From NBC/NJ's Athena Jones
Clinton laid out a proposal to provide a universal 401(k) plan for everyone, at a speech Tuesday in Webster City, Iowa.
She said the savings rate today is lower than it was in 1929, more than
75 million workers do not have employer-sponsored pensions to save for
retirement and many people who do have retirement plans are not saving
Under her "American Retirement Accounts" plan, everyone would have
access to a portable 401(k) and the government would offer matching tax
cuts of up to $500 to $1,000 to help middle class and working families
save. The campaign estimates it would cost $20 billion to $25 billion a
year to provide the matching tax cuts and said she would pay for it by
freezing the estate tax at 2009 levels.
"These accounts will take the best of the 401(k) plans and make them
available to every working family," Clinton told an audience of mostly
elderly people gathered at a recreation center.
Her staff called the proposal the second-biggest policy rollout of the campaign in terms of cost and the number of people it would cover, second only to her plan for universal health care.
The speech kicked off the second and final day of Clinton's "Middle Class Express" bus tour, which began Monday in Cedar Rapids with an economic speech aimed at drawing a distinction between herself and Republicans ahead of tonight's GOP debate on economic issues.
Clinton said that like her health care plan, no one would be forced to set up these accounts and that people who like their current retirement accounts could keep them. She said the current government was subsidizing those who need it least, using about half of the nearly $200 billion spent yearly to encourage retirement savings to help the top 10% of earners and spending only 10% of that money to help the bottom 60% of earners.
Her plan would provide a matching refundable tax credit for 100% of the first $1,000 in savings for every married couple making up to $60,000 and would provide a 50% match on the first $1,000 of savings for couples making between $60,000 and $100,000 a year. The accounts would allow individuals to contribute up to $5,000 per year on a tax-deferred basis.
The credits would be available to all Americans in existing 401(k) type accounts as well as people who choose the accounts she proposes.
The plan would give new tax credits to small businesses to encourage them to provide retirement plans for employees. It focuses on creating competition among private firms that would drive more of them to provide marketable, secure plans, but that there would be an option of opening an American Retirement Account through "a publicly managed clearinghouse similar to the Thrift Savings Plan which Members of Congress can currently utilize". Those plans would be held and managed by private firms.
In a briefing after the speech, Clinton's senior policy advisors said other details remained to be worked out, such as how much tax relief single people would get under the plan.
The accounts would allow penalty-free withdrawals for major investments like buying a home and paying for higher education or to help manage periods of unemployment.
Clinton said she would bolster social security by returning to fiscal responsibility. "I don't think there's any doubt that we've got to fight and finally bury the idea of privatizing Social Security," Clinton said, calling it a bad idea that would not be discussed when she became president. She said people like Bush were crying wolf about Social Security, trying to get people confused and upset and get them to agree to a bad deal.
After her speech, three Iowans talked briefly about some of their own experiences dealing with savings and retirement issues. Clinton then spent about half an hour taking questions from the audience. People raised issues like paying for prescription drugs, fixing the country's infrastructure and asked how Clinton would get troops out of Iraq.
In a light moment, one woman advised Clinton to tie her shoes so that she wouldn't trip, before going on to ask how to put an end to the endless campaigning for president.
Clinton said she wanted to shorten campaigns and reduce the amount of money that was spent. "My husband didn't announce for president until October 1991," she said. "I could have had a baby in the time I've been campaigning."
She also shared that she bought her moccasins in the gift shop of the Fort Dodge Museum and said they were really comfortable. She later sat down to tie her shoe.