GOP, don’t stop states from giving families a secure retirement

The political news of the past several weeks has been dominated by headlines that would be story-of-the-year material in normal times: courts blocking President Trump’s unconstitutional and discriminatory travel ban; the collapse of TrumpCare; and Senate Republicans blowing up two centuries of precedent to ram through a justice committed to railroading the American worker at every opportunity, to name just a few.

So it would be easy to lose sight of the quiet Republican ploy to make it dramatically harder for working families to save for retirement.

{mosads}Tens of millions of workers across the country — between one-third and one-half of all private-sector employees — don’t have access to a retirement plan at work.  Combined with the long-term shift away from traditional pension plans, the fact that workers without access to a retirement plan on the job are less than one-tenth as likely to save means millions of Americans will retire without the savings they need to pay their bills.

For older Americans, inadequate retirement savings means sacrificing on food, housing, healthcare, and other necessities.  If left unchecked, it will swamp other public programs with increased need: Workers who retire into poverty are much more likely to rely on Medicaid and other state and federal programs that support economic security for older Americans.  There are emotional costs as well — majorities of older Americans now report that they’re more afraid of running out of savings than they are of dying.  

But Congress has refused for years to act on commonsense proposals to make saving for retirement easier.  Fortunately, states are stepping up. Seven states are now implementing new ways for people without a workplace plan to save for retirement, and some two dozen more are considering similar moves.

Two years ago, President Obama encouraged these efforts, directing the Labor Department to propose rules for states working to create these retirement savings programs.  We finalized those rules last summer, clearing the path for states to help working families save for the future.

Now, Republicans in Congress are on the verge of undermining it all.  Yesterday Trump signed a measure Congress passed to block large cities from creating automatic savings accounts, and the Senate is about to decide whether to prohibit states from doing the same.

But their opposition doesn’t make any sense. This isn’t a partisan issue: a group of state treasurers from both red and blue states like Mississippi, Oregon, Maine and Utah — has urged Congress to preserve state flexibility.  

This issue also has tremendous popular support.  An AARP survey last month showed that an overwhelming 84 percent of workers (including 82 percent of self-identified conservatives) support state-level efforts to help workers save their own money for retirement.  And it’s good for taxpayers.  Studies have shown that by reducing the risk that older workers will need to rely on social support programs, state retirement initiatives could save billions of dollars in taxpayer funds every year.  

So why are Republicans so eager to block these state efforts?

Wall Street lobbyists and the Chamber of Commerce complained that state efforts would crowd “out the private market” and give states an “unfair advantage” over private providers.  Parroting these objections, the Trump White House now says state retirement initiatives should not be allowed because they “give a competitive advantage to these public plans.”  

This argument is laughable. By expanding access to retirement savings and relying on private investment managers to do so, state efforts will benefit the private sector.  These new programs would allow citizens to use their market power to get a better deal, and there’s nothing unfair about that kind of competition.  States are leveling the playing field for workers who want to save but have been either ignored by Wall Street or overcharged.

All Senate Republicans have to do to allow these state efforts to proceed is simply stay out of the way. Sadly, it’s far more likely that the GOP will continue to put Wall Street’s wish list over the financial well-being of their own constituents.  

Tom Perez is Chair of the Democratic National Committee, and formerly served as the Secretary of Labor in the Obama Administration. Matthew Colangelo is a Senior Fellow at Georgetown’s McCourt School of Public Policy. He formerly served as Deputy Director of the National Economic Council, and Chief of Staff at the United States Department of Labor.  Follow them @TomPerez and @M_B_Colangelo.

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