(Yahoo! Finance) - President Trump has made it clear that he intends to replace Federal Reserve Chair Jerome Powell. Treasury Secretary Scott Bessent told Yahoo Finance Senior Reporter Jennifer Schonberger that his "inclination is we may hear something in the next week or so."
Speaker A
I'm joined now by Treasury Secretary Scott Besant.
Mr. Secretary, thank you so much for joining me. It's great to have you on Yahoo Finance. Great to be with you.
We are here today at the Trump accounts Summit and it feels like an inflection point for capitalism, for bridging the gap, for income inequality.
What do Trump accounts mean for the next generation of Americans and for our economy?
Scott Bessant
Well, I think it's taking the capital markets to everyone. I always say it's the biggest merger in history. It's Wall Street and Main Street. When when I was a kid in South Carolina, I I didn't know about the stock market. I just knew something bad had happened on Wall Street in 1929.
And now with for the next four years, every child getting $1,000, put in an index fund in their Trump account, they're going to learn about the markets, their parents are going to learn about it and the president has done peace deals, trade deals and tax deals, but I think this could be his most enduring legacy because these won't open up for 18 more years.
And if someone rolls it into a retirement account, it won't be for 65 more years. But giving everyone a piece of the American dream, I think is a game changer.
Speaker A
Now, every child who's born for the duration of this administration gets $1,000 to start and they can contribute up to 5,000 a year, kind of similar to an IRA.
Will it automatically be invested in an index fund? How will that work? And will there be perhaps at some point?
company matching as company's match 401Ks?
Scott Bessant
Oh, no, we have company matching now. So everything will be contributed into the index fund, lowest cost, uh broad-based, broadly diversified.
But we're going to hear from a lot of great American companies today who are going to contribute, parent, parents can contribute, family members can contribute, and the other thing that we are seeing is some great American philanthropists are also contributing.
So Michael and Susan Dell are contributing to uh a lot of the children who didn't aren't weren't aren't eligible for the thousand dollars. So you can open an account for a child up until age 18.
Michael and Susan Dell have contributed $6.25 billion to all all children in America who are not in the top 20% economically of zip codes.
Uh Ray Dao and his wife have adopted the the children in the state of Connecticut.
We just heard Brad Gerstner has adopted his home state of Indiana, all the children under five years. I think we're going to have a big announcement on Oklahoma today. We hope by the day the accounts are rolled out, July 4th, July 5th, that all 50 states will be spoken for.
Speaker A
Fantastic.
Could we see even more than $1,000 perhaps at this point?
Scott Bessant
Oh, it it it it could be much more.
I mean it could be topped, topped up and the the the other thing too is I don't know if I'd want to be a toymaker now because I think friends, parents, grandparents, aunts, uncles will maybe contribute to the accounts instead of give a toy.
Speaker A
You're creating the foundation for wealth for the next generation by giving them a jump start.
What about giving children Americans the tools they need to manage themselves?
For example, we know that American history is mandated to be taught in classes, middle school, high school. What about a federal mandate to teach investing in middle school and high school?
Is that something the administration would support? I know you're big on financial literacy.
Scott Bessant
Yeah, so I I've done a lot of work with financial literacy. I don't I don't know if we do a federal mandate.
We would encourage states to do it. I think about two-thirds of the states do it now and I think the great thing about these Trump accounts is that for a lot of families, 38% of families have no investments in the stock market.
where this will change that and I think that it will become the ultimate real-time learning lab because as the children, the parents look on their phones every day, every week, every month and they'll become interested at Treasury, we have financial literacy month and we're going to keep pushing out more and more.
And I think many of us, so the the other match that can come is from states. So I think we're going to have 20 states and I think the states are all going to have financial literacy requirements, maybe to receive the donation.
Speaker A
You're also head of the IRS. What are you seeing in terms of account signups at this point for the Trump accounts?
And what are your expectations for tax season?
Scott Bessant
Uh well, we've already seen 600,000 signups just this week. So, the trump account.gov, any any of your viewers want to go on.
And for the IRS, you know, I can see there's going to be a big refund season because one big beautiful bill was signed on July 4th and we did not give guidance on withholding changes for the president's signature policies, no tax on tips, no tax on overtime, no tax on social security, deductibility of American cars on on the loans.
So uh working Americans going to have very nice tax refunds, encouraging everyone to change their withholding now, their take home pay will go up. So I I was in Iowa with the president yesterday.
The we were in a diner slash restaurant and the wait staff there couldn't have been more excited.
Speaker A
I also cover the Federal Reserve and the Federal Reserve is meeting today. They're expected to hold interest rates steady after cutting three times at the tail end of last year.
I know that you, the president have called for the Fed to continue cutting.
What is your message to the Fed today and do you have any update on the search for the next Fed chair and when we could possibly see an announcement?
Scott Bessant
Yeah, I I haven't necessarily called for cuts. I've just said that I think the neutral rate's lower and I think that inflation is moving down the target faster than maybe some members of the board or the reserve bank presidents do. So but my message is always have an open mind.
In my lifetime, we had Paul Volker who was a great fed chair. Then we had Alan Greenspan and Volker really had to take a lot of tough medicine, bring inflation down.
Greenspan on the other hand in the 90s could see the productivity boom that was coming. He had an open mind and he let the economy really grow at its potential.
Government paid down tremendous amount of debt, thanks to the Clinton administration, the good work of Newt Ginrich and the House Republicans. So what I'm saying here is have an open mind that what growth does not equal inflation.
And let's see what happens. And in terms of Fed search, we have some great candidates. I was talking to the president about what he's thinking on the plane back from Iowa last night and my inclination is we may hear something in the next week or so.
Speaker A
Mr. Secretary, thank you so much for your insights. So appreciate it.
Scott Bessant
Good to see you.
