Responding to growing concerns among American families about losses in their retirement, college, and personal savings, Republicans today unveiled the Savings Recovery Act, a bill that will help families protect what they have and begin to rebuild what they have lost. Rep. Howard P. “Buck" McKeon (R-CA), the top Republican on the U.S. House Education and Labor Committee, introduced the legislation along with other members of the House GOP’s Savings Solutions Group.
“American families are understandably anxious about the savings they have lost in this economic downturn," said McKeon. “Republicans have pledged to be the party of better solutions, and that’s why we’re proposing the Savings Recovery Act. This legislation will give families the freedom and flexibility to save more and rebuild their nest eggs."
In sharp contrast to the GOP proposal to make saving easier, House Democrats today held a hearing on proposed legislation that could actually undermine Americans’ retirement savings by changing the way 401(k) savings accounts operate. While Republicans have advocated common sense 401(k) reforms that would make the accounts more transparent and user-friendly for workers, the proposal offered by Democrats goes beyond transparency to require increased reporting and paperwork, and new government mandates on account offerings.
Rep. John Kline (R-MN), the top Republican on the Health, Employment, Labor, and Pensions Subcommittee and a member of the GOP Savings Solutions Group, cautioned against using market declines as a ruse to enact a controversial overhaul of 401(k) savings plans.
“American workers and retirees are justly upset and frightened by the dramatic effect the market downturn has had on retirement savings. But we do no one a service - indeed, we do a great disservice - to suggest the cataclysmic failure in our markets is no more than a function of so-called ‘hidden’ fees or corporate raiders," said Kline. “The dramatic loss in retirement savings was not caused, nor would it have been avoided, by the difference of a fraction of a percent in an investment fee."
Kline and McKeon suggested that the Savings Recovery Act proposed by Republicans offers a more direct response to Americans’ concerns about losses in their retirement and other savings plans, and that the legislation would allow Americans to more quickly and easily begin to restore their lost savings. Specifically, the Savings Recovery Act would:
• Make it easier for Americans to save more for their retirement by increasing the contribution and catch-up limits for individuals and families.
• Restore college savings by extending the existing SAVERs Credit to contributions made to 529 college savings accounts, effectively reducing by up to half the cost of a family’s contribution to the plan.
• Increase retirement income by doubling the Social Security earnings limit from $14,160 to $28,320 and allowing more Americans to increase their income without being hit by the Social Security earnings penalty.
• Provide tax relief for investors and seniors by immediately suspending the capital gains tax on newly acquired assets for the next two years, raise and index to inflation the amount of capital losses allowed against ordinary income to $10,000, and suspend taxes on dividend income through 2011.
• Stabilize worker pensions and helping employers invest in the future by temporarily providing an increased glide path for recognizing losses and two additional years to resolve pension funding shortfalls.
• Preserve employee-controlled 401(k)s by blocking efforts to wipe out 401(k)s entirely and replace them with government-run accounts.
More information on the House GOP’s solutions to restore Americans savings is available at GOP Leader.gov/savings.
