Obama's MyRA Proposal: Hold the Cheers
by Stephen Lendman
Americans don't need another phony retirement scheme. They need employer-provider defined benefits they once enjoyed.
They need guaranteed pensions. They need safe and secure ones. They need Social Security protected. They need it strengthened.
It's not an entitlement. It's not welfare. It's a contractual federal obligation. It's for eligible recipients who qualify.
It's funded by worker-employer payroll tax deductions. Insurance premiums work the same way.
It's America's most important retirement program. It's not going bankrupt. When properly administered, it's sound and secure.
Bipartisan complicity weakened it over time. It needs strengthening. Its original incarnation needs to be restored and improved.
Today it's not what it was created to be. Franklin Roosevelt's vision needs to be reestablished.
On August 14, 1935, he said in part:
"This social security measure gives at least some protection to thirty millions of our citizens who will reap direct benefits through unemployment compensation, through old-age pensions and through increased services for the protection of children and the prevention of ill health."
The law "give(s) some measure of protection to the average citizen and to his family against the loss of a job and against poverty - ridden old age."
It "represents a cornerstone in a structure which is being built but is by no means complete."
Its purpose is to "take care of human needs and at the same time provide for the United States an economic structure of vastly greater soundness."
On January 11, 1944, Roosevelt's last State of the Union address proposed an economic bill of rights.
He didn't live long enough to implement it. He wanted the following guaranteed for all Americans:
• employment with a living (not a minimum) wage;
• freedom from unfair competition and monopolies;
• decent housing;
• proper healthcare;
• education; and
• strengthened social security.
He wanted all Americans freed from the ravages of poverty. Obama is no Roosevelt. He's ideologically opposite.
Obamanomics did more to wreck the American dream than any of his predecessors.
He presided over the greatest wealth transfer in history. He's beholden to powerful monied interests. They own him.
His rhetoric belies his policies. He's pro-business, pro-privilege, pro-war, anti-populist, and against all fundamental values real democracies cherish.
He's waged war on ordinary Americans. He wrecked the lives of millions. His entire agenda is opposite of what's needed. His new MyRA (retirement account) proposal is more scam than solution.
"Today, most workers don't have a pension," said Obama. He stopped short of explaining efforts to eliminate public and private pensions altogether.
"Social Security...often isn't enough on its own," he added. It could be much more than today. It should be. Proper strengthening would improve it greatly.
It's been weakened over time. Bipartisan complicity wants it privatized. Doing so assures wrecking it altogether. Obama's MyRA proposal ignores a problem needing fixing.
On January 28, he said he'll "direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA. It's a new savings bond that encourages folks to build a nest egg."
On January 29, a White House press release headlined "FACT SHEET: Opportunity for All: Securing a Dignified Retirement for All Americans."
It calls MyRAs "simple, safe and affordable 'starter' retirement savings accounts." Workers earning up to $191,000 are eligible.
Employers willing to participate will make automatic payroll deductions. No employer contribution is required.
Worker contributions are voluntary. An initial $25 is required. Subsequent ones can be as little as $5.
They'll be used to purchase US Treasuries. Yields fluctuate over time. They're rock bottom now.
Treasury bills earn practically nothing. Five year Treasury notes yield about 1.50%. Ten year notes around 2.70%. Inflation is multiples higher. Money invested today ends up worth less.
Savers can keep the same account if they change jobs. They can roll over the balance into a private IRA any time.
Once accounts accumulate $15,000 (or are held 30 years), they automatically roll over into a privately run Roth IRA with no tax loss.
According to Economic Policy Institute economist Monique Morrissey, doing so is bad news.
"The president's plan may serve to channel more savings into a high-risk, high-fee system without first addressing its failings," she said.
His plan is "nothing to get exited about." Savers "already have convenient access to low or no-risk investment options."
They can do it through retirement accounts. They can buy Treasuries or other financial instruments on their own.
Morrissey urges "holding out for a better retirement option." Obama's plan may seem "harmless," she said.
It "distracts from real reform efforts." They're more than ever needed. Obama and Congress ignore them. Obama's MyRA scheme is more smoke and mirrors than needed change.
According to the White House press release, accounts are "offered through an initial pilot program to employees of employers (that) choose to participate by the end of 2014."
Obama claims he's "committed to working with Congress to help secure a dignified retirement for all Americans."
Throughout five years in office, his policies have been polar opposite. Don't expect his MyRA scheme to change things.
According to Social Security Works co-director Eric Kingson:
"Instead of putting forward the MyRA proposal and making some noises about auto-IRAs, I wish (Obama) simply focused on the facts about the impending retirement income crisis, or acknowledged, along with his MyRA and the auto-IRA rhetoric, that these proposals can, at best, only make a small dent in a larger problem."
Crisis looms for millions approaching retirement. Most people haven't saved enough. Many accumulated nothing. They're more indebted than secure.
