February 26, 2024 • 46 mins
‘Retirement provocateur’ Kathleen Kennedy Townsend played an instrumental role in the debate over retirement issues, resulting in significant policy ideas. A founder of the Georgetown University Center for Retirement Initiatives, the 40-year political veteran and former Maryland Lieutenant Governor joins American Retirement Association CEO Brian Graff for a provocative discussion about making it easy to save, state auto IRAs, national retirement plan proposals, and why people just don’t want to talk about retirement.
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Episode Transcript
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Speaker 1 (00:00):
Most times when people talk about retirement,
they're being told you have notsaved enough.
You should have been saving forthe last 12 years.
You have not done your duty,which means everybody feels
guilty and shame and they don'twant to talk about it.
Speaker 2 (00:15):
DC Pension Geeks brings you exclusive
conversations with topretirement policymakers and
regulators in and aroundWashington DC, hosted by Brian
Graff, an attorney, accountant,former Capitol Hill staffer and
CEO of the American RetirementAssociation.
If you're looking for aninsider's view of all the twists
and turns that Washington takeson the road to ensuring a
(00:36):
secure retirement for millionsof Americans, you're in the
right place.
Welcome to DC Pension Geeks.
Speaker 3 (00:42):
Hello everybody, welcome back to another episode
of DC Pension Geeks.
We are really fortunate andhonored today to have with me a
true retirement provocateur,kathleen Kennedy Townsend, who
has played many roles in theretirement policy debate and has
(01:06):
been instrumental informulating a lot of significant
retirement policy ideas.
Kathleen, maybe you know Idon't think people in the real
world, aka outside the wonderfulBeltway here, really know you
know about your role inretirement policy, so maybe a
(01:30):
little bit of background.
How did you end up beinginterested in this topic?
And you know how you gotinvolved and some of your you
know early successes.
Speaker 1 (01:39):
Oh, you're so nice to ask, brian.
Basically, I got involved.
I was working for an investmentmanagement firm and I was in
California and I was at aconference.
I listened to Ranny Weingartenspeak and she talked about how
half Americans didn't havereally enough save for
retirement, that didn't have asavings, and that half of all
(02:01):
businesses don't have a retire.
And the reason they do thatthey don't have enough savings
is because about half of allAmerican businesses don't offer
a retirement plan and we're not.
I don't blame the businesses,because it's difficult to set up
a plan and it's expensive toset up a plan and they don't
have.
If you're going to be ahairdresser, what you know is
(02:22):
hair, but you don't really knowhow to set up a retirement plan.
So I thought, wow, I've been inpolitics for 40 years.
I was in politics for 40 yearsI've been the lieutenant
governor, I'd run for Congressand I didn't know anything about
the challenges of retirement.
I knew about social security,but I didn't know about the
(02:43):
savings issue and I thoughtsomething should be done.
I had heard that California wastrying to pass a piece of
legislation, but I had seen thatwhen I was in state government
very few people knew aboutfinances and when I worked in
the financial sector I learnedthat very few people in the
financial sector knew aboutgovernment and I thought, wow,
(03:10):
I've worked in both of thoseareas.
I think that I should dosomething and I started a center
at Georgetown University tohelp states pass laws that would
require businesses that don'toffer a retirement plan to put
5% of their employees' salaryinto a state-run IRA, unless the
(03:35):
employee objects.
And I was then asked to do byMartin O'Malley, who was then
governor of Maryland, to chair atask force in Maryland to see
if we could pass such a law inMaryland, and we did, and what
we've seen is now about 19states.
When we started there were nostates.
Now there are about 19 stateswho have passed some sort of
(03:57):
form of that kind of legislationand in some states it's been
extremely successful.
As you know, in Oregon, forinstance, 70% of the people
don't do sign up, but they putthat 5% in.
In fact it's gone up now to 6%and the average median salary of
people do that it's about$39,000 a year.
(04:19):
So this is not a group of verywealthy Americans, but there's a
group of Americans who aresaying I want to save, make it
easy for me to save, and whenyou make it easy to save, people
save.
And that, I think, is thebottom line.
What we have to do is make iteasy to do things.
(04:45):
I grew up and I went to a schoolon Barghartha Boulevard called
Our Lady of Victory.
It's a Catholic school.
It was taught by nuns many,many years ago, in the 1950s,
which is when I went toelementary school and they
taught us what we should do isto try to make things easy to be
good.
Avoid the temptations to sinand I think that holds true with
(05:11):
so many things Just make thingseasy to be good.
So make it easy to save andpeople will save, and that has
really been my way of thinking,I think.
A few years ago, as you know,brian, this whole idea of
nudging came out, which is justto say people want to do the
(05:36):
right thing, but they're busy,they have children to take care
of, they have parents to takecare of, they have jobs to get
to, they have buses to catch andtherefore it's hard to do
everything to make their life,as they grow old, easy.
But if you just make it easy tosave, they will.
Speaker 3 (05:57):
The data simplicity.
The point you're making is soincredibly important.
The data around the efficacy ofworkplace savings programs and
automatic enrollment throughpayroll deduction versus getting
people to do it on their own isso powerful.
(06:19):
I mean people for me cite thestatistic moderate income
workers are 15 times more likelyto save when they're covered by
a workplace plan with automaticenrollment than on their own.
I mean, there's no doubt aboutit.
And the state programs that havebeen in effect for the early
ones you mentioned Oregon,california, obviously Colorado
(06:44):
have shown some real earlysuccess and huge meaningful
increases in coverage.
Some of the states it doesn'tseem to be they've been acting
something right, kathleen, butit doesn't seem to be getting
quite the movement that we'veseen in some of the other states
(07:06):
.
I almost feel like because thestate's not doing enough to
communicate to businesses thatthere's a requirement of some
kind and what the valueproposition is.
And do you think?
And, by the way, the centerthat you help form is called the
Georgetown Center forRetirement Research.
(07:28):
People should know what thename is.
It's done tremendous work,particularly in this area.
Speaker 1 (07:37):
I just want to say I formed it with Ken Melman, who
was head of the Republican Party.
Speaker 3 (07:42):
So it was a bipartisan.
I want to, and people may notknow the background, but
Kathleen was also LieutenantGovernor of Maryland at one
point, so obviously, obviouslythrough her family, very I'm a
Democrat really very steeped inpolitics.
(08:04):
And the point is that retirementis one of those issues that can
bring both both Republicans andhas historically so but but let
me ask you this question, givenyour role in the Georgetown
Center, I do don't think we'respending enough time focusing on
the helping the states who dothe right thing have a program,
(08:29):
messaging and communicating andand and effectuating the program
, and maybe we need to spendsome time on the agendas that we
have with the state treasureson that point, and what's your
response to that?
Speaker 1 (08:44):
I think I think you raise an excellent point,
because the Georgetown Center isoften seen as a policy and a
lot of policy is important, but,as you know, a lot of it is is
trying to figure out how to howto do PR.
(09:06):
Yeah, implementation.
And PR just plays an enormousrole and it did in Oregon and
California and they spent moneyon getting the message out.
If you don't get the messageout, all all the good policy in
the world goes nowhere andsometimes doing it.
Speaker 3 (09:30):
They don't show up and they don't know about it.
Speaker 1 (09:32):
No, they don't.
Thank you very much.
That's the truth, and so whatyou really need to do is to have
a really good PR campaign,because we want we want these.
Speaker 3 (09:44):
You know the programs going in New York and New
Jersey.
Yes, marilyn, virginia and thereal challenges with these
programs.
Speaker 1 (09:53):
I mean having I, after we passed it in Maryland,
I sat on the board for a numberof years before I joined the
Department of Labor, and it'sit's hard to do PR for these
programs in a sense because theyall the small businesses that
this affects, they're not all inthe same place and so you don't
(10:15):
.
It's expensive having run foroffice to do good PR, and yet
are they in Western Maryland,are they in Baltimore City, and
what kind of messages reach?
Which kind of group Maybe then?
Speaker 3 (10:30):
is.
I mean, I granted it's not easy, but I do think that's what you
have to do.
Some attention needs to be paidto it.
Speaker 1 (10:36):
You're exactly right.
So you have to work with thechambers of commerce, and some
of them are very supportive insome states.
You have to work with theHispanic groups, which is what
they did very, very well inCalifornia, and you work with.
For some reason, I have aspecial affection for
(10:58):
hairdressers Okay.
Speaker 3 (11:02):
Well, they have a chamber to, I'm sure.
Speaker 1 (11:04):
Yes, and and also because they talked to lots of
people.
So, if so, you've talked tothem and they talked to all
their customers.
Everybody goes to a hairdresser, anyway, I think, I think the
cheer point about getting themessage out is absolutely
critical and it will make justmake them much more successful.
And, and this and the studiesthat have been done, as you know
(11:28):
, by the Pew trust, has foundthat the small, the small
businesses, like it becausetheir customers and in fact it
gives them a way to compete withlarge businesses, because they
can see we are giving you abenefit, otherwise they couldn't
give them a return.
Speaker 3 (11:49):
We're also finding, you know there was a lot of you
know and everyone if you don'tknow a array was, you know, very
early on, a supporter of thisidea.
