>> you say that we are spending that money incorrectly because we qualify plans with bad design. and you would want designs with lots of tweaks, but you would not mandate that the money go in and stay there. and i've been intrigued by this idea that that would disrupt people like lilley or somebody else -- lily or somebody else who have consumer needs and that the government would be forcing people to save too much, and they couldn't optimally

structure their life spending. this came up in the recession. and i was asked by a member of congress, can't people take money out of their 401(k)s now, and the response is, well, if you're going to call it a retirement tax credit, that's what it's for. so i'm going to take your argument a little bit further just to make the point. would you want people to be defaulted into social security and then use their fica money when they need it in those times they need the money the most in how far are you going to go with this default rather than mandate idea? >> so i think that it's very important to have a base floor below which people cannot -- >> take out, okay. >> and i think social security is effective at providing that. i think it could be more effective, but i think that, you know, again, not to say that we could not improve it, but i think allowing, you know -- we

are trying to provide an efficient system to get people to save for retirement, but i think we are also trying to avoid a problem where we have elderly who -- >> so just to follow up on that, would you mandate 2% on top of social security? because we know that social security isn't providing enough. >> so i would not mandate anything on top of social security. i think that's the role for this flexibility. i think people should be encouraged to save a lot on top of social security, but i think that -- >> but you would -- >> yeah. i think that you really need flexibility, because many times either people need money for current expenditures or if you, you know, if you have mandates also, you often end up -- even if it's a very small fraction of people, you know, if you impose enormous hardship on just 1% of the population because you haven't quite structured the mandate in the right way, that

can offset almost everything else that you're doing that's good with the rest of system. and so i think that, again, the real advantage, you know, i gave one example, but the real advantage of having a system where it's kind of a strongly-suggested default but not one that we're going to absolutely force you to take is that you get the main effect of a mandate for 90% of the people. it's just that for that last little bit that really need the flexibility, you're allowing it. >> the soft mandate. okay, thanks. thank you. bill, you've always helped me envision that pile of money on theç table, you know, by -- wih your work on tax expenditure and calling outç that we're really spending lots of money on retirement security. how would you spend it better? is this a people problem or a budget problem? >> no. i guess i would think of it as both. but, first, let me say thanks to you for inviting me.

on the one hand, it's very gratifying to hear stuff that i've been saying for 25 years now coming out as conventional wisdom from people as sharp as lily and john. on the other hand, i have to go third, and they've taken most of the sensible, thoughtful points -- [laughter] so i'll try to weigh in on different aspects of this, right? the way i think about it is, broadly speaking, there's four ways that government can influence retirement accumulation. the first one is mandates, and it goes without saying but i'm going to say it anyway that social security is at the core of the retirement system. it should be there, it should be a mandate for the reasons john mentioned, and that's sort of the building point from any additional discussion of retirement policy. the second way in addition to mandates is incentives, of course, tax incentives, tax expenditures, whatever you want to call them. and there's a wide variety of

them with a somewhat checkered history as lily and john have described. the third category is information education. the government can provide people with education. the social security statement that used to go around is an example that some of the stuff that cfpb is doing is trying to get information out to people on various aspects of saving. and the fourth approach what john referred to as nudges or defaults, what richard sailor calls choice architecture which has shown to be a powerful influence on saving behavior. historically, these four ways have developed as substitutes. auto enrollment came along because firms didn't want to pay the cost of amassing incentive and so on. tax incentives came along because social security wasn't meant to provide all of the

retirement needs of people just to provide a base. so historically they've largely come as substitutes for each other. but i think we should think of them as complements in the policy world. and the example i -- just to put an example in your held, let's suppose we want to increase saving, retirement saving by low and middle income be households. well, what do you do? the first thing you do is you default them into a 401(k), or if they don't have a 401(k), you default them into an auto ira. the second thing you do is you reform the savers credit so that it provides a refundable contribution to the account. and the third thing you do is you provide them with the information or education so they know what they're doing with their funds. and you further design the account along the way so that

contributions escalate, they're invested in diversified, low-cost funds. i'll talk about what happens when it comes out in terms of annuity in just a second. but it's a combination of the policies that would work, i think, much more effectively than one or the other. so you get the person into the account with the nudge or default, rather. you get them contributing more with automatic escalation. you make their saving more rewarding by providing a matching contribution, and you equip them to figure out what they should do with it through education and information. so i think that's sort of a framework for where we should go with policy. that suggests coming back to tax expenditures that incentives can be part of the solution. and i want to emphasize both the can be and the part. the can be is that if they are designed well, if they are going to people for whom the

contributions represent net additions to saving, then they will raise national saving. if they're going to people more whom the contributions represent saving they would have done anyway or asset shifting or whatever, then, in essence, they're a waste of money. and one way to think about this touching on the earlier conversations is there's an easy way to take advantage of tax incentives and a hard way to take advantage of tax incentives. the hard way is to reduce your current standard of living in order to get the benefits of the tax deduction. that represents lower consumption, as lily mentioned, and it represents higher savings. people, for very obvious reasons, choose the easy way if they can. the easy way is shifting your assets or saving you would have done anyway. and not having to reduce your standard of living. not -- you know, people are very excited about tax subsidies for

saving, but nobody is really excited about reducing their standard of living. and if you look at the ads the brokerage industry offers people, they don't say, you know, cut your standard of living and take advantage of this tax incentive. they emphasize shifting opportunities. and for natural reasons. i mean, if you want people to participate, you want them to participate in the easy way. anyway, incentives can be part of the solution, but they can only be part of the solution. if everyone were a perfectly informed neoclassical consumer, maybe they could be the whole solution. if they were designed right. but given the imperfections that people have in terms of not being foresighted, not being able to implement plans even if they get plans, we need more than just incentives. incentives cannot be the whole

solution. so incentives can be part of the solution, is what i would like to emphasize there. let me mention a couple of other things that i think are important. lily touched on -- i think it was lily -- touched on the state-level activities. my colleague, david john, who's here, he's been doing a lot of work on that. i think that's a crucial avenue given the gridlock at the federal level. and as lily mentioned, the federal government can help enable state governments to do more by clarifying the regulations. i want to talk about -- we talked about automatic enrollment. everybody knows about automatic escalation, automatic investment. and, teresa, you raised this issue about lump sums versus taking the money as an annuity. david and i with a few other

people, mark and nina, a few years ago came up with a proposal for a really hard issue to think about. if you automatically enroll someone in a 401(k) and you get the contribution level wrong, it's no big deal. they just change the contribution level. if you stick somebody in the wrong annuity, that's a mess, because they are stuck there for the rest of their life. some people, you know, have a lot of kids that they want to give inheritances to, some people have a lot of health needs that they want to keep their money flexible for that, some people may not think they're going to live very long and so don't want to annuitize, etc. so annuity needs vary a lot. so what david and i and others came up with was the idea of test deriving annuities, the idea that people would automatically be enrolled on a temporary basis. they would get monthly income for a two-year period when they wanted to start taking money out

of their 401(k), and that would sort of get over the hump and sort of the big moral issue with annuities which is, basically, try this at your thanksgiving table. tell your relatives, you give me $100,000, and i'll give you $500 a month. and they'll look at you like you are nuts. why would i ever want to do that? and the answer is because it's a pretty good deal when -- >> very good deal. >> -- if you stretch it out. but people don't see it that way. the idea is getting people to experience that rather than trying to anticipate it beforehand. have a just sort of just do it for a couple years, just see what it's like. after two years if you don't like it, you can take your money out in a lump sum. so there are ways to think about automatically annuitizing people without forcing them immediately into a lifetime commitment. let's see, two other points. one is -- and john has written about this.

i'm surprised he didn't mention this. we need to start thinking about ways of divorcing retirement saving from the employment system. employers, it's sort of an accident of history that the d.c. system ended up in, being employer-based. the db system you can understand why employers set up db structures to manage their work force, etc. a dc program doesn't really have those features. but because the db system was in firms, the dc system came in firms. you can do all the incentives you want, all the matching you want in a 401(k) that is not, that would not have to be employer-based. i won't say more than that because john has written about that recently. i think that's an important thing to think about, especially the latest hot topic is the gig economy and workers who are not really -- workers -- people who

are functionally workers, but for legal reasons are contractors. they don't actually have employers. they're all independent contractors. that's sort of the kind of the tip of the iceberg here. but more generally, we need to think about there's no reason why your retirement security should depend on whether your firm feels like offering a retirement plan. last point, we keep throwing around this $200 billion a year number on tax expenditures. some people would argue the number's not really that big because it's -- >> [inaudible] >> deferred expenditure receipt, not a complete subsidy. regardless, the point i want to make is we should take 1% of that amount on an annual basis and use it to fund research to understand what works many -- in

saving and what wouldn't work. the amount that we could -- we have learned a lot in recent years, but we could learn a lot more and at very low expense relative to the stakes involved. so besides the various policy initiatives aimed at people, we should also aim some of them at researchers who are also people but interested in the research issues. >> i think there's a consensus on the panel of researchers that that's a great idea. [laughter] before we go to questions and answers, can i just do a quick elevator speech. you've got less than 30 seconds. is a refundable tax credit a good idea to spend those hundreds of billions of dollars on the table? and how far does it move the needle? how far does it help solve the problem? lily, do you want to go first?

