after Prop. 50 lost rural reaches of northeast California and picked up liberal North Bay communities — various candidates were vying for the seat long held by the late Rep. Doug LaMalfa (R-Richvale), who died in January. They include Democratic state Sen. Mike McGuire and Republican Assemblymember James Gallagher, who is endorsed by Trump.
Voters from the existing district are also voting in a special election Tuesday to fill the remainder of LaMalfa’s term.
In the 3rd Congressional District, which lost an eastern rural stretch along Nevada and now holds more tightly to the Sacramento suburbs, Rep. Ami Bera (D-Elk Grove) — who currently represents a different district — is running to remain in Congress in a new seat.
Meanwhile, the 3rd Congressional District’s incumbent, Rep. Kevin Kiley (I-Rocklin), is seeking to do the opposite. He quit the Republican Party, became an independent and is now running for Bera’s current seat in Congressional District 6, which includes the city of Sacramento and Placer County suburbs.
In the 41st Congressional District, which became more liberal after Prop. 50 by losing voters in Riverside County and gaining them in Los Angeles County, a slate of candidates — including Rep. Linda Sánchez (D-Whittier), who currently represents a different district — are running to replace Rep. Ken Calvert (R-Corona). Calvert, a 17-term incumbent, decided to run in the neighboring 40th Congressional District instead.
In the 40th Congressional District, which covers a swath of inland Orange County and portions of San Bernardino and Riverside counties, incumbent Rep. Young Kim (R-Anaheim Hills) is now going head-to-head with Calvert, while also facing several Democratic challengers.
Other districts that were not part of the Prop. 50 shuffle are also attracting attention.
In the 11th Congressional District in San Francisco, several Democratic candidates are vying to replace Rep. Nancy Pelosi (D-San Francisco), the retiring former House Speaker, including state Sen. Scott Wiener; tech millionaire and Democratic political operative Saikat Chakrabarti; and Connie Chan, a member of the San Francisco board of supervisors who Pelosi endorsed.
Democrats are also closely watching several races where younger Democrats and progressives are challenging older incumbent Democrats, and where newer Democratic incumbents are seeking to hold onto their seats in relatively competitive districts.
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LOS ANGELES — Outside a Bristol Farms market in LA’s Westchester neighborhood, residents who spoke to Fox News Digital all agreed that homelessness is a top problem facing the city, but disagreed on which mayoral candidate is the right choice to clean it up.
“Love him,” Shelley Zuckerman said about reality television star and independent candidate Spencer Pratt, adding that homelessness is a main motivator of her support for the reality TV star’s mayoral run.
“The fact that he’s not a politician, so he may or may not be a liar, we don’t know that yet, and I know that he wants to do something for LA that the politicians have been saying they’re going to do and then don’t,” Zuckerman added. “And I know politics works, that once you get in there you can’t always do what you want to do, but at least he’s got the passion.”
SPENCER PRATT SAYS HIS POLICY WILL FORCE HOMELESS OUT OF LA AND INTO CITIES LIKE SEATTLE
Los Angeles residents say homelessness is the top problem facing the city as they head to the polls for the mayoral primary. (Fox News Digital)
When asked if crime was a motivating factor to vote for Pratt, Zuckerman’s husband Saul responded, “Of course.”
The couple says they are supporting Republican Steve Hilton for governor.
Patrick Reynolds, who lives in the neighborhood, said he is “not happy with any of the candidates” and called Pratt a “clown” before saying he voted for incumbent Mayor Karen Bass “a little reluctantly.”
Homelessness has been a top-of-mind concern for voters in Los Angeles, and despite Bass being mayor for the last four years, Reynolds said he believes she’s the best choice on that front.
Reynolds, who said he is supporting billionaire Democrat Tom Steyer for governor, spoke at length about the problems with homelessness, including a local park he said has become “too dangerous” to visit in recent years.
KAREN BASS GRILLED OVER BROKEN HOMELESSNESS PROMISE, BLAMES BUREAUCRACY FOR SLOWED PROGRESS
Mayoral candidate Spencer Pratt hosts a campaign block party on 10th Avenue in Los Angeles on May 20, 2026. (Robert Gauthier/Los Angeles Times)
“Homelessness for sure,” a woman named Diane, who said she voted for Bass, told Fox News Digital, “That’s number one on my list, and I think she’s tried very hard to fix that problem. It’s a big problem, I know. And I just think she is down to earth. She’s not some rich billionaire, which I appreciate.”
Diane said she is supporting former Department of Health and Human Services Secretary Xavier Becerra, a Democrat who served in the Biden administration, for governor because he is a “good guy.”
“I like that he is an immigrant and that he has worked his way up in this world,” Diane said. “I think he has a good sensibility. I like also that he isn’t a billionaire. I can relate to him.”
Dan Madden, a resident of nearby Manhattan Beach, told Fox News Digital that if he could vote in LA proper, he’d go with Pratt.
WHO IS TOM STEYER? ANTI-ICE BILLIONAIRE IN CA GOVERNOR’S RACE FACES SCRUTINY OVER DETENTION INVESTMENTS
A Los Angeles city councilwoman and progressive candidate for mayor Nithya Raman, left, pictured alongside incumbent mayor Karen Bass, right. (Ronaldo Bolaños/Los Angeles Times via Getty Images; Justin Sullivan/Getty Images)
“That’d be my man,” said Madden, who added that he is voting for Hilton for governor. “The last 20 years in Los Angeles has been screwed.”
“It’s getting worse,” Madden said about the homeless situation in the Los Angeles area. “They cleaned up here and there. Spots, especially along the beach, coastline, you see it cleaned up. Two months later, everybody’s back.”
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Pratt, a registered Republican running as an independent, faces off in a nonpartisan mayoral primary against incumbent Mayor Karen Bass, a Democrat, and City Councilmember Nithya Raman, a socialist.
Tuesday’s election will determine which two candidates advance to the November general election. If a candidate receives more than 50% of the vote, they will automatically be named the next mayor.
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