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Clinton's New And Improved Savings Idea

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The Tampa Tribune

Published: October 11, 2007

Hearing the cries of protest about her suggestion that every newborn get $5,000, Sen. Hillary Clinton dropped the baby-bond idea and now advocates a more sensible reform: more retirement savings for all adults.

The best feature of her 'American Retirement Account' is its similarity to the popular 401(k) plans sponsored by some employers. Existing law gives a powerful tax shelter to workers fortunate enough to receive a 401(k).

Employers match a portion of each employee's savings. Under Clinton's plan, the government would provide a match, up to $1,000 for a couple earning $60,000 or less. Those earning more would qualify for a smaller tax credit. She would pay for it through the estate tax.

You don't have to agree with her taxing scheme or level of asset redistribution to appreciate the benefits of a universal savings account, privately managed and growing along with the economy. Unlike her ill-conceived pay-each-baby plan, American Retirement Accounts would increase real savings and improve retirement security.

In announcing her plan, Clinton mentioned 'the new realities of aging.' One of those realities is the looming retirement of the baby boom generation and the fact that, without reform, Social Security eventually will owe retirees more each month than it collects in payroll taxes.

There should be bipartisan agreement about the urgency of giving all workers incentives to save more of their own money.

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