>> yeah. i think it's a good way to shift the incentives in terms of improving the fair beness of the system. and i think some of the credit should go not just to employees to supplement their savings, but to make sure that more, a lot more employers are offering plans. >> interesting. >> so that you really increase the participation rate above the roughly 50% right now. >> increase the participation rate of employers, that's really interesting. that's finish. >> they're offering a plan and then get people to participate in their plans because people don't generally save outside of the employer context. >> right. we're in a short elevator. >> i think, you know, tax incentives, the key question is compared to what. if it's compared to the current system, i think it's a small step in the right direction -- >> right. >> -- but i think there are other things you can do with that money if you take a step back -- >> so you would leave the

refundable tax credit to changes in design. >> yeah. i would use a lot of that money to rethink the design of the system. >> okay. >> i'll come back to what i said earlier. incentives can be part of the solution. this would be if you -- refundable credits aimed at lower and middle income households would be helpful because almost all of them face marginal income tax rates of 15% or less and, hence, the deduction system doesn't do much to help them. i don't think it'll help with the overall cost issues at the high end, but it could be part of the solution. >> okay. i'd love to open it opportunity opportunity -- open it up for questions. yes. and can you introduce yourself also. >> i'm david mitchell with the aspen suit. i had -- aspen suit. i had a question, if folks could talk more about the difference between legitimate hardship withdrawals and maybe the unpredictive leak issues, maybe

a starter account, my ra, how do we keep people in retirement and how do we let people get access to the money when they really need it? >> yeah. i'm on a bipartisan policy center commission on retirement reform. we spent three hours on this, and a lot of the provisions you can drive a remodeled kitchen through the hardship withdrawals, you know, for home repair. so thanks for that. lily, you want to start? >> yeah. i think what you're raising is a really important issue. i think as related but distinct from the retirement security crisis. so there is also a major problem of very few households have a basic rainy day fund to deal with both shocks to their income, but also shocks to their consumption expenses. and that actually, at an aspen institute conference, one of my colleagues, jonathan murdoch, talked about his research on in this about how just month to

month there are dramatic shifts in people's disposable incomes and what their demands upon their income are. and i think that's something that, you know, maybe is a somewhat separate topic from today but is really worth very careful policy attention. in terms of how the retirement seeding system works, i think i sort of want to go back to this issue of annuitizing a lump sum. and, you know, one solution may be i think bill's proposal about sort of trying out annuities is very intriguing and worth pursuing. another possibility is just to gradually annuitize people over time. and this deals with several issues. one issue is that there's, of course, very large adverse selection problems in the annuity market. so if you had employers defaulting people into products that just have target date funds so they gradually shift more from stocks to bonds over time, you could imagine a new kind of target date fund that gradually also shifted you into annuities.

you would, first, because it was through an employer and defaulted, deal with a lot of the adverse selection issues. yourself also deal -- you'd also deal with a lot of interest rate risk. they face a lot of risk that they're getting a relatively bad deal on that annuity because of what the interest rate happens to be that year which impacts the price. i think that would, you know, potentially help with less leakage but also give sort of a glide path where in the interim or earlier on in the mid part of your career you have much more of your account not annuitized, and as you approach retirement, you're having somewhat more of your account annuitized. the other thing i would mention is you mentioned the my ra program, and i think this is a really intriguing program for the issue of precautionary savings and rainy day fund, because even though it is structured as a retirement

savings account, it actually works pretty well as a precautionary savings account. it's no risk, it pays a relatively high return for being no risk, it's no fee. the amount that is invested in that product is capped at 15,000 and then treasury's going to have to make a decision about what product it's rolled into once it exceeds that amount. and it's on a roth ira basis which which means the money that you put in yourself you can withdraw without penalty. and so that makes it a nice opportunity for people who want, you know, a basic account of up to $15,000 to deal with these shocks to have something that is earning a good, safe return but that they can withdraw at least their own contributions at any time for those crises. don't think that's the answer to the retirement security crisis writ large, but it's a partial answer to the other major problem that you've raised. >> so i think that, you know, i don't have kind of a silver bullet for exactly how you

delineate, you know, what's a proper hardship expense, but i think what's striking is many of the withdrawals that people make currently in the u.s. don't happen because there's some crisis and then we're trying to decide whether it's actually a crisis or not to, but they happen almost by accident. so the default on loans, i think, is the best example. i mentioned that briefly, but let me go through that in more detail. you can take a loan from your 401(k), and then you have some period to pay it back, and that's fine. that's exactly how it should be working. now, if you have your 401(k) with an employer and then you decide to roll your money over because you're switching employers or even if you just leave your employer often, you are forced to immediately pay back the loan which for many people is simply infeasible. so what happens is through things that in their life that have nothing to do with retirement and need not actually be bad, you get a better job elsewhere and now you're forced to pay back the $50,000 loan you took out in order to help buy

your first home, then suddenly you have to default on that, and now you've lost forever the opportunity to have that money in retirement savings, and you have to start all over. and i think that, you know, while exactly the question you pose, i think, is an excellent one, i think we can get a lot of mileage out of just preventing these almost accidental withdrawals. a very similar thing happens a lot of times when people roll the money over. sooner or later, or it's out of their retirement account. so -- >> i think you asked a great question, and i think what the first thing john said is, yeah, you're right, there's no silver bullet on this. personally, i feel like i'm the dove up here about early withdrawals. i feel like if you tell people when they're 25 or 30 you're putting this money in and you can't get it until you're 62 or 65 or 70, i feel that's going to cause people not to want to participate. i don't have any good evidence on that.

well, i have an evidence of one, my son who's 26 and opened a 401(k) two years ago and was asking me all these questions. the idea that you have to lock it away for certain until he was 60 -- which seems like infinity, okay? -- was a downer. the idea of saving participant of his -- part of his raise, he thought, was a brilliant idea. he's the most enthusiastic endorser of that. but i think it's important to get the money in and rather, and even with the laxer withdrawal rules than it is to insist that people not take the money out until they're 65. we already have a retirement mandate, that's to social security. that is money that you cannot be take out til you retire. but i have a very hard time telling somebody who's got a house and kids and loses their job, you know, and they've got, say, 50 or 100,000 socked away

in their 401(k), i have a very hard time with a policy that says they can't access that to keep their family in their house or something like that. so i think we all want more retirement savings, but i think the perfect can be the enemy of the good here. >> hi -- [inaudible] reporter for financial adviser magazine. this is the ivory tower panel. has any research been done on what the decline in home ownership has done to retirement readiness? i think a strong argument can be made that home equity is a very important part of retirement savings. >> yeah. i'm looking at a couple of researchers in the audience, some from my team. tony webb here at boston college and new school and diane oakley. so it is a really important part of retirement security.

comments here on home equity? >> you know, home equity is the second largest source of retirement assets behind social security, so it's a very important source. i think that i have not done this calculation, but i am guessing that the reduction, the recent reduction in home ownership hasn't had that big of an effect on retirement readiness if only because people seem to be relatively hesitant to actually tap home equity as a source of income in retirement even though it's a source of asset. >> [inaudible] >> well, you're not spending more money. >> [inaudible] >> i think you're just saving less. sorry, you needn't save less, but the point is if you save more in your house and then you don't ever sell your house until you die, which is, i think, how most people do it, then it's kind of not that helpful. i mean, there's a last stop -- >> [inaudible]

>> just a second, just wait. any other questions? >> first, can i weigh in on that? >> yeah, yeah. >> there is a paper by researchers at the urban institute from a few years ago that showed there's a correlation between paying off your mortgage and retiring. i think that's what you're getting at. you finish your 30 years of payment, your cash flow goes down and, therefore, the income you need to survive in retirement to maintain your living standards has gone down. so there's a correlation there. what's not clear is whether the drop in mortgage payments, the end of mortgage payment is then allowing people to retire. it's not clear if it's causal. it might be that people who know that they're going to retire later decide to, you know, refinance their mortgage in their 50s and, hence, have mortgage payments for longer. but if you're doing retirement adequacy calculations, you know, how much income do you need,

that dropoff in cash that someone, you know, when they're paying their mortgage versus having paid it off is a significant amount of money. so when people talk about you need a replacement rate of 70% or whatever, that kind of calculation -- one of the reasons it's not 100 is there's an assumption you've finished paying off your mortgage, you're not making 401(k) contributions anymore and so on. that's, those are the types of things that people try to calculate in when they figure out what replacement rate you actually need. >> we have time for one more question. yes. yeah, hi. >> hi -- [inaudible] and a lot of the current savings incentives are not efficient, they're not effective, and many of your ideas that you've communicated i find to be very compelling. so my question is, can you

comment on the level of support that these ideas have for working men and women on the hill or within the current administration? because i find your ideas very fascinating. >> that's such a good lead into the next panel, but any comment on the political popularity of your ideas? >> yeah. i mean, i think, first, a lot of the ideas have been proposed by this president, and i don't want to sugar coat it. i think some of these are very ambitious legislative proposals that will probably take multiple years to get enacted. but i think there are signs of positive progress on the hill. there was a senate finance committee working group on retirement issues that indicated bipartisan support for the idea of a refundable savers credit. they also indicated some interest in defaulting people into lifetime income options.