Even in California, in the veryearly stages of this kind of
where Kathleen and I first ranto each other, and most of the
(12:11):
objections came from thefinancial services industry
because they didn't want thestates competing with them.
Our view was, you know, biggerpie, that everyone wins.
And you know it turns out wewere right.
The data is absolutely clearthat you know, not only seeing
increases in coverage, we'realso seeing huge increases in
(12:33):
private plan formation to thebenefit of the financial
services industry.
Speaker 1 (12:40):
Can I just tell you the obvious?
In Maryland I say you guys,this is going to help you.
I know, Kathleen, but myclients don't know it, so I have
to do what my clients want.
Speaker 3 (12:52):
You were right, we're wrong, but we got to make sure
that you know, businesses knowabout it, and also so-.
Speaker 1 (13:01):
And financial businesses have been helped,
Both because the state has giventhem more money and also
because small business somesmall businesses say oh, I have
a choice of going with the state, IRA or I can choose my, I can
choose a 401k plan and I'drather with my own 401k plan,
(13:22):
which has increased their numberof businesses.
So it's been great on bothsides.
Speaker 3 (13:29):
And we're actually working with Pew on additional
states.
Right now we're working withthem in Massachusetts, working
with them in Washington stateMichigan is another state so
hoping to, you know, expand thepie even further, which is
exciting.
So, question, you know, we seedata that shows these state
(13:51):
programs really work.
Coverage is happening, assetsare growing for lower income
individuals, they'reparticipating, opt-out rates are
very reasonable.
So, while of a sudden are wegetting these proposals to blow
the whole system up and, youknow, create a federally run
401k plan, like the economicinnovation group wants to do,
(14:13):
what, what I mean?
Why?
Why is this?
This tendency among academicsto throw everything out all the
time?
Speaker 1 (14:24):
Well, remember, brian , we did want a national program
, you and I you and I did.
Speaker 3 (14:32):
Well, and to that point there is legislation by,
you know, congressman RichieNeal, who's the senior Democrat
in the Ways and Means Committee,could very well be the chairman
of the Ways and Means Committeeafter the election.
And this is his, you know, top.
One of his top three proposalsis a national requirement to
have a plan if you have, let'ssay, 10 employees.
(14:55):
But even his proposal doesn'tthrow the whole private sector
system out, but just basicallypiggybacks on the state programs
as well as the private sector.
Speaker 1 (15:06):
Well, I think so.
I think I mean my, let's saythat there are different
programs.
First of all, I think it wouldbe good to have a national
program, in the sense that mostbusinesses don't want to have
different rules all the time.
Speaker 3 (15:26):
Yeah, yeah sure.
Speaker 1 (15:28):
And if you ask me what, what I would hope would
happen with the state programs,I would hope that they would
join together like they do withthe like 529s like the 529s or
the ABLE program that the statescould join together.
You'd have 13 states join onething so that you would have
(15:49):
more scale, sure.
So I think that would be a goodidea and I think Colorado is
being trying to do that, leadingthe charge on that.
It's leading the charge on thatand I was in Delaware last fall
and they were also interested infinding a partner, so I think
that's a very good sign.
(16:10):
I think the EIG is a differentdeal and it is really for more
low, from my understanding, isreally for low income.
So remember I said that 70%stay in but 30% opt out and
(16:30):
those that 30% are, I think, themost low income group.
Speaker 3 (16:38):
Well, they're just, you know, their proposal
specifically, just to giveeveryone some background here.
Speaker 1 (16:44):
Yeah, why don't you describe?
Speaker 3 (16:45):
it.
They would create a federallyrun retirement program that
would be available to bothemployers and concent meal,
thate, even for those who don'tcurrently have a plan or want to
swap out their plans, and gigworkers, which has some value,
and we can talk about thatseparately.
Under their proposal, thefederal government would provide
(17:11):
a 5% of pay contribution toparticipating employees that, if
they're single, make up to$75,000 a year, which is a
pretty large percentage of thepopulation, and married, up to
$150,000 a year, which is apretty large percentage of the
(17:33):
population.
Our concern and, by the way,this matching subsidy only
applies if you participate inthe EIG federally run program
Our concern is small businesshairdresser, if the government's
going to pay for a match, whyshould I pay for it?
(17:54):
By the way, it would completelyundermine the state programs.
Why would I participate in thestate program if the federal
government's going to provide amatch that the state's not
giving any match at all?
There is something called theSabres match, which is going
into law in 2027.
You were very involved in theSabres match.
It's now finally refundableboth, something you and I worked
(18:15):
on for many years.
What we don't understand is whydon't they just piggybacking on
the Sabres match, which wouldcreate no advantage to their
program versus everyone else'sprogram, including the states.
Let's just don't createartificial incentives that
(18:38):
undermine existing programs.
Why don't we just again expandthe pie and allow for everyone
to compete so that there's asmuch universal coverage as
possible?
But we're pretty convinced thatwould completely undermine
existing, both private sectorand state-based programs if it
weren't active.
Speaker 1 (19:00):
Thank you.
What I like about it is mymemory about this.
May be wrong, Brian, but Idon't know if the Sabres match
goes to state programs.
Speaker 3 (19:10):
I know.
Speaker 1 (19:11):
Brian it does now, because what I think is my goal
is to get that 30% to alsoparticipate.
Speaker 3 (19:28):
Well, the EEG would not help with that at all.
It's just an auto enrollmentprogram, Just like the states do
.
They're just having the federalgovernment provide a match that
the states can't afford.
Speaker 1 (19:39):
So let's just say that I think what the best idea
that I can come up with is tohave a way that everybody
participates in a savingsprogram and that we get the 30%
(20:00):
in and that they get a credit,and that is really, I think, the
most important goal.
And I don't know how to do that.
And there are two questionsthat I think are, I think,
coverage, well, the auto stuff.
So what it could happen thisway, brian, right One, the EEG
(20:27):
proposal may get the NEO billpassed.
Speaker 3 (20:32):
That is possible.
That would be a very goodresult.
Speaker 1 (20:36):
So you know what I mean, yeah.
Speaker 3 (20:39):
If it leverages to get something like the NEO bill.
Speaker 1 (20:42):
If A, it might get the NEO bill passed, or B, which
or B, it might get some of thestates more states on board To
do it yeah.
Because we really have, as youpointed out, we have 19,.
Or maybe I pointed out we have19 states but, as you well
(21:02):
pointed out, not all of them areperforming as well as they
should.
So I am not.
So I just think what we need todo is get people more
interested in talking about this, because my experience with
retirement is that it puts theword retirement puts people in a
(21:26):
fetal position, as I was saying.
They're afraid of it, they'rescared of it, they don't think
there are any answers, and sothe EEG bill may not be the
right answer for a number ofreasons, but what it does do, it
(21:46):
does.
Speaker 3 (21:47):
It gets people talking about the issue of.
Speaker 1 (21:50):
It gets people talking about the issue and it
seems to give a lot of people alot of money, so it makes them
less afraid.
Speaker 3 (21:59):
So they do hand out.
Apparently, they do hand out alot of checks.
Speaker 1 (22:03):
So I think it has that value.
That just if you get my drift.
Speaker 3 (22:07):
I get your drift.
Speaker 1 (22:08):
That's all I'm saying , and so I think that's a
reasonably fair point.
Speaker 3 (22:12):
You're putting a silver line, you're putting some
lipstick on a pig, but it'sgood lipstick, so I understand
the point.
Speaker 1 (22:20):
That's what I think is helpful, because most people,
most times when people talkabout retirement, they're being
told you have not saved enough.
You should have been saving forthe last 12 years.
You have not done your duty,which means everybody feels
guilty and shame and they don'twant to talk about it.
Speaker 3 (22:39):
Why is it that you know?
So that's my view of the EEG nono, and your point is a good
one in the sense that you know,as we're.
You know, the people listeningto this podcast are all in the
retirement world, and so theythink about this stuff all the
time.
You and I think about thisstuff all the time, but the
truth is, the vast majority ofmembers of Congress, the vast
(23:03):
majority of White Houseadministrations, presidents,
don't they?
Speaker 1 (23:09):
don't talk about it at all.
They don't.
That's the point why.
Speaker 3 (23:13):
Why don't you know?
Even putting the coverage issueaside for a second, you still
have 80 plus million people inthis country who've got 401k or,
you know, for 3B for the sevenaccounts.
Why don't why?
Why is it more?
Why is it not seen as morepolitically important?
(23:37):
Whether it be thisadministration, prior
administrations that you've hadaffiliations with, I'll tell you
what am?
I missing here.
Speaker 1 (23:46):
Um, this is my experience, because there's not
a constituency and the reasonthere's not a con.
This, ladies, and people yes,but so I compare it to there's
not an organized constituency.
(24:07):
There's not.
It's like mental.
It's like mental health.
30 years ago, Did we havemental health problems?
30 years ago, sure yes, but didanybody want to talk about it?
No.
Did we have wife?
Did we have abuse of women 35years ago?
Yes, but did anybody want totalk about it?
(24:28):
No, it it people?
Why?
