1. National solvency must be a priority.
Restoring this nation’s fiscal health is my top wish for Congress to act on in 2013.
While the last-minute deal to “fix” the fiscal cliff dilemma may have eased the pressure from rising tax rates, it delayed an important component — reining in federal spending. Delaying the automatic spending cuts that were part of the Budget Control Act of 2011 puts off the debate for another two months. But the issue cannot be avoided as our nation once again reaches its debt limit and looks for strategies to continue funding the government.
A good first step toward fiscal health is to achieve solvency for Social Security. This is probably the most attainable of our long-term budget goals.
We can maintain the promise of this program for the millions of Americans who continue to rely on it for retirement security and, at the same time, ensure its vitality for the future with a few adjustments.
2. We need to maintain incentives for retirement savings.
Because broader tax reform and the federal budget deficit are certain to top the agenda in Washington this year, many tax preference items are under scrutiny, including tax savings incentives for retirement savings. But these incentives are not part of the deficit problem, they are part of the solution.
Retirement savings play an important role in strengthening a robust, investment-driven economy.
Without savings incentives, many workers would not save for their future. The majority of these savings advantages — 62% — go to workers earning less than $100,000 per year. According to the Employee Benefit Research Institute (EBRI), if not for savings incentives, 56.7% of workers said they would save less.
Retirement savings are a source of investment capital and job creation for private industry, which is a significant underpinning of our economic recovery.
3. Strengthen our national retirement system and pass Auto-IRA.
Americans are living longer and facing the increasing costs of healthcare, which can be a challenge in retirement. Traditional defined benefit pension plans have declined in number. Many retirees cannot rely on Social Security alone. EBRI has also found that very little retirement savings by low- to moderate-income workers takes place outside the workplace system.
We believe Congress should support expanding access to employer-based retirement savings plans for all workers. A bipartisan proposal already exists in the Auto IRA, which could help millions of workers save for the future.
Strengthening Social Security and our national retirement system not only supports national solvency, but also encourages personal solvency, which ultimately is a key to economic success.