there, i think, has been some interest in cutting back on some of the retirement savings incentives at the very high end. for example, there's a stretch ira proposal that limits the extent to which you can continue to reap the benefits of retirement savings once your retirement savings have been inherited by your heir, and that has at times gotten bipartisan votes. so i think this is sort of a long haul effort, but there is movement in a positive direction. >> i have nothing to add, agree totally on this one. >> yeah, no. >> i'll toss in two cents. i think that there is a political sweet spot in encouraging saving for low and middle come households. middle income households. the sweet spot being that the democrats care about it because it's low and middle income

households, and the republicans care about it because it's safing. that's oversimplification, of course, but i think that if -- my sense is that both parties can support that type of initiative without any sort of stretch of their basic view of the world. and that if and when they do decide that they want to actually do something, that that would be a major candidate for action precisely because it would be consistent with both of their views of the world. >> leslie, as i said, that's a great lead-in to the next policy. thanks a lot. thank you. >> thank you. [applause] >> hi, everyone.

hi, everyone. we're going to have a 15-minute break x then our next panel -- and then our next panel will begin. thank you. [inaudible conversations] >> well, as you just heard, they're going to take a bit of a break, a 15 minute break here at the center for american progress, and resume with their discussion on tax reform and the financial challenges facing those heading into retirement, so we'll take a break as well with a note about the senate action late last night, actually, in the wee hours of this morning. the senate passing the two-year budget bill 64-35. politico saying this morning that president obama today urged congress to use the momentum of its sweeping two-year budget deal to get moving on spending bills that can give the economy a needed jolt and warned against getting distracted by partisan motivations. that's from mitt coe. the statement from the white

house said this agreement is a reminder that washington can still choose to help rather than hinder america's progress, and i look forward to signing it into law as soon as it reaches my desk. that could be today. we will keep you posted. we'll hear from the white house today at 12:30 eastern. today's briefing live over on c-span, and may be hear more about news in this tweet from erica mason hall breaking white house to announce today u.s. boots on the ground in syria, official tells nbc news richard angle on a special report, that tweet from nbc. so a 15-minute break here at the center for american progress, and we'll, in the meantime, we'll show you a conversation from this morning's washington journal on latinos in campaign 2016. >> guest: it's a nonprofit, nonpartisan organization that advances the principles of

economic freedom to the latino community across the country. >> what are some of the issues that you're concerned about? >> guest: debt limit, immigration reform. there's educational issues, the well being of the latino community that matters to to us. and, you know, engaging the latino community and fulfilling their civic responsibility. >> host: how is is immigration reform an economic issue? >> guest: it has everything to do with how our economy interacts. so it's important that we have an immigration law that allows the private sector to respond to market forces by hiring -- the private sector to hire who they need to hire in order to make a profit. sometimes that is low-skilled, sometimes that is high-skilled. sometimes there are immigrants who are coming into our country that are important in that role in fulfilling, i think, that demand in the private sector. >> host: when you say debt ceiling, what is your concern,

what is your hope for the debt ceiling? >> guest: well, ultimately, you know, we are concerned that legislators, elected leaders pull fill their promises -- fulfill their promises to be fiscally responsible, to hold sacred the money that taxpayers are paying into our government and that they be, make sure that the programs that they are financing are working effectively. and so when we have spending caps, that you honor those spending caps. and in this case, they have not. they passed a bill last night, i understand, and they didn't fulfill their promises. and so it's -- what it does is it sacrifices the future of future generations. latinos are very young. we are 27 years median age while the rest of the country is 10 years older than we are on average. so really the ones who are impacted by this more than anybody else are latinos.

and we'll have to pay the pending that is occurring today the spending that is occurring today in the future more than anybody else. so it matters, you know, what elected leaders are doing with taxpayer dollars. so we just felt that what was done last night was not honoring the spending caps that they had agreed to, and the fiscal promises that they have made. so when a politician tells you when they run for office that they're going to be fiscally responsible, then they come to washington and it turns out they're not, well, we remember that. >> host: daniel garza, why are are republican candidates not doing well with latino voters? >> guest: there's a lot to that. it's complex. but, ultimately, i think the conservatives, conservative movement for decades stayed at the margins with minority communityings. i think they ceded minorities to the left. and two things. one, i think they just assumed

that their principles of prix markets and limited government -- free markets and limited government would sort of sell themselves to the latino community, that latinos were conservative instinctively, that they came to america to work hard and achieve the american dream, so they were automatically aligned with conservative principles. while the left was spending money, recruiting young latino talent embedded in the communities, using federal dollars to provide services, gleaning data from the latino council for decades, la raza, spanish-language television, unions, all these sort of, you know, forces were at work in the latino community that were more progressive. and so in driving that narrative and those ideas of left, i think they were much more effective because they were engaged while conservatives were not engaged. and so now they're paying the price. and they're having to catch up. even though i agree that latinos are fundamentally more conservative in their pill soft

call -- philosophical, ideological leaning, you still have to get engaged. you have to connect. ronald reagan said it best, you know, freedom doesn't pass on through the blood, it passes on from one generation to the next. so you have a civic and political responsibility to engage with all constituent is is which they failed to do so, the conservative movement. >> host: what have the presidential candidates been saying that you agree with when it comes to some issues of concern to latino voters, what are some of the positions that have turned off latino voters? >> guest: well, contrary to popular belief, all issues are latino issues. it is not just the issue of immigration. obviously, on the issue of immigration there's a diverse field of thought when it comes to that on the republican conservative side. and they're much more unified on the left, democrat side, if i will. so it's easier for one to know

the position of one side or the other. or, i i should say on the left than on the right. so it complicates things when it comes to immigration with latinos, to say the least. but on poll after poll we know that jobs, the economy is number one in ranking of concern for the latino community, you know? we're concerned about our kids graduating from college and there are no job opportunities. we're concerned about the real low labor participation rate right now in the country which is at 62%. that matters to us. we just did a study at the libre initiative that shows during this time from 2009 more latinos have been part time than any other social group in america. and so if we're at 8 percent part time -- 8% part time while the rest of the country's at 4%, obamacare is impacting us. frank-dodd is impacting us.

more regulation, more taxation. as government grows in its power and centralizes more capital here in d.c. and wall street, those impacted are minority commitments. and the government is imposing more, you know, or threatening to impose minimum wage tax hikes, almost double the cost. right now blacks and latino youth are in double digits when it comes to unemployment, and they want to double the cost to hire them. this matters to us, you know, because it's bringing a lot of latinos to their knees economically speaking. so that matters to us on what the candidates are saying. education, of course, also ranks very high. obviously, a formal education is going to position you in the marketplace, and a quality education is going to be critical. school source issues matters as well, because schools are failing, the public schools, and they need an option to pull their children out and get them back on track and get them a

proper education. college tuition and tax hikes, what the candidates are saying about how we can begin to restrain a little bit of the high cost of college and an education. and health care is also a very important issue to us. and, of course, the issue of immigration. >> host: how long is -- how long has the libre initiative been around? >> guest: we lawned in june of 2011, we are -- launched in june of 2011. we have about 30 contracted workers in nine states. >> host: and it's a koch brothers-funded initiative, is that correct? >> guest: charles and david koch, i understand, contribute to freedom partners, and we have received contributions from freedom partnerrings. so that's, i guess that's the connection. >> host: daniel garza is our guest. libre initiative, libre meaning freedom? >> guest: freedom. free markets, free people, yes. >> host: numbers are up on our screen, republican, democrat and independent. and we've set aside our fourth

line this morning for latino voters. we want to hear from as well, and that number is 202-748-8003. marco rubio at the debate on cnbc the other night, want to get your response to what he had to say here. >> we also need to talk about the legal immigration system for permanent residency. today we have a legal immigration system for permanent residency that is largely based on whether or not you have a relative living here. and that's the way my parents came legally in 1956. but in 2015 we have a very different economy. our legal immigration system has to be based on what skills you have, what you can contribute economically and most important of all, whether or not you're coming here to become an american. >> host: daniel garza. >> guest: so i agree in most part with what he is saying. throughout our history there's an estimation that there have been 200 million immigrants that have come to america, waves and waves of poor immigrants have come to america with a lot of

skills, a lot of talent and, i think, a lot of desire to achieve the american dream. those waves of poor immigrants have made our nation richer, stronger. because our economic system allows anybody with nothing to achieve anything, we have been a prosperous nation because of the wealth of labor. because an immigration system has allowed us to accommodate for those waves of poor immigrants. so i don't feel waves of poor immigrants -- i don't fear waves of poor immigrants even to this day. so what marco rubio is talking about is that we need a system, again, that allows our private sector to respond to market forces. and hiring those people who have either low skill or high skill, and that means student visas, that means absorbing the dreamers that are here. the 1986 dreamer act patsed by

ronald ray gash -- passed by ronald reagan didn't accommodate for future flows of oil grants. -- immigrants. that's why we've almost forced people to come in illegally. so what we need is to fix that component and decriminalize a very rational activity of our private sector hiring who they need to hire and somebody be selling their labor so that they can improve their lives and seek opportunity. at the same time, we do need to, of course, guard our borders, and we need to secure our borders. we are a sovereign nation, after all, and there are a lot of people who want to do us bad. but those are the exceptions when it comes to the immigrant community, and so we're hopeful that, you know, folks can prevail, come to the middle and reach consensus and show some leadership on this issue. >> host: let's take some calls. daniel garza is our guest, and jesus is calling in from bidford be, maine. hi, jesus. >> caller: hi. my question is for mr. garza.