Because people thought it wasembarrassing.
It was their fault.
Speaker 3 (24:40):
It was it's too personal a topic.
Retirement savings.
Speaker 1 (24:43):
Yes, because because if you look, I'm going to, I'm
being, if 20 year olds can talkabout it, because they don't
feel guilty.
But if you look at theadvertisements on the on TV, all
the advertisements the yachtsno, not the yachts.
(25:05):
The advertisements say we willhelp you reach your goals.
Right, thank you.
They don't say it's thesystem's fault for not making it
easy for you to retire.
So when I talked to themilitary spouses about the
(25:27):
difficulty of saving, I saidwell, it's difficult to talk
about retirement.
She said not for us, because wethink it's the system's fault.
So because we think it's thesystem's fault, we blame the
system.
It's very easy for us to talkabout it, but most of Americans
think it's their fault andbecause they think it's their
(25:50):
fault, they can't organize.
So until we change the language.
So for and this is the analysisthat I gave, I tried to give,
it was not successful, but I'llgive it to you, brian I said in
the 1960s we had many people diefrom car accidents and we said
(26:19):
we're going to change the wayRosa built and cars are built
and we're going to change thepoint and we're going to use
we're going to test people foralcohol.
When I was growing up I didn'tknow the word point 08, did you?
No, didn't exist.
Everybody knows what point 08is now Everybody.
(26:42):
My children made me use theseat belts.
I never used a seat belt.
It was my kids because theroads didn't have all those side
parts and all the lights thatchanged.
Speaker 3 (26:55):
I drove across the country in a in a drove.
I rode across the country in acountry square wagon all the way
in the back in those jump seatsthere were no seat belts and
half the time I had I wasbouncing up and down, my head
was hitting the ceiling, whichexplains the plot actually.
Speaker 1 (27:09):
Thank you.
So because of all, exactlybecause the system changed, the
number of deaths per 100,000were cut in half.
We changed how we did things,and you can say the same thing
about a lot of other systems.
And the coverage of four ofretirement coverage has not
(27:33):
changed, but it's only changedby 1% in the last 30 years.
Speaker 3 (27:38):
Well, it's only just now to change it because of what
the state's been doing.
Speaker 1 (27:41):
Yeah, but that's the point.
And so, but, but, but, but whyis it?
I'll give you a, give me a butt.
Speaker 3 (27:47):
But that's the I know I understand what you're saying
.
The question is why?
Why isn't it seen as apolitically significant topic
with?
You know, particularly I meanit's been frustrating for me as
I've tried to convince Democratsto try to make it an issue.
Surprisingly, trump said talkedabout 401k is probably more
(28:12):
than any other president hasever done.
You know not, you know betteror worse, and but we have not
been able to try with Obama, trywith Clinton.
Speaker 1 (28:24):
It's because I gave you the answer.
It's because it think of mentalhealth.
Speaker 3 (28:33):
Think of.
They think politically.
It's a topic that theirconstituencies won't want to
hear about.
Speaker 1 (28:38):
It's go to a dinner party without.
That is not part of yourconstituent, part of your gang,
and try to talk about retirement.
Speaker 3 (28:47):
Yeah.
Speaker 1 (28:48):
And see how many people want to listen to you.
All right, so I'm sorry, that'sand no, no, no, no, no and
that's.
I mean I had when I was theDepartment of Labor.
I had 12 hearings around theStates to talk about retirement
because I wanted to increase thenumber of groups that were
(29:12):
interested in retirement.
And the best, the best hearingwe had, I would say, in terms of
increasing the numbers, was inWashington state.
So I'm really glad the treasureWashington state was terrific
and interesting enough.
In Mississippi we did it at theCenter for Justice in
(29:37):
Mississippi and they producedabout 150 people, but most the
places were the same old gang.
Speaker 3 (29:47):
It was like pulling teeth.
Speaker 1 (29:49):
Well, it wasn't pulling teeth, it was just
saying hey, nice to see youagain.
Speaker 3 (29:54):
Oh okay, Same old gang Got it.
Speaker 1 (29:57):
It's the same old gang, because most people are
afraid of the topic and blamethemselves and don't.
And that's why if you go tofunders, I mean, I don't know,
is this what you want to talkabout on your podcast?
Sure, you can talk aboutanything.
If you go to funders, you go tomost foundations, except for
(30:22):
Atlantic, which went out ofbusiness, as you know, which did
fund retirement.
All funders, they fundchildcare, that's important.
Speaker 3 (30:34):
You're talking about the public policy.
Speaker 1 (30:38):
Yes, why.
Speaker 3 (30:40):
More liberal leaning think tanks.
It's just not an issue for them.
Speaker 1 (30:43):
Or anything.
The only think tanks thatfunded are financial think tanks
.
Right, because all the otherthink tanks are, like themselves
, embarrassed about how littlethey've saved.
The people who run those thinktanks, the people who sit behind
the desk and write the check.
Speaker 2 (31:00):
I went.
Speaker 1 (31:01):
I'm just telling you, I went to a six-year-old, so
anyway.
Speaker 3 (31:07):
So you've been following politics for a long
time.
Social security, you just youmay have seen these proposals to
get rid of the 401K and use themoney to pay for social
security.
You can imagine my reaction tothat.
But I think more importantly,what do you think it's going to
(31:30):
take to have an honest debateabout addressing what is less
than 10 years?
According to the SocialSecurity Trust's report, less
than 10 years, social Securitywill go into a deficit situation
and there will be mandatory 24%cut in benefits.
(31:50):
Now that's I'm assuming youagree that's a political
impossibility.
So, assuming that's a politicalimpossibility, what's it going
to take to have an adultconversation on how to fix this?
Speaker 1 (32:02):
Well, Brian, you and I are going to disagree with
that.
I did.
I did 10 years ago or fiveyears ago, whatever it was.
This is my Joe Biden moment.
I went to a Brookings Institutethat's where I can't remember
the year and, look, heard thelessons from Denmark that says
(32:26):
having a tax deduction doesn'tmake any difference because the
tax breaks go to 60% of the taxbreaks go to 20% of the
population, which is why weenacted the Savers Match to
compensate for that.
Yes, so I love the Savers Match.
Speaker 3 (32:43):
So my I'm going to you finish, but I'm going to
tell you why the Denmark studyis completely well I.
Speaker 1 (32:49):
The truth is, this is what I know being in that top
group.
You know being being fortunate.
Speaker 3 (32:57):
Oh sure, but what you're ignoring is the
hairdresser.
So the reason the hairdresserwants to tax us out.
Let me finish.
The reason the tax hairdresserwants to tax incentive, the
business owner wants that taxincentive, is because the
non-discrimination rules whichall of these studies ignore, in
addition to ignoring the SaversMatch, all of these studies
don't take into account the factthat we have these rules, top
(33:19):
heavy ADP tests, all of thesecomplicated rules.
But they serve a purpose and sowhen the business owner, who
can afford to save, gets the taxbenefit, they have to provide
those matching contributions onbehalf of their employees in
order for them to get the taxincentive.
Speaker 1 (33:37):
Okay, so this is the deal.
Speaker 3 (33:39):
That leverage that the Denmark study the state of
the religion.
Speaker 1 (33:43):
let me finish Right.
Speaker 3 (33:44):
Okay, the state of the Alishah Menel did is surely
looking at the the incidents ofmarginal tax rates, ignoring
completely the impact of thenon-discrimination rules and the
fact that it forces employersto provide actual benefits to
workers.
Speaker 1 (33:59):
Okay, I have a better idea.
Speaker 3 (34:01):
Okay, mandate savings .
That's the Neilville.
We love the Neilville.
Speaker 1 (34:14):
So that's it.
Mandate the savings, then youdon't have to have the tax
benefit.
Just mandate savings.
Speaker 3 (34:21):
No, I still think you need the tax benefit.
No, you don't.
No, you don't, you're going toagree.
Speaker 1 (34:25):
We are going to just, we're just going to disagree on
that, because I will tell you,I've done enrollment meetings of
employees.
Speaker 3 (34:32):
Yeah, all of my constituency.
What they do is they go intothe workplace and they talk to
employees about the value of taxdeferral.
I know, but if they're going to, let me finish the fact that as
they're going along, they'renot going to pay capital gains
taxes and all this other stuff,and they're you know economists
sit there in their ivory towerand they talk about nudging and
(34:55):
automatic enrollment, but noneof them have ever actually done
an enrollment meeting with realpeople and I can tell you for a
fact that the tax incentive is ahuge selling point in
convincing modern income peopleto save.
Speaker 1 (35:08):
I know, but guess what If you had a mandate you
wouldn't have.
Speaker 3 (35:12):
We're never going to mandate people to save without
opt out.
That's the 30% you're talking.
It's going to be 30%, it'sgoing to be 80% opting out.
They're not getting any benefitfrom saving.
Why in the world are they goingto do it?
Because because If you thinkyou can pass the mandate without
opting out, you're going tohave to do it.
Speaker 1 (35:30):
You know what the state plans didn't have.
They didn't get any tax benefitfrom savings.
Speaker 2 (35:38):
No, they didn't, no, they didn't, they're wrong.
