I usually find Claire Cain Miller’s pieces in the NYT very useful, but her piece on Trump accounts badly misled readers in three ways. While the gist of the piece, that the Trump accounts will increase inequality since they are yet another way for the rich to avoid taxes, is correct, there is no excuse for misleading readers.

The key problem is the comment:

“A $1,000 investment at birth could be worth $6,000 at age 18, the Trump administration has estimated.”

While this assertion is attributed to the Trump administration, it is essentially accepted as fact. In reality, the idea that the account would increase sixfold over 18 years is close to absurd.

The first point here is a simple crime that reporters often commit, it reports the numbers in nominal dollars. I know the New York Times’ readers are very well educated, but I guarantee that next to none of them have any idea how much $6,000 in 2044 will be worth in today’s dollars. It would be roughly $4,000, using the Congressional Budget Office (CBO)’s inflation projections. 

I know that it is the norm to just report things in nominal dollars, but it is supposed to be a news outlet’s job to convey information. This is not conveying information. It takes ten seconds to adjust nominal dollars for projected inflation. The value in today’s dollars can be written in fewer than ten words. There is zero excuse not to do it.

This is a peeve I’ve had with the New York Times and other news outlets for many decades. Why can’t they write numbers in ways that are meaningful to their audience? The worst abuse is with big budget numbers that are meaningless to almost everyone who sees them, as in the $5 billion cost of the Africa AIDS program that Elon Musk nixed. 

Is that sum a big deal? It’s a lot of money to most of us, but it’s less than 0.08% of the budget. Why wouldn’t news outlets provide this information? For what it’s worth, former New York Times Ombudsman Margaret Sullivan agreed completely on this point, as did then Washington editor David Leonhardt. Anyhow, this is not a crime that’s unique to Miller’s piece, but it is a huge issue that matters a great deal in this context. 

The second point is that the $6,000 number assumes a 10% nominal return on stocks. While that has been a historic average for the market, the current price-to-earnings ratio for the stock market is near a record 40, more than twice the long-term average. 

As much as it is stylish to pretend the stock market returns are independent of the economy, in real- world land that is not the case. The CBO projections imply that nominal corporate profits will be around 55% higher in 2044 than in 2026. If stock prices have increased six-fold, but profits are up by just 55%, it implies that the price-to-earnings ratio in the stock market will be over 150 in 2044. Is that what Claire Cain Miller wants to tell NYT readers? (The rise will be a bit less if we take account of dividend payouts, but companies will not be paying much in dividends relative to their share price when PEs get over 60.)

The final point is that Miller does not discuss the biggest obscenity about Trump accounts. Trump is putting $1,000 in kids’ accounts while he is cutting back on Medicaid, food stamps, housing assistance, and other programs that benefit the poor. 

Now remember, you literally cannot touch this money until the kid turns 18. That is different from the rules on 401(k)s or 529 accounts, where you can pull the money out under some circumstances at no charge, or with a penalty if you don’t meet these circumstances. 

This means that we can be absolutely certain that in a few years we will have hundreds of thousands of hungry and homeless three-year-olds who have $1,000 sitting in a Trump account that their parents can’t touch. That’s pretty damn MAGA!