let me -- >> host: sorry about that. we're going to move on to don in vallejo, california. don, you're on the washington journal. please go ahead. >> caller: yes, hey, thanks for c-span, number one. i'm looking at this guy garza. you're supposed to be representing the mexicans, so-called mexicans here in america, but don't you, aren't you part of the spanish conquest? aren't you one of the ones who took the indians and turned them into mexicans and taught them how to speak spanish and put them in slavery? you know, how can you represent the mexicans when you're not even a mexican? you're a white man, okay? latino, that's not mexican. that's a white man. okay? >> host: got the point, don, thank you. any response to that, mr. garza? >> guest: well, look, i think if

we're going to indict this generation for the sins of the past generations, i think we're all in trouble. [laughter] all we can do is, you know, reflect on who we are as individuals, as a society today, make life better for ourselves, try to advance freedom, try to make sure that we have a nation where we can safeguard the notion that there is equal opportunity and that we can all prosper and thrive. and no matter who you are. and that's the promise and the proposition of america, and i want to be a part of that. but, you know, having said that, look, i think it's important that the different, diverse voices, diversity of thought even within our cultural diversity that we be given a platform, you know, to voice our concerns about the direction of this country. because we're impacted, you know, by the decisions that are being made here in washington, d.c. and in our state capitol. >> all of today's washington journal available online at c-span.org.

we will take you back live now to the center for american progress and their constitution on retirement and tax policy. >> welcome back to forging a new path: how tax reform could address the coming retirement crisis. my name is rebecca, and i'm the director of policy of the poverty -- [inaudible] here at the center for american progress. having heard an incredibly helpful overview of the state of research on savings incentives earlier this morning, we're now going to switch gears a little bit to focus on how we can build the public and political will to address our lopsided tax code as part of efforts to boost americans' retirement security. please join me in welcoming our second distinguished panel of the morning. sean o'brien is with afl-cio. gary koenig is vice president of economic and consumer security at the aarp public policy institute. diane oakley is executive director of the national institute of retirement

security, and eric rodriguez is vice president of the office of research advocacy and legislation at the national council of la raza. thank you so much for being with us today. >> thank you. >> so, eric rodriguez, i'd like to start with you. there's a lot of discussion about the coming retirement crisis, but too often the related policy discussion seems to be missing. how do we get more attention for the economic struggles of older americans that takes into account the growing inadequacy of families' retirement savings? >> well, it's a good question. you know, in the time that i've been here in washington, 20-plus years, i've seen the debate around retirement security issues really change and develop over that time. you used to be able to secure, you know, improvements in retirement savings in a couple of ways. one was with a strong coalition of business, seniors' organizations and, certainly, labor pushing through changes that were very important for

workers. and as things have become more individualized in terms of the reliance on savings or retirement security, it's meant you've had to change the way you think about advancing and advocating for changes; retirement savings tools, products and changes. so when we think about what we see on the horizon, there's a lot of great ideas out there. i think we'll talk a little bit about california, illinois and other states. i think what you're seeing is different and broader coalitions of constituencies that are coming together saying, hey, we really need to do something about the savings and retirement situation that we have out there and pushing for those changes in a much broader way than we've seen before. so one way has been constituencies, and i think the need to broaden the constituency support for what we need. the other, quite frankly, has been in major tax overhauls where you've had a situation where the top is going to benefit tremendously from the outcome of that conversation, and you have some good

government types who would say, hey, shouldn't we be doing something for the low income? and that's really what 2001 tax reform was about. that's how we got the child tax credit, in fact, and expansion of the itc, was in a debate like that where you didn't necessarily need a strong con constituency push, but you needed smart people who knew how to get something dope. and i think fundamentally that's changing. we have to bring individuals and workers to the table x that means broadening the constituency much well beyond what we're seeing today. >> and, gary koenig, i'd like to bring you into this as well. we're in the midst of an election cycle that's set against the backdrop of fiscal constraints at the federal level. tax reform discussions are perhaps in the very near future, and this could especially benefit retirement savings because, as we heard this morning, savings incentives make up such a large share of the tax code.

although, a new report today issued by the center for american progress finds many of those incentives are overwhelmingly complex or, they're hard to understand, and they make it very difficult for workers to take advantage of them as a result. and in addition, many are skewed in favor of higher income earners. how can we get more retirement policy experts like yourself, like the folks that we have had here today to consider tax incentives as an area that they should care about and as one that's ripe for improvement the? >> that's a very good question. the one thing i would say before i get into the tax reform aspect of it is we have a generally pretty good idea of what works for retirement savings. and so that is access to a payroll deduction retirement plan through work, and plan design, automatic enrollment and escalation. tax reform, i think, can complement those features, but we shouldn't lose sight of those are two key things we know we

need to push forward with. with respect to tax reform, one thing i would say is that we need to, i think, in order to have impact in that debate we need to talk about what it means for additional savings, what it means in the context of tax reform which is going to be focused on making the tax code simpler, it's going to be focused on making it more efficient, it's going to be focused on pro-growth, and it's going to be focused on making it fairer. so i think with respect to retirement saving incentives, we can hit all those buckets. we can come up with a tax system or a savings incentive system that is fair, that is simpler and that is pro-growth. we need -- i think that's a key argument. savings is a pro-growth proposal, right? it is a pro-growth part for the economy. and i think we need to emphasize that. so in my case, and i'll just throw this out there, one thing i'm really interested in is reforming the savers credit.

i worked on the savers credit back in 2001. i would love for that to be made simpler and also go directly into the account, because it would build savings. >> and how can we get more retirement policy folks to see tax as something they should be focusing on? >> i think it's making sure that they understand the value. so right now the way our tax system works is it works well, our retirement savings system works well for some, but for too many it doesn't work well enough. i think there is an opportunity here, and i describe an opportunity for us to improve it so it works as well for this other part of the population for whom it doesn't work well enough and who, in fact, need more savings. savings are more important for them in terms of their retirement security. >> sean o'brien, turning a bit to the politics of tax reform, we see exception of the rare bipartisan cooperation that we've seen in recent days with the budge deal actually moving -- the budget deal actually moving through the

house and early this morning through the senate and now moving to president obama's desk to be signed. we're generally living in an era that most people believe is hyperpolarized. gridlock is the word of the day. so as a result, i think there's some level of cynicism that we'll really see anything move at the federal level in this space. which policy steps related to tax reform and the kinds of savings incentives that we're talking about today do you' as having -- do you see as having the best chance or any chance offing? and does paul ryan's election as speaker change anything? >> i think there's an interesting question about paul ryan in particular. i read a tweet from a reporter yesterday in which the reporter was basically saying, well, so for paul ryan what's going to happen in the next year, right? there's no budget to worry about, we're not going to have immigration reform, not going to

have -- do anything on entitlements, so is it tax reform? and i think, you know, we don't know, and we don't know where i think where speaker ryan would really come out in terms of his interest or not in addressing retirement savings. you know, if you look at the work that he's done in the past, his interest in retirement has really been about social security privatization, cuts in social security benefits. on the other hand, he certainly has shown himself open to, i think, radical, you know, embracing radical ideas in terms of changing tax code incentives. so, for example, getting rid of the current tax incentives for workplace health care plans and replacing that with flat dollar credits. actually, refundable dollar cents which may tell us something or not about his