Speaker 3 (35:40):
They're tax free.
Speaker 1 (35:41):
No, they did not get anything.
No, they didn't.
Speaker 3 (35:43):
Those are Roth accounts, Kathleen.
Speaker 1 (35:44):
They did not get anything.
Speaker 3 (35:45):
No wrong, wrong.
Those are Roth accounts andthey're going to get the savers
amount.
You're 100% wrong.
Speaker 1 (35:50):
Now they're getting it Now, but in the first.
Now because of but they'rewrong, but they're wrong.
They're wrong, they're tax freeaccounts.
They're tax free accounts, ryan, what?
When I talked to Josh Gottbaumabout this, he lobbied his tail
(36:10):
off To get the states to be ableto get a tax Right off For the
state plans.
But before, yeah, but the wrongthing, they did not get any.
Speaker 3 (36:27):
I swear to God they're Roth accounts.
They did not get.
In fact, you can call.
You can call your friends overat Georgetown and fact check me,
but I promise you they are.
Well they.
And having tax free savings, asopposed to these poor, lower
income people having to paycapital.
Get you you have I know youhave a brokerage account because
you're fortunate you have atent, this 1099.
(36:50):
That you get from that TDAmeritrade or swab account.
It's 80 pages long with all thelittle capital gains that you
have in all.
Could you worry?
I'm an average person gettingthat, having to deal with that.
The beauty of the Roth accountis it's all tax free and all of
those lower income people are.
(37:11):
When they eventually retire,they're going to be able to take
out of that account.
It's going to be all retirementincome with no taxes.
That's a real benefit thatthese People, so called expert
economists, are suggesting welose.
Speaker 1 (37:25):
I think it's more important.
I think it's more important Inthe greater scheme of things and
we can, we're going to have agreat time talking to each other
it's more important that theyhave socials, that people have
social security and something ontop of social security to
retire.
That is, that's the mostimportant thing.
Speaker 3 (37:48):
We don't need to raw Peter to pay Paul here.
Speaker 1 (37:53):
I think.
Speaker 3 (37:54):
I think it's a mistake to blow up a system that
is actually working.
Speaker 1 (37:58):
It is not working.
It is not working, it is notworking.
How do?
Speaker 3 (38:03):
you say that when you're involved with all of
these, you've said we talkedabout.
Speaker 1 (38:07):
Okay, we're just working, it's working.
Speaker 2 (38:09):
You know what it?
Speaker 1 (38:11):
it it, the fact that I'm raising my voice is not
helpful for either of us andit's really not helpful for
their listeners, because they'resaying, hmm, hmm, I don't think
this is.
Speaker 3 (38:26):
I have a feeling they're going to.
I think huh.
This is a lot what I guaranteeyou.
They're going to enjoy this alot, so you think so.
Speaker 1 (38:36):
How many, how many times do you get into
discussions?
Oh, that's what the fun of thisis.
Speaker 3 (38:41):
This is a true DC kind of conversation that you
and I have to form.
Speaker 1 (38:48):
Anyway, we disagree about it.
I do think that all the tax,the tax benefits, go all to the,
to the well off.
And I don't look at your face,you know what.
I'm really disappointed thatthis is a podcast because I
can't see your cute eyes gettingso large when you are looking
at me.
Speaker 3 (39:08):
Again, I think, I think a lot about it.
Speaker 1 (39:11):
I'm really sorry that your listeners are missing.
Speaker 3 (39:14):
You're very sick, I will say, kathleen, to respond
to that point.
All of those, all that academicwork so-called completely
ignores the impact of thenon-discrimination rules and
it's frustrating to me that theyjust blow that off and just
ignore the fact that we have allthese rules that require
(39:35):
employers, particularly smallbusiness owners, to provide
these matching contributions andother contributions for their
worker.
Anyway, let's, let's move offof that topic.
Speaker 1 (39:43):
Let's move off of that topic.
We're not getting anywhere withthat, but don't you think it's
funny that your friend AndyBiggs supports it?
Speaker 3 (39:50):
I have no idea what Andy was thinking on that one.
I, I, I, you know for a quoteother than the fact that he's
now a Social Security trustee,so maybe he has the best of
interest.
Insatine Social Security,insatine Social Security.
So there you go.
So there you go.
Speaker 1 (40:07):
I think we should just make sure that your
listeners know that Andy Biggs,who is is part of AEI, part of
the conservative think tank.
Speaker 3 (40:17):
He's theoretically seen as a conservative.
Speaker 1 (40:19):
Also supports this.
Speaker 3 (40:21):
So I just want to make it clear.
Speaker 1 (40:22):
They wrote a paper about it, and that and that the
EIG account that you alsodisagreed with is supported by
Donald Trump's head of economicadvisors.
So I just think it's importantto understand.
Speaker 3 (40:34):
I think it is that there are conservatives out
there that are just as criticalof the system as there are
liberal.
Speaker 1 (40:42):
Yes.
So I thought you were going tosay just.
I thought you were going to sayjust as crazy as liberals
because they both start with CR.
I didn't know how far it wasgoing to go.
Speaker 3 (40:55):
But you didn't ask my question about putting things
aside.
The 401k thing, yeah, how?
How do we have a?
How are we going to have ameaningful, honest debate about
social security?
Speaker 1 (41:04):
Well, as you, as you may or may not know, when my
father was a US Senator, hesuggested that we tax income
from stocks and bonds, and Ithink that's a good idea, and I
think we should I mean don't wedo that already.
Capital, Not for not for socialsecurity.
Speaker 3 (41:26):
You mean saying like another tax on top of it?
Yeah Well, he did that forMedicare, medicare surcharge,
right?
Speaker 1 (41:33):
No, but I'm saying for social security.
Speaker 3 (41:35):
So another, so they would be attacked.
Oh, you're talking abouttransaction tax.
Speaker 1 (41:39):
Yeah, no, not a transaction, just just you like.
Remember, some of us get ourincome not only from our work.
Speaker 3 (41:48):
Yeah, so you're saying that there should be.
Oh, you should pay socialsecurity tax on that ink.
Ah.
Speaker 1 (41:54):
Yes, we should rate, we should.
I mean, let me just tell you,tell you a story.
You may not think this isinteresting.
Speaker 3 (42:01):
So remember.
I think it's immenselyinteresting.
Speaker 1 (42:04):
Okay, so I remember I worked, I was lieutenant
governor, I ran for Congress,and then I started working for a
financial firm and then one dayI saw that my pay went up.
And I said what happened?
Why has my pay gone up thisweek?
And they said oh yours, youdon't have to pay social
(42:26):
security anymore.
And I said what are you kidding?
There's a cap.
I make more money and now Idon't have to pay social
security.
What kind of world do I live in?
I thought the more money youmake, the more you're supposed
to pay, and now I'm learning.
The point of this story is Iwas in politics for 35 or 40, 35
(42:50):
years and I didn't.
I didn't know that socialsecurity had a cap, and if I
didn't know, I think mostAmericans don't know that
there's a cap on your socialsecurity.
Speaker 3 (43:06):
Perhaps most politicians don't know, so why
don't?
Speaker 1 (43:09):
so why aren't the candidates and I created around
the investment firm.
I cannot believe.
I'm getting more money and I'mpaying less taxes.
I was in the total state ofshock?
What?
Speaker 3 (43:30):
so why do you think of that story, Brian?
I think it's kind of funny.
Speaker 2 (43:34):
So, why?
Speaker 3 (43:34):
why aren't you in the fact that we have this
impending?
You know, deficit situation ofthe trust fund.
Why is it that presidentialcandidates don't talk about this
issue at all?
Speaker 1 (43:50):
Oh, you know why, brian?
Because one.
There are two answers to it.
One, raise to access, or two,lower benefits.
And guess what?
Neither of those things arepopular.
That's going to really help.
Speaker 3 (44:05):
That's going to help solve the problem.
Speaker 1 (44:07):
How long have you been in Washington, Brian?
Speaker 3 (44:11):
Not as long as you, but that's true.
35 years.
Speaker 1 (44:16):
I've been doing this for 35 years.
Speaker 3 (44:17):
I've been here since I was a month old, Anyway it's
very At a curiosity bonusquestion Does your brother ever
talk about retirement policyissues?
Speaker 1 (44:35):
You mean the one that's running for president.
Speaker 3 (44:37):
One that's running for president.
Speaker 1 (44:38):
I don't think he has talked about it.
Speaker 3 (44:40):
He's talked about a lot of other stuff we all know,
but has he ever talked aboutthis?
Speaker 1 (44:44):
No, I don't think he has.
That's a good question.
I don't follow his campaignfrom day to day.
Speaker 3 (44:53):
I figured that.
Anyway, well, it's been greattalking to you, thank you, thank
you.
Retirement provocateur, and no,you've really helped.
You know we don't always agree,Kathleen, as you know, but we
always.
That's fine.
I think it's a good question,and usually it's the vigorous
(45:16):
debate that produces the youknow, the best compromises, and
I hope that's what the thing is,it's better to have a debate,
it's better to be interested,it's better to be talking about
something than to ignore it.
