Obama’s Latest Retirement Security Proposals Slammed By Experts As Far Too Little
Retirement security experts parsing President Obama’s State of The Union speech and his follow-up address Wednesday on retirement policy at a U.S. Steel plant are frustrated that the White House is proposing to do too little for the oldest generations of Americans.
In Tuesday evening’s State of The Union, President Obama announced that the Treasury Department would expand the U.S. Savings Bond program to allow people to create their own retirement accounts—called MyRA—taking up to $15,000 in post-tax income.
“And if this Congress wants to help, work with me to to fix an upside-down tax code that gives big tax breaks to help the wealthy save, but does little to nothing for middle-class Americans,” the President said, saying everyone should have access to “an automatic IRA on the job, so they can save at work just like everyone in this chamber can.”
On Wednesday, in Pittsburgh, Obama repeated and expanded his remarks on creating new jobs, investing more in training and education, and making “sure that hard work pays off.” He concluded his remarks on retirement, saying, “So this is the opportunity agenda that’s going to restore some sense of economic security in this 21st century economy.”
But experts like Syracuse University Professor of Social Work Eric Kingson, who also is co-director of Social Security Works, the national coalition calling for modernizing and expanding Social Security, was underwhelmed by Obama’s platitudes. The President did not discuss the real problems and possible solutions for a nationwide crisis where tens of millions of people will slip toward poverty. The upcoming generation of retirees will need at least $6.6 trillion dollars more than they currently saved, a new estimate by Boston College’s Center for Retirement Research has found.
“In the context of an administration that has been tone death on Social Security and a Congress, especially the Republicans, who have been worse, the MyRA proposal, automatic IRA proposals, strike me as distractions from the real issues,” Kingson wrote in an e-mail, responding to the State of The Union.
“Many Americans who have worked hard and done most things right, will be facing very difficult retirement years,” he continued. “Instead of putting forward the MyRA proposal and making some noises about auto-IRAs, I wish the President simply focused on the facts about the impending retirement income crisis, or acknowledged, along with his MyRA and auto-IRA rhetoric, that these proposals can, at best, only make a small dent in the larger problem.”
On listserves Wednesday, where experts like Kingson and others, including progessive economists who regularly testify in Congress, were parsing the MyRA plan, the mood was deflated. The MyRA might be a start for some people who don’t have any savings, some said. But others said that it was harmful because it will shift the political discussion away from proposals to modernize Social Security, which is what progressive Senators such as Massachusetts’ Elizabeth Warren and Vermont’s Bernard Sanders have pushed.
When reviewing Obama’s remarks in Pittsburgh, Kingson was even more discouraged.
Speaking of the MyRA, Obama said, “If you’ve worked hard all your life, you deserve a secure retirement.” In response, Kingson’s said, “Yes, but he is not proposing anything that can move the needle in a serious way (just rhetoric).”
Obama told steel workers, “Let me tell you something, if you work 38 years, at the end of it you should feel like you’re going to retire with some security.” Kingson replied, “Yes, and calling for the chained CPI [consumer price index, which slows the growth of future Social Security cost-of-living increases] and not deep-sixing the Bowles-Simpson Social Security proposals [Obama’s commission that called for cuts] undermines that security. Moreover, giving Simpson a bully-pulpit to make groundless, nasty and uncivil charges about greedy geezers does not increase the sense of security (or dignity of the old).”
“A Social Security check is critical, but oftentimes that monthly check, that’s not enough,” Obama said Wednesday. “So what I’ve asked Congress to do is work with me to give more people more retirement security.”
“Great idea, but this doesn’t do it,” Kingson replied, and then cited substantive reforms that Obama did not mention. “How about refundable tax credits for retirement savings for low- and moderate-income workers paid for by reducing pension-related tax benefits for the well-off?” he asked. “I suspect he would like this but this is not what he is proposing. His proposal is little more than distraction that can be used to justify his support for cutting Social Security with a chained CPI.”
The White House will make its real intentions known for the future of Social Security when it submits it’s proposed 2015 federal fiscal year budget in several weeks. That document will contain future cost-of-living increase proposals—and how they are to be calculated.
Until then, the Treasury Department’s MyRA is not really a retirement savings plan but a nest egg that can be used during people’s livetines for home downpayments, medical problems, tuition or even a vacation. That’s helpful, yes, but nothing to retire on.