Will the Senate Support Wall Street over the Interests of Low-Income Workers?

We came across this article in this morning’s Los Angeles Times. Another clear example of the heartlessness of Wall Street toward working-class men and women. Weren’t these the “forgotten Americans” the President promised to rescue in the last election ?

old-men-sitting-on-a-bench

By The Times Editorial Board, Thursday, March 9, 2017 for the Los Angeles Times

The U.S. Senate is poised to kill efforts by California and a number of other states to keep more seniors out of poverty — because Wall Street mutual funds want it to. . . .

At issue are two rules issued by the Department of Labor last year that create a clear legal pathway for state and local governments to offer a new type of retirement savings plan. Epitomized by California’s “Secure Choice,” the plans require employers that do not offer a pension, 401(k) or other retirement benefit to enroll their workers automatically in an Individual Retirement Account unless the workers opt out. For those who chose to stay in the plan, a small percentage of their pretax wages would be deposited into an account that would grow tax free (until withdrawn) and follow them whenever they changed jobs. Secure Choice is a great idea, refined through years of work by Senate President Pro Tem Kevin de León (D-Los Angeles) and various stakeholders.

Nevertheless, GOP opponents of the rules have pushed resolutions through the House to rescind the rules, and the Senate is expected to vote on the resolutions as soon as Wednesday. . . .

Wall Street mutual fund companies do not like the idea of the government offering a retirement product to consumers they’re making no real effort to serve. But that’s whose retirement security is at stake — 55 million Americans, including an estimated 7.5 million in California, whose employers don’t offer retirement plans. The state estimates that two-thirds of these people work for small businesses that either aren’t capable or not interested in taking the trouble to establish pension or 401(k) plans.

And these folks typically have little or nothing saved for retirement. The Economic Policy Institute estimated last year that half of American families with workers in their prime had $17,000 or less in savings. And too many U.S. seniors — at least 10 % — already are living in poverty. That’s why programs like Secure Choice, which automatically funnel money from workers’ paychecks into IRAs, are so important. According to Utah State Treasurer David D. Damschen, workers not covered by an employer plan are 15 times more likely to save for retirement if they can do so through an automatic payroll deduction than if they have to establish and contribute to an IRA on their own.

But opponents of the rules don’t really object to the department’s reasoning; instead, they’re wrapped up in an ideological straightjacket that rejects any government action to help people whom private companies could serve, even if they have clearly failed to do so. . . .

Damschen, a Republican, sent an impassioned plea last week to his state’s senior senator and fellow Republican, Finance Committee Chairman Orrin Hatch, in favor of the rule regarding state savings programs, noting that it was promulgated at the states’ request. . . .

His argument appears to have fallen on deaf ears, unfortunately; Hatch has introduced resolutions identical to the ones passed by the House. But the rest of the Senate should listen, and put Wall Street’s interests behind those of less fortunate working men and women.

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