Speaker 1 (45:32):
So thank you, brian, and thank you for being there
and fighting and always and Ithink that's a good question you
know saying we've got to dosomething about this and
Hallelujah for your, for yourenergy and Thank you so Bravo.
(45:52):
Thanks again, bye, bye, yeah.
Most times when people talk about retirement,
they're being told you have notsaved enough.
You should have been saving forthe last 12 years.
You have not done your duty,which means everybody feels
guilty and shame and they don'twant to talk about it.
Speaker 2 (00:15):
DC Pension Geeks brings you exclusive
conversations with topretirement policymakers and
regulators in and aroundWashington DC, hosted by Brian
Graff, an attorney, accountant,former Capitol Hill staffer and
CEO of the American RetirementAssociation.
If you're looking for aninsider's view of all the twists
and turns that Washington takeson the road to ensuring a
(00:36):
secure retirement for millionsof Americans, you're in the
right place.
Welcome to DC Pension Geeks.
Speaker 3 (00:42):
Hello everybody, welcome back to another episode
of DC Pension Geeks.
We are really fortunate andhonored today to have with me a
true retirement provocateur,kathleen Kennedy Townsend, who
has played many roles in theretirement policy debate and has
(01:06):
been instrumental informulating a lot of significant
retirement policy ideas.
Kathleen, maybe you know Idon't think people in the real
world, aka outside the wonderfulBeltway here, really know you
know about your role inretirement policy, so maybe a
(01:30):
little bit of background.
How did you end up beinginterested in this topic?
And you know how you gotinvolved and some of your you
know early successes.
Speaker 1 (01:39):
Oh, you're so nice to ask, brian.
Basically, I got involved.
I was working for an investmentmanagement firm and I was in
California and I was at aconference.
I listened to Ranny Weingartenspeak and she talked about how
half Americans didn't havereally enough save for
retirement, that didn't have asavings, and that half of all
(02:01):
businesses don't have a retire.
And the reason they do thatthey don't have enough savings
is because about half of allAmerican businesses don't offer
a retirement plan and we're not.
I don't blame the businesses,because it's difficult to set up
a plan and it's expensive toset up a plan and they don't
have.
If you're going to be ahairdresser, what you know is
(02:22):
hair, but you don't really knowhow to set up a retirement plan.
So I thought, wow, I've been inpolitics for 40 years.
I was in politics for 40 yearsI've been the lieutenant
governor, I'd run for Congressand I didn't know anything about
the challenges of retirement.
I knew about social security,but I didn't know about the
(02:43):
savings issue and I thoughtsomething should be done.
I had heard that California wastrying to pass a piece of
legislation, but I had seen thatwhen I was in state government
very few people knew aboutfinances and when I worked in
the financial sector I learnedthat very few people in the
financial sector knew aboutgovernment and I thought, wow,
(03:10):
I've worked in both of thoseareas.
I think that I should dosomething and I started a center
at Georgetown University tohelp states pass laws that would
require businesses that don'toffer a retirement plan to put
5% of their employees' salaryinto a state-run IRA, unless the
(03:35):
employee objects.
And I was then asked to do byMartin O'Malley, who was then
governor of Maryland, to chair atask force in Maryland to see
if we could pass such a law inMaryland, and we did, and what
we've seen is now about 19states.
When we started there were nostates.
Now there are about 19 stateswho have passed some sort of
(03:57):
form of that kind of legislationand in some states it's been
extremely successful.
As you know, in Oregon, forinstance, 70% of the people
don't do sign up, but they putthat 5% in.
In fact it's gone up now to 6%and the average median salary of
people do that it's about$39,000 a year.
(04:19):
So this is not a group of verywealthy Americans, but there's a
group of Americans who aresaying I want to save, make it
easy for me to save, and whenyou make it easy to save, people
save.
And that, I think, is thebottom line.
What we have to do is make iteasy to do things.
(04:45):
I grew up and I went to a schoolon Barghartha Boulevard called
Our Lady of Victory.
It's a Catholic school.
It was taught by nuns many,many years ago, in the 1950s,
which is when I went toelementary school and they
taught us what we should do isto try to make things easy to be
good.
Avoid the temptations to sinand I think that holds true with
(05:11):
so many things Just make thingseasy to be good.
So make it easy to save andpeople will save, and that has
really been my way of thinking,I think.
A few years ago, as you know,brian, this whole idea of
nudging came out, which is justto say people want to do the
(05:36):
right thing, but they're busy,they have children to take care
of, they have parents to takecare of, they have jobs to get
to, they have buses to catch andtherefore it's hard to do
everything to make their life,as they grow old, easy.
But if you just make it easy tosave, they will.
Speaker 3 (05:57):
The data simplicity.
The point you're making is soincredibly important.
The data around the efficacy ofworkplace savings programs and
automatic enrollment throughpayroll deduction versus getting
people to do it on their own isso powerful.
(06:19):
I mean people for me cite thestatistic moderate income
workers are 15 times more likelyto save when they're covered by
a workplace plan with automaticenrollment than on their own.
I mean, there's no doubt aboutit.
And the state programs that havebeen in effect for the early
ones you mentioned Oregon,california, obviously Colorado
(06:44):
have shown some real earlysuccess and huge meaningful
increases in coverage.
Some of the states it doesn'tseem to be they've been acting
something right, kathleen, butit doesn't seem to be getting
quite the movement that we'veseen in some of the other states
(07:06):
.
I almost feel like because thestate's not doing enough to
communicate to businesses thatthere's a requirement of some
kind and what the valueproposition is.
And do you think?
And, by the way, the centerthat you help form is called the
Georgetown Center forRetirement Research.
(07:28):
People should know what thename is.
It's done tremendous work,particularly in this area.
Speaker 1 (07:37):
I just want to say I formed it with Ken Melman, who
was head of the Republican Party.
Speaker 3 (07:42):
So it was a bipartisan.
I want to, and people may notknow the background, but
Kathleen was also LieutenantGovernor of Maryland at one
point, so obviously, obviouslythrough her family, very I'm a
Democrat really very steeped inpolitics.
(08:04):
And the point is that retirementis one of those issues that can
bring both both Republicans andhas historically so but but let
me ask you this question, givenyour role in the Georgetown
Center, I do don't think we'respending enough time focusing on
the helping the states who dothe right thing have a program,
(08:29):
messaging and communicating andand and effectuating the program
, and maybe we need to spendsome time on the agendas that we
have with the state treasureson that point, and what's your
response to that?
Speaker 1 (08:44):
I think I think you raise an excellent point,
because the Georgetown Center isoften seen as a policy and a
lot of policy is important, but,as you know, a lot of it is is
trying to figure out how to howto do PR.
(09:06):
Yeah, implementation.
And PR just plays an enormousrole and it did in Oregon and
California and they spent moneyon getting the message out.
If you don't get the messageout, all all the good policy in
the world goes nowhere andsometimes doing it.
Speaker 3 (09:30):
They don't show up and they don't know about it.
Speaker 1 (09:32):
No, they don't.
Thank you very much.
That's the truth, and so whatyou really need to do is to have
a really good PR campaign,because we want we want these.
Speaker 3 (09:44):
You know the programs going in New York and New
Jersey.
Yes, marilyn, virginia and thereal challenges with these
programs.
Speaker 1 (09:53):
I mean having I, after we passed it in Maryland,
I sat on the board for a numberof years before I joined the
Department of Labor, and it'sit's hard to do PR for these
programs in a sense because theyall the small businesses that
this affects, they're not all inthe same place and so you don't
(10:15):
.
It's expensive having run foroffice to do good PR, and yet
are they in Western Maryland,are they in Baltimore City, and
what kind of messages reach?
Which kind of group Maybe then?
Speaker 3 (10:30):
is.
I mean, I granted it's not easy, but I do think that's what you
have to do.
Some attention needs to be paidto it.
Speaker 1 (10:36):
You're exactly right.
So you have to work with thechambers of commerce, and some
of them are very supportive insome states.
You have to work with theHispanic groups, which is what
they did very, very well inCalifornia, and you work with.
For some reason, I have aspecial affection for
(10:58):
hairdressers Okay.
Speaker 3 (11:02):
Well, they have a chamber to, I'm sure.
Speaker 1 (11:04):
Yes, and and also because they talked to lots of
people.
So, if so, you've talked tothem and they talked to all
their customers.
Everybody goes to a hairdresser, anyway, I think, I think the
cheer point about getting themessage out is absolutely
critical and it will make justmake them much more successful.
And, and this and the studiesthat have been done, as you know
(11:28):
, by the Pew trust, has foundthat the small, the small
businesses, like it becausetheir customers and in fact it
gives them a way to compete withlarge businesses, because they
can see we are giving you abenefit, otherwise they couldn't
give them a return.
Speaker 3 (11:49):
We're also finding, you know there was a lot of you
know and everyone if you don'tknow a array was, you know, very
early on, a supporter of thisidea.
Even in California, in the veryearly stages of this kind of
where Kathleen and I first ranto each other, and most of the
(12:11):
objections came from thefinancial services industry
because they didn't want thestates competing with them.
Our view was, you know, biggerpie, that everyone wins.