Obama's so-called "good start" is more sham than solution. It does practically nothing to resolve a festering crisis.
Longtime Chicago financial adviser, Terry Savage, reports the "Savage Truth." She discussed Obama's MyRA proposal.
"What a creative idea," she said. "It sounds so familiar. Wait. We already have that account. It's called SOCIAL SECURITY."
It's how it "was promoted when...enacted in 1935." In the 1980s, "growing surpluses (became) a tempting target…"
They were looted to fund government. Wall Street crooks benefitted. So did war profiteers and other corporate favorites. Super-rich elites got wealthier. The trust fund became their piggy bank.
Then Reagan National Commission on Social Security Reform head Alan Greenspan recommended it.
He lied claiming a Social Security "financing crisis." He wrongfully claimed the trust fund could run out of money "as early as 1983."
Congress acted irresponsibly. In April 1983, Reagan signed the Social Security Amendments of 1983 into law.
Doing so claimed to "resolve short-term financing problem(s) and (make) many other significant changes in Social Security law."
The public was scammed. Payroll taxes were raised. Rich Americans were exempted beyond a woefully low maximum limit.
Low-income earners today pay more in payroll than income taxes. Greenspan's commission was supposed to make Social Security fiscally sound for the next 75 years.
People were lied to. They weren't told no problem existed. Changes made transferred wealth to rich elites. Multiple income tax cuts benefitted them more. At the same time, the bottom 11% rate rose to 15%.
It was America's first ever tax cut making low-wage earners pay more. Their income and payroll taxes rose. Transferring wealth to corporations and super-rich elites continues. Inequality today is unprecedented.
"...Social Security was (meant) to be a tax-free return on your contributions," said Savage. It was so until "1983 reforms."
"(W)e've seen this movie before...In offering his new 'MyRa' proposal, the President said: 'MyRA guarantees a decent return, with no risk of losing what you put in.' "
...(A)nd you can keep your doctor, too," remember?
"Fool me once, shame on you. Fool me twice, shame on the voters! That's the Savage Truth!"
Social Security Works co-director Nancy Altman says "(s)trengthen Social Security." It didn't cause the federal deficit. It shouldn't be used to reduce it.
It didn't become law to fund government. It shouldn't be privatized. it shouldn't be means tested. High-income earners should pay the same percentage payroll tax as others.
Benefits should be increased, not reduced. Annual inflation adjustments should be real, not based on phony numbers. Low income Americans should be helped most.
In 2010, Professor James W. Russell discussed America's retirement crisis," saying:
"The great 30-year experiment in 401(k)s and similar retirement financing schemes that depend on stock market investments has failed."
"Even before" 2008 crisis conditions erupted, it was clear. "(V)ery few workers...accumulate enough wealth through these accounts to insure" secure retirement futures.
Until the 1980s, each generation since the 19th century was better off financially than earlier ones.
No longer. Inflation adjusted wages are worth less than decades earlier. Benefits steadily eroded. Inequality is the new normal.
Secure retirements are more myth than reality. Untampered with Social Security works as intended.
Strengthening it makes it work better. Russell calls it "the federal government's most successful and popular domestic program."
The 1978 Revenue Act changed things. Its sections 401(k), 403(b), and 457 let retirement plan contributions be made with pretax dollars.
Employer defined benefit plans became defined contribution ones. They offer no assurance of retirement income. Marketplace uncertainty becomes costly in crisis times.
Financial services industry predators profit hugely through large commissions and fees. They benefit. IRA holders lose out. They're scammed.
Privatized plans often don't deliver on promises. Secure retirements require strengthened Social Security, employer-provided benefits and personal savings.
Russell commented on Obama's MyRA proposal. He called it a "token response" at best to today's festering retirement crisis.
It "perpetuates the very myths and fallacies that caused the crisis." Its roots go back to when defined contribution plans replaced defined benefit ones.
IRAs guarantee nothing. They return "dramatically less retirement incomes than the pensions they replaced," said Russell.
Obama said "most workers don't have a pension." He failed to say they deserve one. Instead of recognizing a failed IRA experiment, he "implied that" crisis conditions only affect non-IRA holders.
He lied claiming they're much better off. MyRA's are another gift to financial predators. "The program will do little to benefit retirees," said Russell.
"No one ever obtained retirement security with savings bonds. Once more," Wall Street crooks stand to benefit most.
"The need remains urgent for a comprehensive public program to address the retirement crisis." Throughout five years in office, Obama proposed nothing to do it.
His MyRA scheme falls woefully short. It bears repeating. It's more scam than solution.
Stephen Lendman lives in Chicago. He can be reached at email@example.com
His new book is titled "Banker Occupation: Waging Financial War on Humanity." http://www.claritypress.com/LendmanII.html
Visit his blog site at sjlendman.blogspot.com.
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