Why Trump's plan to 'drill, baby, drill' is unlikely to fix inflation | The Excerpt
On Monday’s episode (first released on December 16, 2024) of The Excerpt podcast: Why Trump's plans for U.S. oil drilling are unlikely to cut gas prices and fix inflation, experts told Paste BN. Paste BN Personal Finance Reporter Daniel de Visé talks through how to become a 401(k) millionaire. The U.S. deploys resources on drone sightings. Paste BN National Correspondent Elizabeth Weise takes a look at why Americans are obsessed with white Christmas.
Hit play on the player below to hear the podcast and follow along with the transcript beneath it. This transcript was automatically generated, and then edited for clarity in its current form. There may be some differences between the audio and the text.
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Taylor Wilson:
Good morning. I am Taylor Wilson, and today is Monday, December 16th, 2024. This is The Excerpt. Today, what would Trump plans on oil mean for gas prices? Plus, how to become a 401(k) millionaire? And where do ideas around white Christmas come from?
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On the campaign trail, President-elect Donald Trump vowed to lower consumer prices that have soared since the pandemic, explaining how he would do so by saying, 'drill, baby, drill.' Trump told supporters in August, "At the center of our effort to bring the cost of living under control will be the all-out push to end the Biden-Harris War on American energy. We will drill, baby, drill." Trump is expected to speed drilling permits that took an average 258 days to complete during the Biden administration hold permit sales more frequently and increased drilling off the US coasts, Reuters reported last month. Those steps theoretically could reduce oil and gasoline prices and help nudge down the price of groceries and other goods by cutting their transportation costs.
But would they? It's not likely. Experts interviewed by USA Today say, Robert Kaufman is a Boston University professor who studies global oil markets, climate change and land use changes. He said that the world oil market determines the supply and demand balance and that a significant boost in US production would trigger responses from other producers that would leave crude and gas prices roughly unchanged. And gas prices are falling, broadly speaking. The price of benchmark US crude oil has tumbled to about 70 bucks a barrel from 120 in June of 2022, shortly after Russia's invasion of Ukraine. In turn, average US unleaded gasoline prices have fallen to about $3 a gallon from nearly $5 according to AAA. You can read more with a link in today's show notes.
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The 401(k) Millionaires Club keeps growing. I spoke with USA Today personal finance reporter Daniel de Visé for some tips on how to join them. Hello, Daniel.
Daniel de Visé:
Hello.
Taylor Wilson:
So let's just get this out of the way at the top, Daniel, how many Americans are 401(k) millionaires? Do we know how common this is?
Daniel de Visé:
Well, Fidelity says it's about 2% of all of their planned participants. Fidelity doesn't cover all the 401(k)'s in the world, but they cover a lot of them. So it's about half a million of their customers, basically. It's about 2%, one out of... What's that? One out of 50.
Taylor Wilson:
All right. So let's talk through some of the tips for potentially joining this 401(k) Millionaires Club, Daniel, starting with don't wait. I think this might seem obvious to some folks, but it could be good advice for some of our listeners, especially in their 20s or 30s.
Daniel de Visé:
Yeah, I started in corporate journalism when I was 23 at Knight Ridder, which doesn't exist anymore. So I was right away enrolled into a 401(k), and it's a really good idea to go ahead and enroll in it with your first job if you can. And it's not as easy as it sounds because if you're working for a small company or if you're a barista or something, there may not be one, right? But as early as you can in your career, you should start.
Taylor Wilson:
All right, how about employer matches? What's the kind of general advice here?
Daniel de Visé:
Is take it. That is free money. One of the CFPs I interviewed said it's like doubling your money because if you're contributing 5% of your salary and the employer matches 100% of that, it's like getting your money literally doubled. So this is a minimum goal if you're doing a 401(k), is take all of the match that your employer offers. Often it's up to maybe 6% of your pay, and they might only match half of it, but it's a huge boom. So that's just a low, low bar, right?
Taylor Wilson:
Yeah. Well, that makes sense. But how much, Daniel should folks really be saving every month and should the expectation really be to max out your retirement contributions?
Daniel de Visé:
Yeah, I'm not going to shame or scold anyone because just to be candid, I save 10% of my salary and I know I should be saving more, but I don't feel like I can afford it. The goal, according to Fidelity is 15%. That doesn't mean if you're not saving 15% that you're doomed or anything, but you should aim if you can afford it, to maybe save 15%. This is pre-tax money so it doesn't feel like you're 15% poorer. This is money that's taken out before taxes are taken out, but that should be your goal. That's a higher bar, right? It's a higher bar.