And you know it turns out wewere right.
The data is absolutely clearthat you know, not only seeing
increases in coverage, we'realso seeing huge increases in
(12:33):
private plan formation to thebenefit of the financial
services industry.
Speaker 1 (12:40):
Can I just tell you the obvious?
In Maryland I say you guys,this is going to help you.
I know, Kathleen, but myclients don't know it, so I have
to do what my clients want.
Speaker 3 (12:52):
You were right, we're wrong, but we got to make sure
that you know, businesses knowabout it, and also so-.
Speaker 1 (13:01):
And financial businesses have been helped,
Both because the state has giventhem more money and also
because small business somesmall businesses say oh, I have
a choice of going with the state, IRA or I can choose my, I can
choose a 401k plan and I'drather with my own 401k plan,
(13:22):
which has increased their numberof businesses.
So it's been great on bothsides.
Speaker 3 (13:29):
And we're actually working with Pew on additional
states.
Right now we're working withthem in Massachusetts, working
with them in Washington stateMichigan is another state so
hoping to, you know, expand thepie even further, which is
exciting.
So, question, you know, we seedata that shows these state
(13:51):
programs really work.
Coverage is happening, assetsare growing for lower income
individuals, they'reparticipating, opt-out rates are
very reasonable.
So, while of a sudden are wegetting these proposals to blow
the whole system up and, youknow, create a federally run
401k plan, like the economicinnovation group wants to do,
(14:13):
what, what I mean?
Why?
Why is this?
This tendency among academicsto throw everything out all the
time?
Speaker 1 (14:24):
Well, remember, brian , we did want a national program
, you and I you and I did.
Speaker 3 (14:32):
Well, and to that point there is legislation by,
you know, congressman RichieNeal, who's the senior Democrat
in the Ways and Means Committee,could very well be the chairman
of the Ways and Means Committeeafter the election.
And this is his, you know, top.
One of his top three proposalsis a national requirement to
have a plan if you have, let'ssay, 10 employees.
(14:55):
But even his proposal doesn'tthrow the whole private sector
system out, but just basicallypiggybacks on the state programs
as well as the private sector.
Speaker 1 (15:06):
Well, I think so.
I think I mean my, let's saythat there are different
programs.
First of all, I think it wouldbe good to have a national
program, in the sense that mostbusinesses don't want to have
different rules all the time.
Speaker 3 (15:26):
Yeah, yeah sure.
Speaker 1 (15:28):
And if you ask me what, what I would hope would
happen with the state programs,I would hope that they would
join together like they do withthe like 529s like the 529s or
the ABLE program that the statescould join together.
You'd have 13 states join onething so that you would have
(15:49):
more scale, sure.
So I think that would be a goodidea and I think Colorado is
being trying to do that, leadingthe charge on that.
It's leading the charge on thatand I was in Delaware last fall
and they were also interested infinding a partner, so I think
that's a very good sign.
(16:10):
I think the EIG is a differentdeal and it is really for more
low, from my understanding, isreally for low income.
So remember I said that 70%stay in but 30% opt out and
(16:30):
those that 30% are, I think, themost low income group.
Speaker 3 (16:38):
Well, they're just, you know, their proposal
specifically, just to giveeveryone some background here.
Speaker 1 (16:44):
Yeah, why don't you describe?
Speaker 3 (16:45):
it.
They would create a federallyrun retirement program that
would be available to bothemployers and concent meal,
thate, even for those who don'tcurrently have a plan or want to
swap out their plans, and gigworkers, which has some value,
and we can talk about thatseparately.
Under their proposal, thefederal government would provide
(17:11):
a 5% of pay contribution toparticipating employees that, if
they're single, make up to$75,000 a year, which is a
pretty large percentage of thepopulation, and married, up to
$150,000 a year, which is apretty large percentage of the
(17:33):
population.
Our concern and, by the way,this matching subsidy only
applies if you participate inthe EIG federally run program
Our concern is small businesshairdresser, if the government's
going to pay for a match, whyshould I pay for it?
(17:54):
By the way, it would completelyundermine the state programs.
Why would I participate in thestate program if the federal
government's going to provide amatch that the state's not
giving any match at all?
There is something called theSabres match, which is going
into law in 2027.
You were very involved in theSabres match.
It's now finally refundableboth, something you and I worked
(18:15):
on for many years.
What we don't understand is whydon't they just piggybacking on
the Sabres match, which wouldcreate no advantage to their
program versus everyone else'sprogram, including the states.
Let's just don't createartificial incentives that
(18:38):
undermine existing programs.
Why don't we just again expandthe pie and allow for everyone
to compete so that there's asmuch universal coverage as
possible?
But we're pretty convinced thatwould completely undermine
existing, both private sectorand state-based programs if it
weren't active.
Speaker 1 (19:00):
Thank you.
What I like about it is mymemory about this.
May be wrong, Brian, but Idon't know if the Sabres match
goes to state programs.
Speaker 3 (19:10):
I know.
Speaker 1 (19:11):
Brian it does now, because what I think is my goal
is to get that 30% to alsoparticipate.
Speaker 3 (19:28):
Well, the EEG would not help with that at all.
It's just an auto enrollmentprogram, Just like the states do
.
They're just having the federalgovernment provide a match that
the states can't afford.
Speaker 1 (19:39):
So let's just say that I think what the best idea
that I can come up with is tohave a way that everybody
participates in a savingsprogram and that we get the 30%
(20:00):
in and that they get a credit,and that is really, I think, the
most important goal.
And I don't know how to do that.
And there are two questionsthat I think are, I think,
coverage, well, the auto stuff.
So what it could happen thisway, brian, right One, the EEG
(20:27):
proposal may get the NEO billpassed.
Speaker 3 (20:32):
That is possible.
That would be a very goodresult.
Speaker 1 (20:36):
So you know what I mean, yeah.
Speaker 3 (20:39):
If it leverages to get something like the NEO bill.
Speaker 1 (20:42):
If A, it might get the NEO bill passed, or B, which
or B, it might get some of thestates more states on board To
do it yeah.
Because we really have, as youpointed out, we have 19,.
Or maybe I pointed out we have19 states but, as you well
(21:02):
pointed out, not all of them areperforming as well as they
should.
So I am not.
So I just think what we need todo is get people more
interested in talking about this, because my experience with
retirement is that it puts theword retirement puts people in a
(21:26):
fetal position, as I was saying.
They're afraid of it, they'rescared of it, they don't think
there are any answers, and sothe EEG bill may not be the
right answer for a number ofreasons, but what it does do, it
(21:46):
does.
Speaker 3 (21:47):
It gets people talking about the issue of.
Speaker 1 (21:50):
It gets people talking about the issue and it
seems to give a lot of people alot of money, so it makes them
less afraid.
Speaker 3 (21:59):
So they do hand out.
Apparently, they do hand out alot of checks.
Speaker 1 (22:03):
So I think it has that value.
That just if you get my drift.
Speaker 3 (22:07):
I get your drift.
Speaker 1 (22:08):
That's all I'm saying , and so I think that's a
reasonably fair point.
Speaker 3 (22:12):
You're putting a silver line, you're putting some
lipstick on a pig, but it'sgood lipstick, so I understand
the point.
Speaker 1 (22:20):
That's what I think is helpful, because most people,
most times when people talkabout retirement, they're being
told you have not saved enough.
You should have been saving forthe last 12 years.
You have not done your duty,which means everybody feels
guilty and shame and they don'twant to talk about it.
Speaker 3 (22:39):
Why is it that you know?
So that's my view of the EEG nono, and your point is a good
one in the sense that you know,as we're.
You know, the people listeningto this podcast are all in the
retirement world, and so theythink about this stuff all the
time.
You and I think about thisstuff all the time, but the
truth is, the vast majority ofmembers of Congress, the vast
(23:03):
majority of White Houseadministrations, presidents,
don't they?
Speaker 1 (23:09):
don't talk about it at all.
They don't.
That's the point why.
Speaker 3 (23:13):
Why don't you know?
Even putting the coverage issueaside for a second, you still
have 80 plus million people inthis country who've got 401k or,
you know, for 3B for the sevenaccounts.
Why don't why?
Why is it more?
Why is it not seen as morepolitically important?
(23:37):
Whether it be thisadministration, prior
administrations that you've hadaffiliations with, I'll tell you
what am?
I missing here.
Speaker 1 (23:46):
Um, this is my experience, because there's not
a constituency and the reasonthere's not a con.
This, ladies, and people yes,but so I compare it to there's
not an organized constituency.
(24:07):
There's not.
It's like mental.
It's like mental health.
30 years ago, Did we havemental health problems?
30 years ago, sure yes, but didanybody want to talk about it?
No.
Did we have wife?
Did we have abuse of women 35years ago?
Yes, but did anybody want totalk about it?
(24:28):
No, it it people?
Why?
Because people thought it wasembarrassing.
It was their fault.
Speaker 3 (24:40):
It was it's too personal a topic.
Retirement savings.
Speaker 1 (24:43):
Yes, because because if you look, I'm going to, I'm
being, if 20 year olds can talkabout it, because they don't
feel guilty.