willingness to embrace or at least consider refund about of the savers credit. you know, as we think about opportunities for addressing retirement savings in tax reform, i would, i think i would first say, you know, the first thing that comes to mind really though is we have to worry about the threats to the retirement savings system. and a lot of times the retirement savings system is looked at as a piggybank by congress to pay for other things that they want to do. certainly, if you look at what paul ryan's predecessors, the chair of the ways and means committee in the house had proposed, you know, he would actually have used changes in the retirement savings incentives to pay for other things. you know, you've referenced the budget deal. let's look at that budget deal and what was included there. there is some stuff on retirement, and they use it to pay for other things. actually, i thought to myself that, you know, i learned that,

you know, after having been in washington so long i wasn't cynical enough -- [laughter] because the first version of the agreement that was released included certain changes to defined benefit pension rules, higher premiums that had to be paid to the pbgc as well as changes in the funding rules. and that would have generated about, i think, $5.1 billion over ten years. and then within 24 hours they changed what they did for a 50% increase in the money they were getting from it. and i, it's hard to believe that in this all came out of a heartfelt desire to, you know, protect pensions. it really was about raising the money to pay for other things. so it's important to keep that in mind when thinking about tax reform. there is a threat to the workplace-based retirement savings system and other retirement incentives. i think in terms of what ideas are most likely to be looked at, you know, unfortunately some of it tends to be, i would consider

to be more marginal even though it may or may not be worth doing. changing some of the rules to create incentives for more efficient retirement plan designs. there seems to be a fair amount of bipartisan interest in something called open, multiple employer plans which would allow for -- targeting smaller employers to come together in a plan that they don't have to, the employers themselves don't have to run. you know, there has over time been a lot of interest in changing the savers credit, and there's been a lot of talk about that here today. gary's talked about it in, certainly, the first panel has talked about it a lot. it's hard to gauge how much energy there is and whether or not you can get republican support for refund about. i think some of these structural questions we've heard a lot about today are really important, and they're just as important as the retirement savings incentives. you know, interestingly, you know, the auto ira proposal

initially was a bipartisan proposal. i think the original republican cosponsors of that all lost their re-election races, unfortunately. [laughter] but it has been bipartisan in the past. so i think, you know, there may be opportunities for discussion around issues like -- proposals like those. >> and, diane oakley, i think what we're hearing is maybe question marks at best about how much we can really see at the federal level in this space. and even if we were to see forward progress at the federal level to make savings incentives work better, be more efficient, other policy efforts would arguably be needed to make sure that we see more people save for retirement and take advantage of those kinds of incentives. are there steps that policymakers outside of congress can take, and in particular are there steps that state policymakers should consider? >> it's a great question, and, in fact, you know, part of idea is the federal government can't do it on its own. what's really important for the federal government to understand

and even the state government legislators to understand is that individuals know they cannot do it on their own. and, in fact, we've asked americans, you know, do you agree with this statement i can't save enough for retirement on my own. three-quarters of americans agree with that, and about 50% of them strongly. and the other piece is that americans want help. we've got data that suggests, again from this public opinion survey that we do, that 84% of americans want to have higher priorities placed on retirement security. ..

the bill fairy mentioned, i forgot the title of it but that 2001 tax bill does not major tax reform by the way, something like the 86 act which were talking about in some of the discussion here, but that bill was the first time that really congress passed federal legislation in creating the saver's credit that would focus on where the problem is. when you look at who does not have a retirement account, it's the bottom half of the population by income. the lowest income quartile, only about one in four people have a retirement. one in four households have a

retirement account. if you look at the next poor tile it is about half. that's where we have a big gap. we have a gap in the level of savings entirely that we have the gap with no savings. the saver's credit is targeted towards those individuals. it's worked we must extend. because it is a modest proposal and it got more modified as it does, how all of a sudden the new bill doubled the amount our increased by 50% to pay for from the retirement community. when the other bill was being put together one point in time the saver's credit to cut by at least that when it was done. instead of giving everybody a 50% tax credit it had attended 50, 25, 20 and 10. in fact that also because it's not refundable for people of the levels where you really need to get incented because they have no tax liability, they don't get the same type of benefit that

someone into 39% bracket kits, 40% of their pension contribution is supported by the tax law, they get none of that. so it's unsurprising they don't have savings. what we've seen is states also relies because i think they are closer to their constituents because there are more districts locally. we have seen actually bipartisan effort across the states. by states already have approved legislation. illinois and may be the first state to move ahead with some type of auto a. so the proposals are having automatic payroll deduction, in other words, as the employee earns to lease make a commitment to employees to give them access to payroll so they can do that one thing we all know works best when it comes to saving, which is a to can think of paying yourself first, when you get your paycheck by putting your money into your retirement plan,

that's the best way to say. if you a payroll deduction you don't do it at the end of the month. we know that especially for those incomes, and individuals are willing to do that. we've seen illinois adopt a bill that would implemented next year. california is in the midst of a study that should be finalized in the next couple of months and will be moving forward. washington state, oregon, nasa chooses and connecticut have looked at that. more than 50 of the state, more than half of the state have actually looked at and consider some type of legislation. a lot of the state treasurer's are taking action. we're seeing this. the thing that's important don't have to link up a little bit better is we have to link up using the saver's credit to the state effort. that can be a really powerful tool because right now one of things that happened with the saver's credit, the people, 25% of the taxpayers would be

eligible for the saver's credit based on their income. today, 20% of that 25 actually make a contribution that would be eligible for the saver's credit which was also talk about often talk about it, more about a natural uncle sam to save for retirement. it's important especially for not going to get a match from your employ to understand about the match in the tax code. the next step of that is a key one which is right now especially the low income levels, 40% who saved in open accounts don't go through the paper work to get the saver's credit. as gary said we don't put the credit into the count. if the state to look and say we're going to create these accounts, ma one of the way to go these accounts faster is to put the match in the accounts. the other piece to make it simpler is let's make that state. i think of be a lot of agreement

of single least the magic you get can't come out and tell your retard. we heard earlier my son might not go into this if he knows he can't get that money out until you're 65, maybe let him take his money but not let them take out the money that goes in from the tax code. i think there's some things we could do to make it better. i think will have a lot more ideas. i was thinking earlier, i think we got a great discussion. let's get on with it. >> this is the very beginning to plenty of time left. >> i want to get the cheap your chance to weigh in on traditional policy steps that should be on the table. we heard about the saver's credit, auto iras. there's this general sense, that the tax code is lopsided, there's a lot more that benefits the higher income households and those at the bottom refund ability is key. what additional policy steps

that also need to be on the table either the federal or state level? >> i'll start. although i know i'll sound like a broken record a little bit, so i apologize. what diane said, i really, the reason why i am a big supporter of a big fan of the series great is because i think it is doable any think it can get support. one of the keys for the saver's credit is not making it refundable but having it go into the counter don't debate the language for second. speed will get to messaging in a minute. >> having to go into the count is ultimate article because what we want to do is build assets. i think i will make it simple and that will complement. want to do things in my initial comment, we should complement the features and the policies that we know work and are

effected. providing more access to payroll deductions we know is an effective future. doing it through auto enrollment window is effected. the states are taking up where the federal government sort of fell off in terms of the ira. at the federal level at the very least we could have the saver's credit that goes into account which supports what's happening at the state level. i know einstein like a broken record but it's important to emphasize this as i think something that is achievable in tax reform and the a lot of our goals. >> i would add, i think it depends on the problem we're trying to solve, more specifically. are we trying to prove adequacy for current savers in some way? will that lead you down a certain path? are we trying to bring into the retirement savings system '07 left behind or that are not engage? that take you to a different kind of road because we start to think that are we talking about? we are talking a potentially low-wage workers, those who

don't automatically saved in any other way that maybe a disconnected from the banking system, maybe moving from job to job. that means a different set of things you want to look at and what is the of the tax system is influencing or affecting those particular workers and families. 'so i was a couple of things on the. there was a great, i will plug a c.a.p. study earlier this year. >> anytime you want. >> you look at the demographics. i think the big picture wasn't that we've got three states that a majority-minority right now it's going to go to about 14 in the next few decades. what's happening to minority workers, how are they saving becomes an important national question also really important in a few states. we look at what's happening in california, we are studying it, looking at the retirement savings issue. 3 million latino workers don't have access to retirement savings accounts in california.

we've got to be able to dive into that, unravel that ethic at what's going on with those particular workers if we're going to be able to substantially increase over all savings over time. the other issue i think is really important related to this is a lot of the data coming out right now that's looking at wealth inequality and what's happening amongst households based on race and ethnicity is funny even if you control for income, if you control for employment, you find real disparities in savings and wealth between african-americans, let tenet and whites in their upper '20s that have good college degrees, but they of student loan debt. they have significant amounts of debt that is preventing them from being able to engage in writer savings or even if you strong incentives, even if you have good access you're going to run into problems if we are also addressing some of these problems.

