I’ve spent most of my life, certainly my adult life, confident that Americans, certainly in large part, are reasonable and rational. I have not, unfortunately, always been as sure of certain subsets of the population, notably politicians.
On numerous occasions during the political season just past, as one outrageous claim after another was laid at the feet of one candidate or another (and sometimes both), I heard (and was heard to utter) “rebuttals” of a sort—“They’d NEVER do that,” for example, or at least, “They’d never get away with that.” Granted, sometimes I’d say those words—and yet wonder if, this time, “they” actually might. One’s position on such things is inevitably interwoven with one’s comfort with the idea, of course. “Anything’s possible” can be both an anthem of positive change and an ominous portent of doom.
Those were the kinds of reactions that last fall’s hearings on the impact of the markets on retirement engendered, certainly in terms of the reactions to comments made at those hearings, particularly those held by the House Education and Labor Committee. Hearings that included the perspectives of some who clearly see the 401(k) as a failure—and who seemed willing, if not anxious, to trade it in for a better model. Indeed, the notion that we’d not only impose a new Social Security-like tax on workers and employers to build a new solution—and fertilize it with the carcass of the 401(k) (or at least the carcass of the tax support for the 401(k))—drew a lot of (IMHO) well-deserved comment and criticism, including mine (see “IMHO: The Pit and the Pendulum”). In fact, “The Plot to Kill the 401(k)” was the December cover story of PLANSPONSOR.
Best, Worst Case
Despite those ominous portents, the Washington insiders I have discussed this with over the intervening months—nearly to a person—dismiss the notion. At worst, they view this as a bridge too far, even for the commanding majorities in Congress. At best, they simply don’t think this is what Congressman George Miller (D-California), Chairman of the House Education and Labor Committee, has in mind or would support.
That said, that same committee is getting ready to start up another wave of hearings (see “They’re Baaack….Hearings on Retirement Security, 401(k) Resurface” )—and, much as I would like to console my fears with those Washington-insider voices, I can’t quite get there.
Don’t get me wrong. When, in announcing the hearings, the Committee Web site speaks to “a series of hearings to explore the shortcomings of our nation’s retirement system and look at solutions,” I couldn’t be more supportive. By nearly any measure, many Americans aren’t saving enough on their own, most don’t have the support of a pension, and whatever fiscal integrity Social Security still enjoyed has surely been sacrificed in an era where the federal government claims to be providing tax “cuts” to workers who aren’t paying any kind of federal tax beyond that earmarked for Social Security (FICA). Nor, though I am an ardent supporter of the 401(k) system, do I see it as sufficient in every case to do the job (see “IMHO: ‘Broken’ Record”).
I keep thinking that maybe I’m being too sensitive—that I’m too willing to impugn the motives of folks who are genuinely trying to do something that I have long advocated needs doing: figuring out a solution to the “problem” of ensuring retirement security (see “IMHO: ‘Focus’ Group”). And yet, when I also read in the Ed/Labor Committee’s announcement that the “first hearing will examine how the current economic crisis has highlighted existing weaknesses in the 401(k) retirement savings system,” I can’t help but feel that at least some of this is about excoriating a valuable part of the solution, rather than crafting a more complete one.
Those reservations notwithstanding, I’m going to try to watch these hearings with an open mind—and I hope you will as well (to their credit, the Ed/Labor Committee has been very good about broadcasting these hearings on the Internet and archiving them for later viewing). For we surely need some alternatives not yet on the table—and, IMHO, we need to be attentive to preserving and enhancing the ones we currently do have.
Because, after all…anything’s possible.
—Nevin E. Adams, JD