But if you look at theadvertisements on the on TV, all
the advertisements the yachtsno, not the yachts.
(25:05):
The advertisements say we willhelp you reach your goals.
Right, thank you.
They don't say it's thesystem's fault for not making it
easy for you to retire.
So when I talked to themilitary spouses about the
(25:27):
difficulty of saving, I saidwell, it's difficult to talk
about retirement.
She said not for us, because wethink it's the system's fault.
So because we think it's thesystem's fault, we blame the
system.
It's very easy for us to talkabout it, but most of Americans
think it's their fault andbecause they think it's their
(25:50):
fault, they can't organize.
So until we change the language.
So for and this is the analysisthat I gave, I tried to give,
it was not successful, but I'llgive it to you, brian I said in
the 1960s we had many people diefrom car accidents and we said
(26:19):
we're going to change the wayRosa built and cars are built
and we're going to change thepoint and we're going to use
we're going to test people foralcohol.
When I was growing up I didn'tknow the word point 08, did you?
No, didn't exist.
Everybody knows what point 08is now Everybody.
(26:42):
My children made me use theseat belts.
I never used a seat belt.
It was my kids because theroads didn't have all those side
parts and all the lights thatchanged.
Speaker 3 (26:55):
I drove across the country in a in a drove.
I rode across the country in acountry square wagon all the way
in the back in those jump seatsthere were no seat belts and
half the time I had I wasbouncing up and down, my head
was hitting the ceiling, whichexplains the plot actually.
Speaker 1 (27:09):
Thank you.
So because of all, exactlybecause the system changed, the
number of deaths per 100,000were cut in half.
We changed how we did things,and you can say the same thing
about a lot of other systems.
And the coverage of four ofretirement coverage has not
(27:33):
changed, but it's only changedby 1% in the last 30 years.
Speaker 3 (27:38):
Well, it's only just now to change it because of what
the state's been doing.
Speaker 1 (27:41):
Yeah, but that's the point.
And so, but, but, but, but whyis it?
I'll give you a, give me a butt.
Speaker 3 (27:47):
But that's the I know I understand what you're saying
.
The question is why?
Why isn't it seen as apolitically significant topic
with?
You know, particularly I meanit's been frustrating for me as
I've tried to convince Democratsto try to make it an issue.
Surprisingly, trump said talkedabout 401k is probably more
(28:12):
than any other president hasever done.
You know not, you know betteror worse, and but we have not
been able to try with Obama, trywith Clinton.
Speaker 1 (28:24):
It's because I gave you the answer.
It's because it think of mentalhealth.
Speaker 3 (28:33):
Think of.
They think politically.
It's a topic that theirconstituencies won't want to
hear about.
Speaker 1 (28:38):
It's go to a dinner party without.
That is not part of yourconstituent, part of your gang,
and try to talk about retirement.
Speaker 3 (28:47):
Yeah.
Speaker 1 (28:48):
And see how many people want to listen to you.
All right, so I'm sorry, that'sand no, no, no, no, no and
that's.
I mean I had when I was theDepartment of Labor.
I had 12 hearings around theStates to talk about retirement
because I wanted to increase thenumber of groups that were
(29:12):
interested in retirement.
And the best, the best hearingwe had, I would say, in terms of
increasing the numbers, was inWashington state.
So I'm really glad the treasureWashington state was terrific
and interesting enough.
In Mississippi we did it at theCenter for Justice in
(29:37):
Mississippi and they producedabout 150 people, but most the
places were the same old gang.
Speaker 3 (29:47):
It was like pulling teeth.
Speaker 1 (29:49):
Well, it wasn't pulling teeth, it was just
saying hey, nice to see youagain.
Speaker 3 (29:54):
Oh okay, Same old gang Got it.
Speaker 1 (29:57):
It's the same old gang, because most people are
afraid of the topic and blamethemselves and don't.
And that's why if you go tofunders, I mean, I don't know,
is this what you want to talkabout on your podcast?
Sure, you can talk aboutanything.
If you go to funders, you go tomost foundations, except for
(30:22):
Atlantic, which went out ofbusiness, as you know, which did
fund retirement.
All funders, they fundchildcare, that's important.
Speaker 3 (30:34):
You're talking about the public policy.
Speaker 1 (30:38):
Yes, why.
Speaker 3 (30:40):
More liberal leaning think tanks.
It's just not an issue for them.
Speaker 1 (30:43):
Or anything.
The only think tanks thatfunded are financial think tanks
.
Right, because all the otherthink tanks are, like themselves
, embarrassed about how littlethey've saved.
The people who run those thinktanks, the people who sit behind
the desk and write the check.
Speaker 2 (31:00):
I went.
Speaker 1 (31:01):
I'm just telling you, I went to a six-year-old, so
anyway.
Speaker 3 (31:07):
So you've been following politics for a long
time.
Social security, you just youmay have seen these proposals to
get rid of the 401K and use themoney to pay for social
security.
You can imagine my reaction tothat.
But I think more importantly,what do you think it's going to
(31:30):
take to have an honest debateabout addressing what is less
than 10 years?
According to the SocialSecurity Trust's report, less
than 10 years, social Securitywill go into a deficit situation
and there will be mandatory 24%cut in benefits.
(31:50):
Now that's I'm assuming youagree that's a political
impossibility.
So, assuming that's a politicalimpossibility, what's it going
to take to have an adultconversation on how to fix this?
Speaker 1 (32:02):
Well, Brian, you and I are going to disagree with
that.
I did.
I did 10 years ago or fiveyears ago, whatever it was.
This is my Joe Biden moment.
I went to a Brookings Institutethat's where I can't remember
the year and, look, heard thelessons from Denmark that says
(32:26):
having a tax deduction doesn'tmake any difference because the
tax breaks go to 60% of the taxbreaks go to 20% of the
population, which is why weenacted the Savers Match to
compensate for that.
Yes, so I love the Savers Match.
Speaker 3 (32:43):
So my I'm going to you finish, but I'm going to
tell you why the Denmark studyis completely well I.
Speaker 1 (32:49):
The truth is, this is what I know being in that top
group.
You know being being fortunate.
Speaker 3 (32:57):
Oh sure, but what you're ignoring is the
hairdresser.
So the reason the hairdresserwants to tax us out.
Let me finish.
The reason the tax hairdresserwants to tax incentive, the
business owner wants that taxincentive, is because the
non-discrimination rules whichall of these studies ignore, in
addition to ignoring the SaversMatch, all of these studies
don't take into account the factthat we have these rules, top
(33:19):
heavy ADP tests, all of thesecomplicated rules.
But they serve a purpose and sowhen the business owner, who
can afford to save, gets the taxbenefit, they have to provide
those matching contributions onbehalf of their employees in
order for them to get the taxincentive.
Speaker 1 (33:37):
Okay, so this is the deal.
Speaker 3 (33:39):
That leverage that the Denmark study the state of
the religion.
Speaker 1 (33:43):
let me finish Right.
Speaker 3 (33:44):
Okay, the state of the Alishah Menel did is surely
looking at the the incidents ofmarginal tax rates, ignoring
completely the impact of thenon-discrimination rules and the
fact that it forces employersto provide actual benefits to
workers.
Speaker 1 (33:59):
Okay, I have a better idea.
Speaker 3 (34:01):
Okay, mandate savings .
That's the Neilville.
We love the Neilville.
Speaker 1 (34:14):
So that's it.
Mandate the savings, then youdon't have to have the tax
benefit.
Just mandate savings.
Speaker 3 (34:21):
No, I still think you need the tax benefit.
No, you don't.
No, you don't, you're going toagree.
Speaker 1 (34:25):
We are going to just, we're just going to disagree on
that, because I will tell you,I've done enrollment meetings of
employees.
Speaker 3 (34:32):
Yeah, all of my constituency.
What they do is they go intothe workplace and they talk to
employees about the value of taxdeferral.
I know, but if they're going to, let me finish the fact that as
they're going along, they'renot going to pay capital gains
taxes and all this other stuff,and they're you know economists
sit there in their ivory towerand they talk about nudging and
(34:55):
automatic enrollment, but noneof them have ever actually done
an enrollment meeting with realpeople and I can tell you for a
fact that the tax incentive is ahuge selling point in
convincing modern income peopleto save.
Speaker 1 (35:08):
I know, but guess what If you had a mandate you
wouldn't have.
Speaker 3 (35:12):
We're never going to mandate people to save without
opt out.
That's the 30% you're talking.
It's going to be 30%, it'sgoing to be 80% opting out.
They're not getting any benefitfrom saving.
Why in the world are they goingto do it?
Because because If you thinkyou can pass the mandate without
opting out, you're going tohave to do it.
Speaker 1 (35:30):
You know what the state plans didn't have.
They didn't get any tax benefitfrom savings.
Speaker 2 (35:38):
No, they didn't, no, they didn't, they're wrong.
Speaker 3 (35:40):
They're tax free.
Speaker 1 (35:41):
No, they did not get anything.
No, they didn't.
Speaker 3 (35:43):
Those are Roth accounts, Kathleen.
Speaker 1 (35:44):
They did not get anything.
