360° Coverage : Sour Grapes From Some Conservatives On The MyRA

2 Updates
Sour Grapes From Some Conservatives On The MyRA

Sour Grapes From Some Conservatives On The MyRA

Feb 5 2014, 3:47pm CST | by

It’s been a week since President Obama’s “State of the Union” speech where he detailed a new savings plan for lower-income families called the “myRA.” Since then, it’s come under fire from some...

Filed under: news


32 weeks ago

Sour Grapes From Some Conservatives On The MyRA

Feb 5 2014, 3:47pm CST | by

It’s been a week since President Obama’s “State of the Union” speech where he detailed a new savings plan for lower-income families called the “myRA.”

Since then, it’s come under fire from some conservative quarters: the Wall Street Journal editorial page, the Cato Institute’s Dan Mitchell, and pundit Star Parker to name a few.  Each of these middling-to-negative reviews of the myRA come down to two things: the myRA is a not a carve-out Social Security personal account; the myRA is created by government and therefore is suspect.

First, to acknowledge the obvious: the myRA is really thin gruel for the working poor compared to, say, large Social Security personal accounts.  MyRA dollars have to come from workers’ own after-tax earnings, whereas Social Security personal accounts could be funded using payroll tax dollars these workers are already losing.  And it’s fair to be skeptical (even highly skeptical) of government-originated solutions to public policy problems.

But both those concerns are off-base with regard to the myRA.

First, Social Security personal accounts a’int happening.  It not only takes a Republican House to pass the idea and a Republican president to sign it into law, it also takes a Republican Senate with at least 60 pro-account votes (unless Harry Reid makes this easier by triggering the nuclear option on legislative filibusters, too).  Even if you’re bullish on GOP White House prospects in 2016, no one but no one thinks the GOP will sniff 60 votes in the Senate for at least a decade, if ever.  Back in 2005, President Bush couldn’t even get a GOP House to vote on personal accounts, much less pass them.

Second, the myRA doesn’t have the same mandate/paternalism problems that most of these think tank-bred schemes tend toward.

  • Nothing new is really being created: these are basically Roth IRAs with a new name.  That means after-tax money goes in, and the money grows tax-free for retirement.  Contributions could be withdrawn under the usual Roth IRA rules
  • It’s only available in workplaces that don’t have a 401(k) or other retirement plan
  • Employers only participate if they want to
  • Employees of these willing employers only participate if they want to
  • Financial institutions only participate if they want to
  • The bulk of the cost will be picked up by the willingly-participating financial institutions
  • Once a participant’s myRA reaches $15,000, they are required to transfer it over to a big boy Roth IRA in the real world

The only role for government (besides being the host of the myRA party) is to provide the financial instruments–Treasury debt, something the government makes available in all sorts of innovative ways from time to time (think war bonds and what your grandma put in your sock drawer).  The bonds in question will be like the “G Fund” option available today in the federal employee Thrift Savings Program.  Nothing particularly statist there.

From a bigger picture perspective, this myRA effort represents the best shot we have of not only getting the working poor into the retirement savings game, but also getting at least a few of them to join what President George W. Bush called the “investor class.”

According to the Employee Benefits Research Institute, fully one-third of workers at large and medium-sized firms don’t participate in workplace retirement plans.  It’s even worse at very small firms, where two-thirds of employees don’t save anything at work for retirement.  Social Security personal accounts are not on the way for these people, and there’s a very good chance they will spend much or all of their working careers saving nothing for retirement.

The myRA is a start, a baby step in the direction of responsible financial planning.  Workers can start an account for as little as $25, and can contribute as little as $5 per pay period.  There would be no fees, as the firms administering these accounts would use them as a loss leader to attract potentially profitable customers of tomorrow.  Once an account hits $15,000 and the owner has to leave the myRA nest, the odds are very good that this policy will have created another mutual fund or ETF owner.

Conservatives would do well to acknowledge that even a broken clock tells the right time twice a day.

Source: Forbes Business


3 weeks ago

Khazanah throws MAS RM6b lifeline

Aug 29 2014 5:01pm CDT | Source: Business Times Singapore

August 30, 2014 1:15 AMKHAZANAH Nasional will inject RM6 billion (SS$2.4 billion) over three years to resuscitate loss-making Malaysia Airlines (MAS) under a recovery plan that includes even an Act of Parliament. Other key moves are migrating its operations, assets and liabilities to a new company (NewCo) and slashing the workforce of 20,00 ...
Source: Business Times Singapore   Full article at: Business Times Singapore


3 weeks ago

MAS posts loss of RM307m for Q2

Aug 28 2014 5:00pm CDT | Source: Business Times Singapore

August 29, 2014 1:13 AMMALAYSIA Airlines (MAS) registered a loss of RM307 million (S$122 million) for the second quarter to end-June, but warned of worse to come in the second half when the "full financial impact of the double trag ...
Source: Business Times Singapore   Full article at: Business Times Singapore


Don't miss ...


