New America on Retirement Security

A Department of Labor retirement guide notes: “For many Americans, retiring in this new century is a mystery.” They’re living longer, they’re more personally responsible for their own retirement savings and they have many more savings options than previous generations did, which exacerbate the confusion. In June 2008, a House Ways and Means Subcommittee hearing explored options for expanding IRA participation. This article presents data about the mystery and IRA participation, highlights of the hearing and considerations for reform.

For general information about… more

Once a land of savers, America is now the home of the thriftless. Americans' personal saving rate, in steady decline over the last quarter of century, finally plunged into negative territory this year. No surprise there. In modern America the struggle between debt and saving is a rigged contest. It's never been easier to borrow -- credit cards, subprime home mortgages, home equity loans, payday loans. But when it comes to saving, about half of American workers, including more than… more

For a married couple, talking about money can be hard. But the cost of using a credit card to put off the conversation is almost always worse. So it is with a company, a city or a country. In While America Aged, financial journalist Roger Lowenstein uses the stories of three deeply encumbered institutions -- General Motors, the New York City subway system and the City of San Diego -- as examples not only of the way most individual Americans… more

The current crop of Presidential candidates sound a lot like they did in prior years with promises of new targeted tax breaks, loophole closures, increased taxes on the rich and new spending programs. Have the candidates not read the doom and gloom budget reports from the Government Accountability Office (GAO), Congressional Budget Office (CBO) and others?

The fiscal agenda for the next President and Congress must include some very difficult decisions that go beyond just tweaking the tax system. Below,… more

In the global economy, today's winners can become tomorrow's losers in a twinkling, and vice versa. Not so long ago, American pundits and economic analysts were snidely touting U.S. economic superiority to the "sick old man" of Europe. What a difference a few months can make. Today, with the stock market jittery over Iraq, the mortgage crisis, huge budget and trade deficits, and declining growth in productivity, investors are wringing their hands about the U.S. economy. Meanwhile, analysts point to… more

In 1946, Peter Drucker’s intimate, multiyear examination of General Motors (GM), Concept of the Corporation, was published. GM hated it.

Drucker’s take -- that the then-wildly-successful automaker might want to reexamine a host of long-standing policies on customer relations, dealer relations, employee relations, and more -- was viewed from inside the corporation as hypercritical. GM’s revered chairman, Alfred Sloan, was so upset about the book that he "simply treated it as if it did not exist," Drucker later recalled, "never mentioning… more

Over the past generation, the economic risks American families face have increased substantially. Yet public programs have largely failed to adapt to these new and newly intensified risks, and private workplace benefits have eroded. As a result, Americans increasingly find themselves on an economic tightrope, without an adequate safety net if, as is ever more likely, they lose their footing. This tightrope both creates anxiety about the future and causes hardship when families do lose their balance. But importantly, it… more

In the final days of this fall’s campaign, Republicans have turned to an unexpected issue: the economy. President Bush touted the nation’s prosperity last week, insisting that "a strong economy is going to help our candidates."

And why not? The Dow is soaring. Unemployment is low. Inflation is tame. Gas prices are falling. And the overall economy has been growing steadily. If Americans practice what political scientists call "retrospective voting" (captured by President Ronald Reagan’s famous question: "Are you better… more

America's leaders say the economy is strong and getting stronger. But ordinary Americans aren't buying it. They see what the rosy statistics hide: We are all struggling under the weight of terrifying economic instability. No matter how well educated and hard working we are, we know that the bottom can fall out at any moment. Meanwhile, the safety net that once protected us is fast unraveling. With retirement plans in growing jeopardy while health coverage erodes, more and more… more

Having just finished a book entitled The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement -- And How You Can Fight Back, I have no doubt that Stephen Rose will accuse me of offering a "message of misery." My defense, already laid out in greater length on the website of "The Democratic Strategist" in response to three of Rose’s colleagues, is that political candidates and leaders should, first and foremost, offer a message of truth.… more

