WEBSTER CITY, Iowa — I’m here at the Fuller Hall Recreational Center where Hillary Clinton is delivering a speech on “retirement security.”
She just announced her new “American Retirement Account,” essentially giving every American a 401k-type plan, with the government, rather than the employer, as a the matching entity.
For families earning up to $60,000, the government will match with tax credits on a dollar-for-dollar basis, savings of up to $1,000. If their income level is $60,000-$100,000, they will be matched with tax credits on a 50% basis. Her “American Retirment Account” sounds like an IRA-type plan, allowing individuals to contribute up to $5,000 on a tax-deferred basis.
Like her health plan, Clinton co-opted the rhetoric of conservatives, talking about choice and portability, but said: “We have to fight and finally bury the idea of privatizing Social Security.”
She then engaged in some demagoguery, falsely claiming that Bush’s proposal on personal accounts demanded benefit cuts for the middle class and asked for seniors to sacrifice. The personal accounts, if you recall, were voluntary and didn’t apply to anybody above 55.
“Don’t you believe all of these people crying wolf over Social Security,” she said, claiming that at the end of the Clinton administration a plan was in the works to use the surplus to shore up the program.
At the conclusion of the speech, she moderated a panel discussion with three Iowa voters who expressed their concerns about saving for retirement. She’s taking questions now.
UPDATE: The cost of the proposal will be $20-25 billion a year, which the campaign claims will be paid for by rolling back the estate tax cut and keeping it at 2009 levels. In a conference call with her policy advisers following the speech, I asked whether her proposal to make up to $5,000 in saving contributions tax-deferable would affect IRAs. I was told that $5,000 would be the maximum allowable in tax-deferable contributions and if somebody had contributed to an existing IRA it would cut into the amount they would be able to invest in an American Retirement Account. The bottom line is that her American Retirement Account is essentially an extension of an IRA with a matching component for the first $1,000.