Speaker 3 (35:45):
No wrong, wrong.
Those are Roth accounts andthey're going to get the savers
amount.
You're 100% wrong.
Speaker 1 (35:50):
Now they're getting it Now, but in the first.
Now because of but they'rewrong, but they're wrong.
They're wrong, they're tax freeaccounts.
They're tax free accounts, ryan, what?
When I talked to Josh Gottbaumabout this, he lobbied his tail
(36:10):
off To get the states to be ableto get a tax Right off For the
state plans.
But before, yeah, but the wrongthing, they did not get any.
Speaker 3 (36:27):
I swear to God they're Roth accounts.
They did not get.
In fact, you can call.
You can call your friends overat Georgetown and fact check me,
but I promise you they are.
Well they.
And having tax free savings, asopposed to these poor, lower
income people having to paycapital.
Get you you have I know youhave a brokerage account because
you're fortunate you have atent, this 1099.
(36:50):
That you get from that TDAmeritrade or swab account.
It's 80 pages long with all thelittle capital gains that you
have in all.
Could you worry?
I'm an average person gettingthat, having to deal with that.
The beauty of the Roth accountis it's all tax free and all of
those lower income people are.
(37:11):
When they eventually retire,they're going to be able to take
out of that account.
It's going to be all retirementincome with no taxes.
That's a real benefit thatthese People, so called expert
economists, are suggesting welose.
Speaker 1 (37:25):
I think it's more important.
I think it's more important Inthe greater scheme of things and
we can, we're going to have agreat time talking to each other
it's more important that theyhave socials, that people have
social security and something ontop of social security to
retire.
That is, that's the mostimportant thing.
Speaker 3 (37:48):
We don't need to raw Peter to pay Paul here.
Speaker 1 (37:53):
I think.
Speaker 3 (37:54):
I think it's a mistake to blow up a system that
is actually working.
Speaker 1 (37:58):
It is not working.
It is not working, it is notworking.
How do?
Speaker 3 (38:03):
you say that when you're involved with all of
these, you've said we talkedabout.
Speaker 1 (38:07):
Okay, we're just working, it's working.
Speaker 2 (38:09):
You know what it?
Speaker 1 (38:11):
it it, the fact that I'm raising my voice is not
helpful for either of us andit's really not helpful for
their listeners, because they'resaying, hmm, hmm, I don't think
this is.
Speaker 3 (38:26):
I have a feeling they're going to.
I think huh.
This is a lot what I guaranteeyou.
They're going to enjoy this alot, so you think so.
Speaker 1 (38:36):
How many, how many times do you get into
discussions?
Oh, that's what the fun of thisis.
Speaker 3 (38:41):
This is a true DC kind of conversation that you
and I have to form.
Speaker 1 (38:48):
Anyway, we disagree about it.
I do think that all the tax,the tax benefits, go all to the,
to the well off.
And I don't look at your face,you know what.
I'm really disappointed thatthis is a podcast because I
can't see your cute eyes gettingso large when you are looking
at me.
Speaker 3 (39:08):
Again, I think, I think a lot about it.
Speaker 1 (39:11):
I'm really sorry that your listeners are missing.
Speaker 3 (39:14):
You're very sick, I will say, kathleen, to respond
to that point.
All of those, all that academicwork so-called completely
ignores the impact of thenon-discrimination rules and
it's frustrating to me that theyjust blow that off and just
ignore the fact that we have allthese rules that require
(39:35):
employers, particularly smallbusiness owners, to provide
these matching contributions andother contributions for their
worker.
Anyway, let's, let's move offof that topic.
Speaker 1 (39:43):
Let's move off of that topic.
We're not getting anywhere withthat, but don't you think it's
funny that your friend AndyBiggs supports it?
Speaker 3 (39:50):
I have no idea what Andy was thinking on that one.
I, I, I, you know for a quoteother than the fact that he's
now a Social Security trustee,so maybe he has the best of
interest.
Insatine Social Security,insatine Social Security.
So there you go.
So there you go.
Speaker 1 (40:07):
I think we should just make sure that your
listeners know that Andy Biggs,who is is part of AEI, part of
the conservative think tank.
Speaker 3 (40:17):
He's theoretically seen as a conservative.
Speaker 1 (40:19):
Also supports this.
Speaker 3 (40:21):
So I just want to make it clear.
Speaker 1 (40:22):
They wrote a paper about it, and that and that the
EIG account that you alsodisagreed with is supported by
Donald Trump's head of economicadvisors.
So I just think it's importantto understand.
Speaker 3 (40:34):
I think it is that there are conservatives out
there that are just as criticalof the system as there are
liberal.
Speaker 1 (40:42):
Yes.
So I thought you were going tosay just.
I thought you were going to sayjust as crazy as liberals
because they both start with CR.
I didn't know how far it wasgoing to go.
Speaker 3 (40:55):
But you didn't ask my question about putting things
aside.
The 401k thing, yeah, how?
How do we have a?
How are we going to have ameaningful, honest debate about
social security?
Speaker 1 (41:04):
Well, as you, as you may or may not know, when my
father was a US Senator, hesuggested that we tax income
from stocks and bonds, and Ithink that's a good idea, and I
think we should I mean don't wedo that already.
Capital, Not for not for socialsecurity.
Speaker 3 (41:26):
You mean saying like another tax on top of it?
Yeah Well, he did that forMedicare, medicare surcharge,
right?
Speaker 1 (41:33):
No, but I'm saying for social security.
Speaker 3 (41:35):
So another, so they would be attacked.
Oh, you're talking abouttransaction tax.
Speaker 1 (41:39):
Yeah, no, not a transaction, just just you like.
Remember, some of us get ourincome not only from our work.
Speaker 3 (41:48):
Yeah, so you're saying that there should be.
Oh, you should pay socialsecurity tax on that ink.
Ah.
Speaker 1 (41:54):
Yes, we should rate, we should.
I mean, let me just tell you,tell you a story.
You may not think this isinteresting.
Speaker 3 (42:01):
So remember.
I think it's immenselyinteresting.
Speaker 1 (42:04):
Okay, so I remember I worked, I was lieutenant
governor, I ran for Congress,and then I started working for a
financial firm and then one dayI saw that my pay went up.
And I said what happened?
Why has my pay gone up thisweek?
And they said oh yours, youdon't have to pay social
(42:26):
security anymore.
And I said what are you kidding?
There's a cap.
I make more money and now Idon't have to pay social
security.
What kind of world do I live in?
I thought the more money youmake, the more you're supposed
to pay, and now I'm learning.
The point of this story is Iwas in politics for 35 or 40, 35
(42:50):
years and I didn't.
I didn't know that socialsecurity had a cap, and if I
didn't know, I think mostAmericans don't know that
there's a cap on your socialsecurity.
Speaker 3 (43:06):
Perhaps most politicians don't know, so why
don't?
Speaker 1 (43:09):
so why aren't the candidates and I created around
the investment firm.
I cannot believe.
I'm getting more money and I'mpaying less taxes.
I was in the total state ofshock?
What?
Speaker 3 (43:30):
so why do you think of that story, Brian?
I think it's kind of funny.
Speaker 2 (43:34):
So, why?
Speaker 3 (43:34):
why aren't you in the fact that we have this
impending?
You know, deficit situation ofthe trust fund.
Why is it that presidentialcandidates don't talk about this
issue at all?
Speaker 1 (43:50):
Oh, you know why, brian?
Because one.
There are two answers to it.
One, raise to access, or two,lower benefits.
And guess what?
Neither of those things arepopular.
That's going to really help.
Speaker 3 (44:05):
That's going to help solve the problem.
Speaker 1 (44:07):
How long have you been in Washington, Brian?
Speaker 3 (44:11):
Not as long as you, but that's true.
35 years.
Speaker 1 (44:16):
I've been doing this for 35 years.
Speaker 3 (44:17):
I've been here since I was a month old, Anyway it's
very At a curiosity bonusquestion Does your brother ever
talk about retirement policyissues?
Speaker 1 (44:35):
You mean the one that's running for president.
Speaker 3 (44:37):
One that's running for president.
Speaker 1 (44:38):
I don't think he has talked about it.
Speaker 3 (44:40):
He's talked about a lot of other stuff we all know,
but has he ever talked aboutthis?
Speaker 1 (44:44):
No, I don't think he has.
That's a good question.
I don't follow his campaignfrom day to day.
Speaker 3 (44:53):
I figured that.
Anyway, well, it's been greattalking to you, thank you, thank
you.
Retirement provocateur, and no,you've really helped.
You know we don't always agree,Kathleen, as you know, but we
always.
That's fine.
I think it's a good question,and usually it's the vigorous
(45:16):
debate that produces the youknow, the best compromises, and
I hope that's what the thing is,it's better to have a debate,
it's better to be interested,it's better to be talking about
something than to ignore it.
Speaker 1 (45:32):
So thank you, brian, and thank you for being there
and fighting and always and Ithink that's a good question you
know saying we've got to dosomething about this and
Hallelujah for your, for yourenergy and Thank you so Bravo.
(45:52):
Thanks again, bye, bye, yeah.
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Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
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If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.