Will globalization destroy itself? Every few years, another crisis suggests it might. The Internet, satellite phones, and intercontinental air travel help terrorists cross the world in an instant. The global spread of democracy shakes authoritarian governments -- and opens the way for Islamists in Tehran and Cairo, a populist strongman in Venezuela, and nuke-happy nationalists in New Delhi. Open capital markets wreck the economies of Southeast Asia. Divisions between Muslim immigrants and the rest of Europe explode in French riots… more

Do rich nations need more poor workers? The answer is yes, according to the conventional wisdom, which finds expression in a new United Nations report on migration and development. The UN says that in developed nations 10 years from now there will be only 87 young entrants to the labour force for every 100 retirees. To forestall a labour shortage in the developed world, the report says that rich nations should turn to developing countries, which will have 342 new… more

The announcement by IBM that it would freeze its traditional pension plan, shifting all workers into 401(k) plans by 2008, passed through the news cycle with nary a ripple. It was, after all, the latest in a string of increasingly desperate attempts by companies as diverse as GM, United and Verizon to get out from under mounting pension and healthcare burdens.

The terms of discussion are mind-numbingly complex, a thicket of acronyms and arcane benefits jargon. Yet the basic… more

In each era of modern American history, California has been at the forefront. It emerged from the Depression and World War II as the nation's archetype of the suburban middle class. It marked the end of government expansion with Ronald Reagan and Proposition 13. And it ushered in the age of technology, as the birthplace of Apple, Intel and Hewlett-Packard.

Californians are still willing to push the envelope, as they demonstrated with the unprecedented recall of a governor in 2003… more

President Bush's tax reform panel has ventured into political no man's land. It wants to limit the tax deductions for home mortgages, employer-provided health insurance and state and local taxes.

Individuals and businesses love these tax breaks. Democrats and Republicans embrace them for their own ideological reasons. The constituencies backing them are powerful. But these sacred cows are in desperate need of reform. The Treasury needs the money to close the growing budget deficit, and these tax breaks… more

Nearly a year ago, voters following the presidential race heard a stirring call for social reform: "The times in which we work and live are changing dramatically. The workers of our parents' generation typically had one job, one skill, one career. ... And most of those workers were men. Today, workers change jobs, even careers, many times during their lives, and ... two-thirds of all moms also work outside the home." As a result, "many of our most fundamental systems--the… more

Remember those bumper stickers during the early-1990s fight over the Clinton health plan? "National Health Care? The Compassion of the IRS! The Efficiency of the Post Office! All at Pentagon Prices!" In American policy debates, it's a fixed article of faith that the federal government is woefully bumbling and expensive in comparison with the well-oiled efficiency of the private sector. Former Congressman Dick Armey even elevated this skepticism into a pithy maxim: "The market is rational; government is dumb." … more

In a 1938 address on the third anniversary of the Social Security Act, Franklin Roosevelt declared, "There is still today a frontier that remains unconquered an America unclaimed. This is the great, the nationwide frontier of insecurity, of human want and fear. This is the frontier the America we have set ourselves to reclaim." And reclaim it FDR and his fellow thinkers did.

In the three decades after Roosevelt's words were spoken, the great "frontier of insecurity" shrank dramatically. A… more

Could a reformed public pension system give citizens more control over their retirement savings, as conservatives want, without undermining security in old age, as liberals fear? Here is a proposal that does just that in the American context, although it could apply equally well to any public pension system struggling with long-term debts and an ageing population.

The idea is to allow all US workers to divert a portion of their payroll taxes into personal "early retirement accounts",… more

Here's a factual statement and two arguments about Social Security.

The factual statement is that under any retirement system, the amount of America's national wealth devoted to the elderly is going to increase, for the simple reason that the elderly percentage of the population is going to increase. Today, about 13 percent of the population is over 65; by 2030, that percentage is expected to rise to 20 percent. After that, the percentage will level off -- unless,… more