It’s been said multiple times that Obama is playing “small ball,” preferring smaller executive orders to bigger legislation that would require working together with Congress. And the “myRA” proposal is another example.
If you haven’t read about this, the idea is to create payroll-deduction-type accounts that function like IRAs in terms of tax-effectiveness, administered by the Treasury Department, for those people who don’t have access to an employer-sponsored retirement account, and who haven’t established a personal IRA. The catch: the funds are to be invested in government bonds. Some details here, at The Week. Now, the statement is that these will be a “special type” of government bonds, so it leaves open the option for the government to provide constituent-pleasing artificially-high interest rates, as well as the more likely alternative that these accounts earn interest at the same extremely low rate as any other government bond.
And this can do more harm than good, to the extent that people participating in this program don’t use these as “starter accounts” before moving to more diversified funds, but stay with the government bonds, or if we see the fact of large numbers of Americans expecting government bonds to provide investment growth, causing problems.
Ideas about a better way of saving for retirement, something more automated, via payroll deduction, without being dependent on employer benefits — these have been kicked around for a long time. And if a plan is designed well, it can get bipartisan support. So that’s what makes this sad — to give up on bipartisanship for even something that ought to be acheiveable with a moderate, rather than herculean effort.
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