I’ll also work with you to advance a broad strategy on retirement security – one that protects defined benefit plans and defends Social Security and ensures that every worker can retire with dignity. We owe it to our seniors and to future generations of retirees.
Hillary Rodham Clinton remarks at AFSCME – June 8, 2015
So what does this leaked agenda item portend for defined benefit plans?
Commenter NY sees it this way:
My guess is her strategy when push comes to shove will be to “monetize” all or nearly all unfunded-DB-pension liabilities (multiemp & public) via the Fed with as little fanfare as possible, which has the advantage that it doesn’t require her (or any state governor) to raise taxes. I guess her advisors will justify it to themselves by viewing it as QE direct to her downmarket foot soldiers (rather that to ‘the rich’), and that unlike QE as we’ve known it since 2008, they’d spend a large fraction straight on goods/svcs (rather than being saved by ‘the rich’ as today). She’ll probably just pay 100% rather than go to bat on ‘spiking’ and similar games, because doing so would be too embarrassing to her union cronies. And the piper doesn’t get paid until the day far, far away when the USD begins to wilt, the way the GBP has since the Brexit vote.
I’m not saying this is a good idea, just that it’s my best guess of how she’ll address the liabilities. I’d be keen to hear others guesses, I agree there’s very little clarity. Re: Puerto Rico, she’s also still very cagey.
I’ll say this for her: her advisors discuss in the Wikileaks emails the possibility of making 401k/IRAs less attractive for high-earners, to refocus towards the original intent of govt-subsidized retirement savings, which is basic income security to avoid penury/hunger. This isn’t the worst idea I’ve ever heard.
Thoughts? Am I crazy for thinking this is a plausible scenario?–
My guess is that Clinton is pandering to a municipal union audience and I have seen nothing that indicates her people recognize the depth of the problem* which would lead to any actions beyond the benign neglect policies of the Obama administration.
As for targeting high-earners where it matters, politicians first have to understand the fallacies behind average benefits testing especially for new comparability CB/DC combinations. That’s not happening. There may be some tweaking of 410(k) limits but that’s as far as I see it going.
* In fairness, I have seen nothing in the presidential campaign on this issue though hundreds of thousands of union employees have already had benefits arbitrarily slashed.