tax reform can look at what's happening for certain populations and try to provide some relief and i think the right kinds of incentives. i agree, this is the issue with the savers tax credit that he mentioned. we can get changes to the credit in a major tax reform overall the question is at what cost? ultimately that will include a lot of other provisions in the tax reform package that could skew to the upper half of the income for the upper 1%. you've got to wonder over the addressing the problem is that's the result we are getting. we've got savers but we've got a refundable child tax credit in 2001 but i and others opposed that bill for justifiable reasons. we are going to have to think about this more holistically, but i think on the whole it depends on the problem we are trying to solve and i think it's about workers who are not in the system, not saving or different kinds of situations that we

should be looking at as a long-term investment in improving retirement savings. >> i want to bring you in on this, given the political constraint we've been talking about this morning that frame so much of what happens in washington, are we in a place where if we want to see those improvements added to a bipartisan support where we will have to find a way to pay for those improvements? shaun, do you have thoughts on that? >> first i just want to build on -- >> go for it spirit a point eric was making. the conversation we had at laurent's earlier in the week talking about this is, -- rossa. a lot of folks were uncovered also have emergency savings. certainly this is some of the earlier discussion about leakage from retirement plans and how we think about that. i think right now in the most --

there's no way to grapple with that other than to concede that okay, there are some people are going to have to access this money so let's put them into a roth ira so they can take out the contributions and not pay a penalty. i think this is where more work needs to be done. think about maybe there's a way to pair the need for short-term savings with some kind of features in the plan design to help people in that respect. it's an important area we need to think about because otherwise we're going to have the leakage problem for people who go in or they'll be plenty of people who are not going in because they can't access, feel like they can't access the money easily enough and they may need it. on the question of paying for the reform, as i noted earlier, my biggest concern is that the retirement savings system is going to be asked to pay for other things, take money away

from it. and that certain something i would caution against. let's have a discussion about how we use this money more effectively. but i think a bad idea talk about taking money away for deficit reduction or to pay for, eliminating, reducing capital gains taxes. i think that would be my biggest concern, if you're talking about, a lot of people talk about the tax reform as some people might do as revenue neutral. some people would blow open giant holes in the budget because they don't replace the revenue. even in the context of repeating people as a whole, is a former ways and means chairman camp is an example again where he supposedly was revenue neutral on the whole but it did take money away from retirement

savings. >> look back at the 2001 tax bill. the savers credit was scored by gary and some of the folks at about $10 billion of lost revenue. does score for the rate revisions and the reductions in the bracket changes i think was probably about 800, almost 900 billion. we look at this scale ca, i thik one of the hardest things we have and if you look at how much, i think the original, there was one score and one of the obama budgets about making the savers credit refundable and linking that with auto ira come to put that together you are probably somewhere maybe $50 billion that that was back in 2011. so it's probably more than that. you are looking at $50 billion. summit it depends on what you're doing. it sounds like a lot but if you're going to turn around and do major rate reduction,

restructuring of corporate taxation, how do we not do something for half of the americans who right now feel they are in a crisis? there's been some analysis that if you look at the top fortune plans, which has been done by a group called -- they have a publication that said even among career employees at these large corporations where many of them still even defined benefit plans as part of their retirement portfolio, one out of five, only one out of five are going to be able to maintain their standard of living. what they also suggested, even in their circumstances, 19 or 18% of individuals really will not be able to retire until they are 75. that's in the best plans. those are not for the latino and

the african-american population where the majority of people have nothing saved. when we look at the population at risk, they are minorities, they are women, they are single individuals and they are our children. and we have to do something. >> you mentioned the dollar figures that might sound large. we were talking about the peace that no one often thinks about, the cost of doing nothing. could you talk about that speak with i don't think we've really put anything on the cost of doing nothing to do. it's a figure we haven't looked at. we know, for example, from our david that when retirees spend a defined benefit pension money they generate between dollars of economic activity in the united states roughly. in one year -- from our data. what concerns me is whether generations coming up that will have half the amount in resources that our current retirees do, and we have baby

boomers who no longer will be able to spend and help fuel the economy as they have done throughout their entire time in the workforce, what does that mean? at the same time we also know we have millennials who are coming out and they are being challenged to buy houses, to save for retirement, to pay off their student loans. what's going to happen to our economy if people don't, we have a consumer economy, we don't spend, what happens next and we asked individuals in our public opinion survey, but we do to respond to the crisis tha but yu tell us you are in? 75% of the people say i'm going to spend less money in retirement. if i'm a drug company or a health care company, i want to be concerned with who's going to be my marketplace in the future. so it's not just what are they going to spend for people who need help to stay above the safety net.

the safety net cost can be up to 2500, i think $2500 a person per year. this is from an estimate a study done by aarp in utah for people who need that type of direct assistance to that couldn't be a huge cost. >> just to follow, i think understanding that if individuals don't have assets for retirement, it could create greater burdens for state and local governments. the other thing i would say is aarp sponsored some work done by oxford economics because we want to look to see if we can increase say this, what would that mean for long-term growth? it substantial. increasing savings is a way for us to improve our economy. from the left and right with both, that's a desirable outcome. savings can be part of that solution. we have evidence to support that. >> shon, some people say that

the looming retirement crisis is the result of poor choices or personal ineptitude. i think it's important to talk about messaging because on this that we might all be preaching to the choir but when we're thinking about building public will, political will, what do you say to people who claim people should have saved more, if something if they don't have savings and enough prepared for retirement. >> clearly if you look at the experience of the vast majority of working people in the last couple of decades, if you had at this stagnant wages, you have more recently surging health care costs, which by the way are probably going to cannibalize retirement savings are people going for if we don't address those out of pocket costs. it's clear that we have an

economy that's out of balance, that is had enormously affect on individuals and families finance and security. that is the context and i think it is indisputable that, particularly for middle and low income americans, that's been unfortunately for trajectory that we have been on for far too long. i think also that, i think we talked about some of the here today, so but these enormous differences in people's experience based on whether or not they have the benefit of a workplace retirement plan. from the first panel pointed out how the people actually say directly into an ira we have the tax advantages of there.

you compare a similarly situated person who is workplace plans to when it does have the workplace plan. the odds have been saving for retirement are tremendously different. just really underlines how we have a system that doesn't really work that well for people and ou there are real problems h the retirement saving system. you look at the reality of that, it's very clear this isn't about moral virtuousness. it's about the larger economic storm that people are facing in a system that just doesn't work well for them. >> i think it's really important for us to get some real pictures of what the typical american is. so many of us in the policy sphere, some people are lawyers, some people are indifferent things that we are not the average person, the average family. average family in california does, is the cover by pension, the average income is $25,000.

and so a lot of individuals don't understand that if they can even say $500 a year, that's huge. that's a huge thing for the. to understand, the other pieces understand really where the assets go. i used to work for a congressman from north carolina on the ways and means committee i gave him a statistic one night that he couldn't believe and it was from the government accountability office. they have looked at the assets of baby boomers but to look at all the financial assets of baby boomers. that assessment was that the bottom half of the baby boomers owned just 3% of the baby boomers financial assets. and that was startling to him. he couldn't believe it or of course the top 5% of the baby boomers owned 58% of the baby boomers assets. this was before the financial crisis. we looked at this a couple years

ago after the crisis came about and as it was in two recovery, that ratio was about this thing. in fact, a little more concentrated at the top to bottom half still had 3% of the baby boomers financial assets. we took it a step deeper and we looked at those assets that are dedicated to retirement and retirement accounts to we have a lot of stuff in the tax code to make sure those plans don't discriminate. well, we got the bottom half of the baby boomers retirement assets to be 4% of all the retirement assets. the very, very top to get as much a love it more goes to the top 20%. in reality there's a real big myth that people are supposed of something besides the social security, but look at the income that goes to people who are actually retired and no longer working. the seniors over 60, the bottom half almost all their income is coming from social security.

and that is something if we really want to change we have to start dating real convincing data points that will never leave the minds of policymakers. >> this week we had reports, see if i can get this right, the top 100 ceos have retirement savings equal to the bottom 41% of american families, just to highlight those kind of staggering statistics. >> i think this is a common issue. what we can to get on our side is, if they can't speak english, if their foreign-born come if they have lower educational levels, of course they can't say for retirement. a lot of it boils down to look at the outcome of the data, look at wealth levels, income levels, and then putting the focus on individuals. we know it's really about increasing access, opportunity and increasing the incentives to save for those that are mobile or losing, relatively low

income. it's an important distinction because if we continue to think it's about people and their own behavior that we never get to systemic solutions we need. this is true of industry as well who have been our partners over the years, thank you very much, ultimately there is a plethora of financial education information, education and information that is going to change everything with respect to people situations. what we need is a coalition working on policy change. policy change some significant ways we've been talking about today. >> this stuff can get pretty wonky. as we talk about messaging and still managed to devolve into acronyms how can we talk about these issues and these goals as part of a larger movement or anywhere that might resonate effectively with the american public? i will take answers from anyone who wants to wage and. >> i will just start and say we've had an opportunity to engage latino workers in a lot of states and internationally on

the issue and they're hungry. they really want to talk about the economy. we can do think they only care about immigration. but, in fact, a lot of it is wages, income opportunity. they want the ability to improve situation for themselves and their lives. but what's happening is we're not having a conversation as much. we are not in communities, not doing town halls, not doing the kind of work that is essential to build up those coalitions. it's not just the messaging effort we need. it's not just adds or communications campaign. we've got to be in communities talking to people, organizing them, talking about what's good. to build a coalition it needs to be multifaceted, much broader than the coalitions we've had today because the deal has changed. even though we are very greater champions on capitol hill, very smart ones, they don't have the support.

