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Not a Democratic or Republican Responsibility It is an AMERICAN Responsibility These deficits [the primary deficit challenge facing our nation: structural.

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Presentation on theme: "Not a Democratic or Republican Responsibility It is an AMERICAN Responsibility These deficits [the primary deficit challenge facing our nation: structural."— Presentation transcript:

1 Not a Democratic or Republican Responsibility It is an AMERICAN Responsibility These deficits [the primary deficit challenge facing our nation: structural deficits] are projected to exist in coming yearseven when the country is at peace, even when the economy is growing, even when unemployment falls …While we address our short-term unemployment challenges, we must also immediately establish a path to address our large, and growing, structural deficits. Larry Mishel, President, Economic Policy Institute and David Walker, Former President and CEO of the Peter G. Peterson Foundation 2/24/10

2 Not a Left or Right Problem It is an AMERICAN Problem The United States faces a very serious deficit problem if current policies remain unchanged. The problem ultimately will threaten the economic health of the country and compromise the ability of the government to meet crucial national needs…I believe it is absolutely necessary for policymakers to address this problem, and the sooner the better…If the budget is not put on a sustainable path, it is likely that low- and moderate-income Americans will suffer the most from the inevitable erosion of the average standard of living in this country. No one with particular concerns about the well- being of low- and moderate-income Americans can afford to ignore the long-term budget problem. Bob Greenstein, Executive Director, Center for Budget and Policy Priorities

3 The Long-term Budget Outlook: One View Source: EPI Analysis of CBO Long-Term Budget Outlook and Budget and Economic Update Other Mandatory Medicare & Medicaid Revenue Social Security Net Interest

4 The Long-term Budget Outlook: Another View Source: EPI Analysis of CBO Long-Term Budget Outlook and Budget and Economic Update Other Mandatory Medicare & Medicaid Revenue Social Security Net Interest

5 5 DOD Budget ($Billions, Constant 2011$) Source: Wheeler, Center for Defense Information

6 ($ billions) Employer pensions and retirement plans 85 Mortgage interest 79 State and local taxes (property, income, etc.) 74 Accelerated depreciation 57 Capital gains 53 Capital gains step-up at death 41 Charitable contributions 37 Deferral of foreign income 32 (Source: Office of Management and Budget, Analytical Perspectives, February 2010

7 Forgone Revenues from Tax Expenditures versus Income Tax Revenues ($billions, 2009) Source: Joint Committee on Taxation; Congressional Budget Office

8 Wage Percentile AccessParticipationTake-Up Rate Lowest 25%38.4%27.7%72.1% Second 25%59.2%49.7%84.0% Third 25%67.3%60.1%89.3% Highest 25%72.9%68.6%94.1% Source: Pension Sponsorship and Participation 2009 Retirement Benefits: Private Industry Workers, By Wage Percentile 2008

9 78% of Americans concerned about having adequate retirement savings 92% state there is a retirement crisis/ 61% more afraid of outliving assets than they are of death (2010 Allianz Life Insurance poll) 2010 retirees with avg. annual earnings eligible at 65 for only 40% of their pre-retirement earnings ($16,500) (Social Security Administration estimate) 2008: 90% of people over age 65 received SS benefits, was the major source of income for 57% of families We need to solve our budget problems, of course, but in a way that doesn't worsen our retirement problems. – Ezra Klein (Washington Post, 11/29/2010)

10 Guaranteed Retirement Accounts Universal Coverage Mandatory 2.5% Minimum Contribution From Workers and Employers Government refundable tax credit of $600 for all workers, regardless of income Portable Benefits Minimum 3% Annual Real Return guaranteed by the Government PLUS Accounts Universal, Lifelong Account $1,000 Government Contribution at Birth Mandatory 1% Minimum Contribution From Workers and Employers No Withdrawals Prior to Age 65 Child Development Accounts Universal, Lifelong Accounts Greater Financial Incentives for Low Income Families Provide Initial Deposits, Savings Matches, and Encourage Third-party Deposits Asset Building for Higher Education, Homeownership, Entrepreneurship and Retirement Savings

11 Accumulation Phase Universal Coverage Government Aide Adequate Income Require Contributions Portable Benefits Voluntary Savings Wealth Payout Phase Lifetime Payouts Payouts Could Begin with Permanent Disability Possible Partial Lump Sum at Retirement Investment Phase Professional Managers and a Reasonable Choice of Investment Options Guaranteed Accounts Efficient and Transparent Administration Effective Oversight


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