<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.


blog comments powered by Disqus

Latest stories

Israel approves rebuilding plan for communities near Gaza
Jerusalem, Sep 21 (IANS) The Israeli cabinet Sunday approved a $360 million development initiative for the communities in the country's south, near the Gaza border, who were hit hard in the recent bloody conflict between Israel and the Hamas.
High-level Indian ministerial visits to London next month
London, Sep 21 (IANS/RAY) India's Finance and Defence Minister Arun Jaitley is scheduled to visit London Oct 13-14 for an interface with financial institutions to persuade them to invest in India.
Expressway to link Vietnam and China opens
Hanoi, Sep 21 (IANS) Vietnam's longest expressway connecting Noi Bai in capital Hanoi and the north-western Lao Cai province, bordering China, with a total length of 245 km, officially opened to traffic Sunday.
G20 deal on sharing bank data to help India battle black money
Cairns (Australia) Sep 21 (IANS) In a major step that will aid India track and recover black money stashed abroad, G20 finance ministers Sunday agreed on allowing automatic sharing of all bank information with tax authorities at the end of each year, starting 2017.

Latest from the Network

Yemeni government, Houthi rebels sign truce deal
Sana'a, Sep 22 (IANS) The Yemeni government and Houthi rebels signed a ceasefire deal late Sunday after days of deadly clashes in the capital Sanaa, an official said. The two sides agreed to cease fire in Sanaa...
Read more on Politics Balla
US bombs IS positions in Iraq's Sinjar region
Baghdad, Sep 22 (IANS/EFE) US combat aircraft Sunday bombarded positions of the Islamic State (IS) Sunni extremist group in the Sinjar region of Iraq's Nineveh province, Kurdish sources said. A Kurdish leader of the...
Read more on Politics Balla
'Golden Boy' director slams Sharon Stone
Los Angeles, Sep 22 (IANS) Italian director Pupi Avati, who was happy to team up with Sharon Stone in his low-budget movie "Golden Boy", says the actress was a demanding diva on the set and gave him a hard time. Avati...
Read more on Celebrity Balla
UN chief welcomes unity government deal in Afghanistan
United Nations, Sep 22 (IANS) UN Secretary-General Ban Ki-moon Sunday welcomed the conclusion of the presidential polls in Afghanistan as well as an agreement on formation of a national unity government in the country...
Read more on Politics Balla
Miley flaunts chicken and waffles print bikini
Los Angeles, Sep 22 (IANS) It seems Miley Cyrus' latest style is inspired by food. The singer, who took a break from her Bangerz Tour, was spotted lounging in a chicken and waffles print bikini. The 21-year-old, who...
Read more on Celebrity Balla
Israel steps up cyber defence with new body
Jerusalem, Sep 22 (IANS) Israeli Prime Minister Benjamin Netanyahu Sunday announced the establishment of a new organisation that would spearhead the country's cyber defence operations. The decision was made pursuant...
Read more on Politics Balla
Wife of British hostage asks IS to free him
London, Sep 22 (IANS/EFE) The wife of a British taxi driver kidnapped by the Islamic State (IS) Sunni extremist group last December Sunday asked the jihadis to show compassion and set him free. Barbara, the wife of...
Read more on Politics Balla
Clashes with IS continues across Iraq
Baghdad, Sep 22 (IANS) Fierce clashes continued between the Iraqi security forces and the Islamic State (IS) Sunni extremist group across the crisis-torn country Sunday, security sources said. In western Anbar...
Read more on Politics Balla
Tessa James diagnosed with cancer
Tessa James has been diagnosed with cancer. The former 'Home and Away' star, 23, is battling Hodgkin's lymphoma and has returned to the Gold Coast in Australia to be with her husband Nate Myles. A statement released...
Read more on Celebrity Balla
Five Boko Haram terrorists surrender in Nigeria
Abuja, Sep 22 (IANS) Authorities in Nigeria Sunday confirmed that some Boko Haram terrorists have begun to surrender voluntarily following relentless onslaught by troops. At least five terrorists surrendered Saturday...
Read more on Politics Balla