they don't have a constituency support that they need to make the changes we want. we've got to roll up our sleeves, get out there and i think that is the way of the future. >> our members and -- do a lot of work to provide retirement security in the private sector, over 80% of union members have a retirement plan at work, two-thirds are in a traditional pension plan. and that starts with a set of values about what we are going to accomplish. what working people are trying to a published in bargaining. and, boil it down for me values perspective on retirement security, wanting to make sure that people after a lifetime of our work can afford to retire.

on a panel like this we do throw around a lot of numbers in acronyms, but i think the discussion that we have to have starts with really talk about what we want to 22 look like and what do we want, for retirement would we want it to look like? i think that's important. one of the things that's promising, bigger picture perspective i think people are really paying attention now to the fact that we have an economy run by a set of rules that enforce what are not designed to benefit middle-class workers or working people generally. so i think there's a real interest in making meaningful changes that are going to lead to better outcomes. i think that it's important the length of discussion into that larger discussion that i think people are very much open to inhabit without us.

>> i think two things. number one, the idea of working people, so many working individuals just fill out they have spent so much time working on that -- they don't have time to understand the financial education we want them to understand. they don't have anytime to do the advocacy necessary. they need to advocates, they need of data. but the other relatives the most convincing think we cannot understand is give us something we can all relate to. we all have to understand that we are human beings, and all of this is us together. i think what's interesting is when you start to look at millennials, there's a great deal of interest in retirement security and millennials. i think they are seeing their parents struggle and they see grandma and grandpa the mighty lucky enough to have a pension. i heard someone say a pension is like a foreign word to me, as someone who. i know i'm never going to get attention. the reality is they are willing

to say that, in fact, some of our data when asked people could you save like another 3%, could you save another five? millennials are twice as likely to say that they're willing to save more than the baby boomers speak they say they are willing speak as we say we are willing to save more. but are we seeing saving behaviors that matched -- >> i think we are, where they feel they can do even though they know they have to pay their student loans. they do get it when you start to explain to them that she, you don't want to leave the match on the table, you want to lease get into the plan. they are not backing away from auto enrollment. so they are embracing some of those things. i do think we have come we have to give them the facility to save and that's the biggest thing about the saver's credit and auto i every. when you put the two of them together, and this is data from the government accountability office, they did a study. what they should is in the bottom half we would increase

retirement income by about 20% for individuals who today are relying only on social security. that's a huge benefit to our economy and to our future. it's a huge benefit for millennials. >> people do understand the need to save. i think they want to save, and i think it is incumbent upon policymakers to design a system that makes it easy for them to save. and we are not there yet. i am optimistic. i think we can get there. i think that can be part of tax reform. building on what shaun said, i do think thinking but emergency savings is really important because that's really what people need initially in some money for an emergency, and then they can go and start building up their retirement savings.

if they don't have emergency savings and they're building a retirement savings -- i think people want to save. i think they understand the need to save, but i think it's difficult. savings because of financial challenges, because of having to go out and open up an ira, go to the bank, that is actually a significant barrier to a lot of people. i think the willingness is there. i think we as policymakers, policymakers could design a system to make it more efficient and to get people to do really what they want to do what they aspire to do. >> a final lightning rent before we do audience question and answer. if you had to pick one take with him this month's two-part discussion that showed the audience would, what would you pick? >> i think, at least in this small group, i think there's an

understanding that at least in the private retirement savings and pension space, that we need to not only think about the savings incentive but we need to make sure that the right kinds of savings plan and system are in place. that can meet employer paid retirement plan, as well as making sure that people have access to over just talking about, retirement savings that can make all the difference as well. >> the one thing we talked but was having something at the state level. the auto iras to be bipartisan, it became partisan. the states have a got the ball. i think i in matching pairs of five states that have already

passed plans that are in process of implementing them. there's dozens more that are set up commission for exploring this. that is the real opportunity for us to increase savings. i think we need to support that work. >> i think where to start looking at retirement savings as a win-win for everybody. it's a win for the individual. it's the way for the low income individuals. it's a win for the high-end income in this business people might rely less on entitlement programs. it's also a way of our economy. it's a win for business. it's a win for the financial services community. what we will have to choose where to find a way to come together as opposed to be there defending our sacred cows. and i think that's the key thi thing. >> eric does get a chance to give a final word because he had another engagement he had run off to but i think we'll open it up do audience q&a. so please raise your hand if you

have a question. right here in the front row. >> if i start with a comment. i have a problem with the general premise that facility more retirement savings will solve the retirement crisis. i believe that it is much more complex and some of the problems, some of the complexity was alluded to by some of the commentators. for example, looking at the macroeconomic context, many people come due to the developments within the last 30 years, the decline in wages, the fact that most people have not seen an increase in real wages at all, and the fact that the productivity, that tremendous

put it could increase is doing the last 30 years was not passed on to the average american. and as a consequence people just do not have money to save for anything. college costs have gone up, house of commons, everything has gone up while wages are declining. the middle class is decline. as we all know, we hear it anywhere, we hear it from, yeah, every corner, the middle class is shrinking. the incomes are shrinking. the middle class incomes are shrinking. so there's just not enough money. so that's the first point. the second point, if i may, and then i will come to my question. as a former economist, world bank economist at investment banker i think i know a little bit about the financing. end of the savings issue also is to be looked at an in a national

and a global context. what if we all save more? we need to have the assets to invest been in. if, as if i believe currently the case we continue to have a savings glut, meaning a lot, you know, all the money is looking for assets to invest in, then what happens is that asset prices increase at the rates of return will continue to fall. and right now we are lucky if we invest to get one or 2% rate of return. at i don't think that's going to change anytime soon, especially if the bush people are motivate people to save inning more. and then, now to my question. considering all that come with me be better instead of motivating people were spending a lot of money on tax credits to motivate people to save more for retirement, wouldn't it be

better to use that money, i think you mentioned $50 billion, to support social security? a program that the majority of americans trust and like. and that seems to have worked throughout decades. why not do that instead of stimulating the financial sector, because that's what it is also, we're stimulate the financial sector by giving tax credits for more savings because the money has to go somewhere. why not use that make was also security? >> naked for that a lot of there. i think probably three of the most common questions that you guys always get, right was people like incomes and rising cost, how can they possibly afford to say i think was the first piece. the second in interest rates are really point in saving anyway?

the reasonable minds might differ. the third being why not focus on social security. who wants to take any and all of that? >> i will ago. spent a great men in the front row. >> your comments were partly consistent with some of things that i've said, an that we've gt to look at the big can contact. we don't have an economy that works for people are we have a much bigger problem. we have to look at these issues in that context. absolutely agree with you on the basic point that we need to look at expanding social security. circa something that we in the labor movement here support. as you mentioned very popular and also very efficient, effective way to deliver retirement benefits. so absolutely with you on that. within the labor movement we've also i think invested heavily in time to deliver retirement

benefit that supplements social security. we are going to continue to have the need to do that. and so i think this kind of discussion, although it's pretty segmented will have a complete discussion about retirement savings. we need to connect it to the bigger picture. >> i would say the right retirement system is a necessary fix but not sufficient. so i think we still need of a better retirement system. in addition to strengthening social security, one thing that i would point out is even with no changes to social security can which we know some changes are going to happen, benefits are being cut right now. so we have for the retirement age is going from age 65 to 67 come at any given age you claimed benefits are getting a lower benefit as the age increases.

we also know that the pressure for tax social security benefits are fixed, not indexed. we have more people having more other social security benefits subject to tax. my point in saying all that is that we need to look at the system as a whole, but i think we need in addition to strong social security we also need individuals of additional retirement savings the north to live the way they want in retirement. >> i couldn't agree more. we need to fix social security. i don't think there's anyone on this panel who says we don't need to. we need to think about how do we make it especially of the lower end a little bit better for people because we do have, women, once they get to be about 85 have a substantial increase in the level of poverty, just because of their lack of having resources. at the same time there is a reason everybody should have some steak and i think everyone of these things. we should make sure we keep the high-end people in social

security and also think we have to make sure that we keep a low in people having some opportunity to say. what happens often in this gets into other things that are out there, individuals at the low end, their car breaks down to their house needs a new growth. if you're just living on social security, they do not have the resources to go and get that prepared and they may be forced to do something like go to a payday lender and given their social security check and get into that kind of financial downward spiral that c.a.p. and others have done a lot of work on. we want to find ways to bring pieces of the retirement system. we have a very bifurcated retirement system in the united states, especially when compared to our peers. i was in areas with members of former mayors of congress sitting next to one of our major financial mutual funds and they turned me and said well, social security has to do with the bottom half.