Taylor Wilson:
Yeah. Well, if you leave a job, Daniel, what do experts advise on the 401(k) front in that situation?
Daniel de Visé:
It's just at all costs to don't cash out your 401(k). Even if it's like 5,000 bucks and you're like 25, you shouldn't cash it out. People do. People close to me have done this, but it's a bad idea. Because even though it's 5,000 bucks and you're 25, by the time you're 55, that could be worth, I don't even know how many tens of thousands of dollars through the miracle of compound interest. So our corporate kind of infrastructure is moving to try to make it easier that when you leave a job, you can either... Basically click a button. So either it kind of rolls over into a new 401(k) at you're a new company or into a rollover IRA, which I've got two of those now. I did that, but a lot of people don't because they think, oh, it's only 5,000 bucks. I can go to Italy, right? But it's a mistake.
Taylor Wilson:
I think one of the scary kind of psychological aspects to any kind of investing is what happens when the market drops, right, Daniel? And we're in a strong market right now relatively, but what does happen if the market drops? We know it'll always have natural fluctuations. What do those down periods mean for retirement savings?
Daniel de Visé:
So a lot of people with the 401(k) will want to either put their holdings in cash, take them out of the stock market, or maybe even take them out of the 401(k) altogether. That would be really a bad move. But even to go out of the market and to put your money in cash, it's hard to time that. I mean, even the pros have a hard time timing when to do that. The experts say you really are better off leaving it alone. Think of a fund as if it's like a bunch of hens. If your account goes way down in value in a downturn, you still have as many shares of those mutual funds or of those stocks. So it's like if they were hens, in lean times, the hens would lose weight, but you still have the same number of hens, right? And then when the market improves, those hens will fatten back up. So that's how to think of it. You've got all these shares and as long as you have the same number of shares, they will eventually recover their value.
Taylor Wilson:
That was a perfect way to put it in the piece. Dan, you touched on this a little bit earlier, but does it ever make sense to tap in early to your 401(k) before retirement? Are there any situations or is this kind of a writ large policy, just stay away?
Daniel de Visé:
Well, again, I've done every bad thing you can do. I borrowed against mine years ago and I raided mine. I took money out at one point when I was desperate. And those are... Especially the taking money out thing is really, really bad because you pay this huge tax penalty. So basically you're losing about 25% of the money before you spend any of it, if you take money out of your 401(k) before you're 59 and a half. In most cases, there are situations like a first home or like a financial emergency where you're at least spared the penalty, but you're still getting taxed on it. And the rule with a 401(k) is your goal is keep the money in there until you retire. I mean, really, if you can avoid it, find some other way.
Taylor Wilson:
Right. Folks can find this full piece with a link in today's show notes. Daniel de Visé covers personal finance for USA Today. Thank you, sir.
Daniel de Visé:
Thank you, sir.
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Taylor Wilson:
Senate Majority Leader Chuck Schumer has requested that special detection systems be deployed in New York and New Jersey after recent drone sightings fueled anxiety among residents in the region. Schumer told reporters yesterday that he made the request to the US Department of Homeland Security and pushed for Robin Radar Systems, which he said has a better chance of detecting drones because of their 360 degree technology. Schumer's request comes after a series of reported drone sightings in the Northeast over the last month, including ones that caused a New York airport to shut down on Friday. Yesterday, Homeland Security Secretary Alejandro Mayorkas said the federal government is deploying additional resources to address the aerial drones, speaking with ABC News this week.
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Americans are obsessed with romantic ideas about White Christmas and where does that come from? I called up USA Today national correspondent Elizabeth Weise to find out. Hello, Beth.
Elizabeth Weise:
Hey, how's it going?
Taylor Wilson:
Good, Beth. So we know ideas about white Christmas are a big part of the American Christmas tradition, but I just want to start by asking you how many Americans actually live where it snows at Christmastime.
Elizabeth Weise:
So a lot fewer than you would think. It's only 40% of Americans that live where it snows reliably at Christmas or it snows at all, really.
Taylor Wilson:
And yet it's such a big part of the kind of cultural traditions in the US. Let's retrace some of the cultural background here, Beth. What are the origins of this kind romantic idea of white Christmas?