we can't have that kind of mentality i think we all have to have a piece of something to really make it work for everybody. >> other questions from the audience? right here. >> imf research associate any student in economics at the new school. one thing i heard a surprising was that this is the issue, the thing, i personally work on retirement account balances and a grouping to everyone, should agree on the fact there is not enough saving for individual. the surprising point wasn't that i heard aarp saying that -- [inaudible] in the places that even federal reserve is saying no, it doesn't come at us when the interest rate is so low.

so is this something that right and left will agree on, or is it something i took at the right that we're moving just because this is the right policy at the individual level, and that's the only option right now in? >> thank you for the question. so gary, i think aarp was mentioned. do you want to respond speak with i think what you are referring to his i mention aarp sponsored work from oxford economics and what that meant for long-term growth. the research found that it does help improve long-term growth. so i think your question was is this a left and right issue. i think economic growth is a left and right issue expect how do you get at it speak with is may be initiated i think it has been in the past have retirement

savings policy has been a bipartisan issue. in 2001 attacks cut bill, where that came from, if you look at the sites of the bill, about two-thirds of the was retirement savings and pension reform. that came about from rob portman and cardin when different sides of the aisle but this is when their in house and work together to build that bill at it again part of the tax proposal. i think it does. i think what happened is with the automatic diary we had the affordable care act and acrid scent issues but i do think fundamental having people save more for their future, i do think it is a bipartisan issue, i think it can be. i think it once was and if it can be again. >> i've been of are being at the sabres summit that they had that was part of this bill to

encourage people to save for retirement. part of the discussion was all about the growth we had created your most of the growth we had created, this was in 2006, with because we expanded that and we were borrowing money. i think we saw what happens when we expand growth on borrowed money. as opposed to when we create growth based on savings and investment come investing in things like our infrastructure come investing in our employees and our students to get a better education. we end up with about economy in the end, that's the keeping with remember. if we do it on debt, we'll be in a really fun place again speak i think we have to live there. please join me in thanking our panel. [applause] and christian weller, i welcome up to the stage. >> well, thank you very much,

rebecca, and the panelists for the interesting policy discussion. it is my honor to introduce our closing keynote speaker for this conference, dr. karen dynan is an extinct economist whose work has influenced my own thinking heavily especially consumer debt, market risk and other issues. she currently serves as this is in second economic policy and chief economist at the u.s. treasury department. throughout her career she has been sharply in tune with the pressures they sing american families including the pressure to build wealth and save money for retirement. i urge you to pick up a number of pieces over there. very informative. before her current role at the treasury department, she served as a vice president and corporate of economic studies program at the brookings institution. she also served on the staff of the federal reserve bank board for 17 years and was a senior a couple of the white house council economic visor from 2003-2004. she served as a visiting assistant professor at johns

hopkins university. herkimer has been one of public service and expertise also financial issues has by the critical insight of someone middle-class families we just heard putting squeeze more and more between rising costs and stagnant incomes. it is my great pleasure to bring confined to the stage. thank you very much -- to bring dr. dynan to the stage.

has declined markedly over the past several decades. american said about 12% of their income on average in the 1970s, about 9% on average in the 1980s and about 7% on average in the 1990s. since 2000 the personal saving rate has averaged just under 5% which is about where it is today. it's a very low-level a historical standards. researches don't entirely understand the source of the longer-term decline, but some have pointed to lower interest rates, higher aggregate wealth and a greater ability and willingness of households to borrow as possible contributing factors. whatever the reason low personal saving can be problematic for the growth of aggregate income and living standards over the longer run. higher savings would've been detrimental as the economy struggles to recover from the great recession because they would have held back private

demand. however over the longer run higher saving will increase our capital investments and in turn increase the income that we receive in the future. that statement is true even with a substantial international capital flows that we have at some of the additional savings would increase the capital stock in this country which would raise order to be in wages in this country. the remainder would increase the capital overseas and, therefore, the returns we receive on this capital. that's tobacco case but let me turn now to the crucial role -- there are really several parts of this case. first of all individuals households can better cope with unforeseen disruptions to their income and unanticipated consumption need needs if they o assess the cumulative. even before the financial crisis also income volatility was trained to do. increasing exposures declines in income. and then the high rates of job

loss and underemployment experience as a result of the great recession serve as a particularly painful reminder of the need for these sorts of precautionary reserves. second, saving provides individual households with opportunities. so funds for candidates who savings can be used to pay for college tuition and to purchase big ticket items such as cars. savings could households who wish to establish businesses in a better position to do so, and given the tightening of credit standards in the wake of the financial crisis, saving is more important to obtaining homeownership been in the past. i 2014 federal reserve board survey provides evidence on the board of saving in this context of the 87% of young adult who are renting but said they would prefer to own if they could afford it. 59% cited a lack of a down payment as a factor holding them back. so third and this brings me to

the things you've been discussing all morning, saving his support for individual households because it allows them to enjoy a better standard of living in retirement. although most people will receive social security benefits when older, and some will receive regular payouts undefined benefit pensions, these sources of income are often not sufficient to make up for the stub out in earnings that people experience at retirement. as a result older households will need to supplement his income with a committed well if they wish to maintain the consumption levels they had when younger. the need for retirement savings has increased over time, given rising life expectancy. today more than three out of 565 year olds, accessible higher share than previous decades. unfortunately for all the potential benefit of savings, many households and have a great

deal of trouble doing so. according to the 2013 survey of customer finances, only 53% of households reported having saved over the preceding year. low and moderate income households have a special low levels of a kindred assets. among households with heads between age of 25-54, the age that saving often peaks, the typical household on the lowest quintile, the net worth of this division of financial assets that amounted to approximately one week of income, and have liquid assets that amounted to only a few days of income. the typical household and the next highest quintile have about five and weeks of income and financial assets. and just over one week in liquid financial assets. so while these latter households in the second highest quintile, they are in a better position to

weather tempered disruption to income. the amount of financial assets of their the cumulative could only support a very short period of retirement in the absence of considerable pension income. there's also wide range of incorrect evidence to suggest many households have insufficient savings. for example, a 2011 brookings paper examines survey data on people's ability to withstand financial shock and determine one quarter of u.s. respondents were so-called financially fragile in the sense they were certain they could not come up with $2000 in 30 days. including respondents reported probably being unable to come up with $2000, half the respondents would be viewed as financially fragile. low saving was a key underpinning as people reported they most often turn to the own assets to deal with shocks. in addition many americans report adequate savings for retirement is a challenge. in a 2014 gallup poll only half of respondents reported being confident that we'll have enough

money to live comfortably in retirement. research validates this concern and suggest in particular households in the lower part of the income distribution are most likely to be squeezed. lower income households are much more likely to experience a material drop in the consumption at retirement than their higher income counterparts. so this brings us to the crucial questions of why people don't see enough and how federal policy can't encourage them to save more. so to start it's not uncommon to hear people say they can't afford to save. we lack research that can create documents this phenomenon, and surely is the case penalties some of these people are just not prioritizing savings for one reason or another. however, it does seem plausible somehow sold or simply stretched too thin to be putting any money aside. this problem has likely been

exacerbated by the stagnation of wages and the lower and middle parts of income this division over the past several decades. although my remarks on false are going to be focused on initiatives that directly encourage saving, this consideration just adds to the need for policy measures i've many of those proposed by the administration and policy measures being researched by c.a.p. that are designed to support income growth for households in the lower and middle parts of the income distribution. a second problem is that many of the tax incentives that it can put in place to encourage saving has very little effect on return to saving received by lower income households. as this crowd knows households in lower tax brackets achieve smaller reductions in their tax liability, liability for each dollar of savings and tax deductible for. and households with incomes so low that no federal income tax liability at all receive no benefit at all from savings tax

preferences that are not refundable. a third and broader challenge is that many people are not making this sort of rational calculations about savings that economists models often assumes. the simplest models used by economists predict that a person saving will depend on several factors, including the return to saving as well as how they expect their income to evolve over their lifetimes. however, the available evidence suggests the incentives that policy has traditionally the corporate to encourage saving by changing the return to the texas and seem to have limited effect on many peoples decisions, including people who would benefit from the savings tax preferences. so, for example, in a very comprehensive study that was cowritten by their own john friedman was talking earlier this morning, researchers examining a danish pension system which is very similar to ours found that only a minority

of savers respond to incentives affecting the return on savings in a way that was roughly consistent with traditional economic theory. most individuals, about 85%, or what the researchers termed passive savers, who did not respond. so what is it that blunts the response of many households? probably one significant factor is that people are focused on other aspects of their lives. so they use simple rules of thumb to determine their savings rather than complex calculations. that's not necessarily irrational. we could probably do a show of hands in the room to demonstrate this fact. ..