Elizabeth Weise:
It kind of goes back to Charles Dickens. So we're talking Victorian England in the 1830s and he writes a Christmas Carol, which has now been made into more than 100 movies and a billion plays and remakes and everything else. And what's interesting about that... And I talked to a guy who is a climate scientist who's written about the Dutch and European climate over the last thousand years. And it turns out that Dickens grew up at the tail end of what's known as the Little Ice Age. And the Little Ice Age is this cold period that lasts from about 1300 to about 1850 or so when Europe got a whole lot colder than it had been. And actually there was a warming period before that when they were growing grapes in England. They're doing that again, I will note. So it's part of this natural variation and we're going to talk about that later.
But the Little Ice Age, there was the Thames River froze and people could walk across it. It does not do that anymore. So Dickens childhood is during this period of intense cold, lots of snow, ice skating on the Thames, all of that. And Christmas is all about looking back to that magical period when you're a child. And Christmas is this kind of wonderful magical period. And whatever you imprinted on at the time is what Christmas is to you. To Dickens, it was this cold, snowy period in English weather history, which it isn't now. And it wasn't even as he was growing older, but he wrote a Christmas Carol and it imprinted basically the entire English-speaking world.
Taylor Wilson:
It's so fascinating. So when did this kind of bleed over to the United States then? Was it pretty immediately after Christmas Carol was published or was there some time?
Elizabeth Weise:
Yeah, so this is an interesting thing too. So Christmas Carol comes out in the 1830s and I would not have thought that there was really a lot of kind of mass market, but boy, was there? It got printed here in the States and it was incredibly popular. And then he came and did two reading tours, which are kind of like blockbuster events of the day where he went around and read from a Christmas Carol, which made it even more popular. So by the 1860s it was the Christmas novel. And Little Women is also starts out famously with a snowy cold Christmas. And so kind of our two oldest memories of Christmas are all about cold and snow.
Taylor Wilson:
So let's fast-forward to this period after the Civil War in the US where we really saw this rise in mass commercial culture. What happens next?
Elizabeth Weise:
Yeah, so this is another fascinating thing, and if you love Hallmark movies, find the story and find the link in there. Because it turns out that the period after the Civil War is when we started to get these mass market magazines that went all over the US Harper's Bazaar, Godey's Lady Book, and they published short stories, often romances. And around Christmastime, they published what were basically the Hallmark Christmas movie equivalent in the Victorian era. And they often feature kind of cold and snow and ice skating and sitting by the fire and all of that. And so it just cements this idea that Christmas is about cold and snow, what you think about it, Christ was born in the Middle East.
He was not born where it snowed at Christmastime. This whole idea has nothing to do with the birth of the savior. It's all about kind of mass popular culture. And another thing... Kind of this is before movies really, before photographs were really accessible, all of these magazines and people actually bought prints. They had all these idyllic Christmas scenes with people skating in Central Park or a snowy day at a farmstead with people slaying.
Taylor Wilson:
What's the future look like here when it comes to snow this time of year? And what does climate change really have to say about all this?
Elizabeth Weise:
Oh, I know. I just make it so depressing, don't I always? Climate change is real. It's happening. We have probably already blown past the 1,5°C mark, and if we don't work hard, we could get to the 2.0°C increase and that would really not be good. And so the possibility of white Christmases continues to decrease every year that we don't decrease our carbon emissions. And there's a chart in the story. Because people will say, "Well, but there was natural variation back then." Yeah, there was natural variation. But if you look at the temperature charts, there's kind of natural up and down. And then there's what happens after the industrial revolution where it just goes, up, up, up. What we are experiencing now, even NASA said on their website, this is not normal. This is not part of any natural variation. This is because we're pumping CO2 into the atmosphere at levels that are crazy.
Taylor Wilson:
Enjoy white Christmas if and while you can. Elizabeth Weise is a national correspondent with USA Today. Thanks as always, Beth, and happy holidays.
Elizabeth Weise:
Oh, you too, Merry Christmas.
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Taylor Wilson:
Thanks for listening to The Excerpt. You can get the podcast wherever you get your audio, and if you're on a smart speaker, just ask for The Excerpt. I'm Taylor Wilson, and I'll be back tomorrow with more of The Excerpt from USA Today.