 Good morning. I'm Andrea Levere, President of CFED, the Corporation for Enterprise Development, and it is my great pleasure to welcome you all to what I think is one of our very favorite lines for starting a policy conversation. Can America save itself? Tax reform, savings, and financial security. For those of you who watched President Obama's inodular address, one of his most compelling lines was his reinvocation of the American dream. We are true to our creed, he said, when a little girl born into the bleakest poverty knows that she has the same chance to succeed as anybody else because she is an American. And as I sat with my group of folks, we all looked at each other and said, is this really possible anymore? And I think that's what our conversation is about today. Because if opportunity is at the heart of the American dream, one of the key ingredients if opportunity is savings. We see savings both as the bedrock for financial security and as a ladder to opportunity. If you have savings, you can protect yourself from financial crises, and over time you can build opportunity and wealth through home ownership, education, entrepreneurship, and retirement. But savings is something that too few people have. Many of you I know, less than a month ago, saw the findings from CFED's Assets and Opportunity Scorecard, which we released less than a month ago. One of the key data points in the Scorecard is a data piece called liquid asset poverty, which measures the ability of a household to exist at the poverty level with just its savings for three months if its main source of income is disrupted. 44% of American households are in liquid asset poverty today. What that means is that the number of financially insecure households reaches way up into the fourth quintile of income. So we find that households earning between $55,000 and $90,000 have 25% of those households in liquid asset poverty. We also know because of the great data from the FDIC that 30% of households have no savings account at all. So we don't even have the tools to help those families save. So today, to address this issue of savings, we've gathered some of the nation's leading policymakers and experts on this issue to really offer up the best ideas about what Congress and other policymakers can do to help more Americans save. In particular, we're going to be focusing on the immediate opportunity of tax reform. And while most of the debate around tax reform is about deficit reduction, we believe the conversation must be broader. Some of you may also be familiar with our report called Upside Down, the $400 billion federal asset building budget, where we see in fact that we spend largely through tax expenditures $400 billion to help people build wealth. This really shows how most of our social policy is being created through the tax code. If we make the right changes to the tax code, it can have a tremendous impact on savings and financial security, especially for lower and moderate income households who reap the lowest amount of benefits yet have the greatest need. To start this conversation, I will briefly introduce our keynote panel. For their full biographies, you have the handout on your chair. We are going to begin with Congressman Richard Neal, who is a Democrat from Massachusetts, who was elected in 1988. He is a senior member of the House Ways and Means Committee and the ranking member of the Subcommittee on the Select Revenue Measures. Next will come Congressman Jim Gerlach, who is a Republican from Pennsylvania who is currently serving his fifth term in Congress. Congressman Gerlach is also on the House Ways and Means Committee and serves on the Health Subcommittee and the Select Revenue Subcommittee. And third, we have Jonathan Mintz, who is the commissioner of the New York City Department of Consumer Affairs and has held that post since Mayor Bloomberg appointed him in 2006. New York City's Department of Consumer Affairs is the nation's oldest and most powerful municipal consumer protection agency. Jonathan is also co-chair of Cities for Financial Empowerment, a coalition launched under Mayor Bloomberg. Together, Congressman Neal, Congressman Gerlach, and Commissioner Mintz are among the nation's most preeminent voices on savings and financial security. Each of our panelists will offer an opening statement, and then I hope to be able to follow up with some questions. So with that, Congressman Neal. Here or there? Here would be terrific. You were spared. I left my glasses in the gym last night. That would be a good thing for all of you. First of all, thanks for those of you who've had this unwavering commitment to trying to figure out how we increase retirement savings for the American people. And I've been at this for a long time, as many of you know, and I'm taking great satisfaction from the fact that as I watch the argument whereon, I must tell you, the positions I think that I've assumed since my earliest days in the Congress have been reinforced. And just a couple of points by way of anecdote that I think are very important. Just think of this number. Half the people that get to work every day in America are not in a retirement plan. So for those of you in the audience who don't have any gray in your hair, I know you tend not to think of retirement, but I want to tell you one of the benefits of, the few benefits that have come of this recession, is it's cost people to begin to rethink what retirement's going to look like. And just a word of wisdom for those of you again that I just noted who don't have a lot of gray in your hair, it comes fast. It comes really fast. So if you remember, after the election between President Bush and Senator Kerry, one of the things that President Bush said the day after, he said, I've earned some chips and I'm going to spend them. That's the quote. And he immediately said he was going to tackle social security. Now if half the American people think social security is their retirement plan, it's not going to go very far and it sure didn't. And when you consider that the average social security benefit is about $14,000 a year, you understand the role that additional savings will play. Now let me also submit that Jim and I have put together a pretty good auto IRA. And the auto IRA seems to gain some traction year after year. For those of you who are inpatient with the pace of the Congress, recall that it took me 15 years to get rid of alternative minimum tax, but I did stay at it. I did stay at it. So I have, for those of you who often find it troubling that we can't find agreement here on some issues, let me submit this to you that the auto IRA plan that I have has been endorsed by the Brookings Institute and the Heritage Foundation. So that's a big issue for a Democrat in Massachusetts. I can tell you. That's a huge issue. And what my point once again is that retirement savings ought to be that three-legged stool. And I traveled the country really giving President Bush and Social Security plan a bad time. And it was very faithful to it. You should know that. I have my own story to tell on Social Security. My parents died when I was very young. And we were raised by an aunt. So it was Social Security that allowed us to live together as a family. And at the same time, it was her pension from Mass Mutual and little savings that she had. But it gave you a floor of benefits. And I frequently say to the financial services industry in Massachusetts, of which I'm no secret, I'm very fond. They provide wealth every day and they help to support creating wealth every day that what's important about what it is that they do, they provide one of the legs of the stool, encouraging people to save and using the tax code to encourage people to save. Jim and I have a resolution that has garnered enormous number of signatures in the House of Representatives to encourage the use of tax incentives and keeping them. And the danger for all of you is this, that the issue of expenditures, which I think are inartfully described, frequently comes down to this notion that it's pork. And I would say this to you, I don't think that retirement savings in America work very well, without tax incentives. And I think that having people set aside X number of dollars every week or every month is terribly important. And as you hear this description about expenditures for those of you who are not familiar with the jargon or the Ways and Means Committee or the Finance Committee, all it means is that revenue that ordinarily could come to the government would not come any longer but for that incentive. So think of it this way, that people right now have decided to work longer because of the recession. A lot of people have gone back to work because they did not plan for retirement. Or they assumed that it was always going to be there. And I read these heartbreaking stories as recently as yesterday about companies that decide that they can no longer continue the retirement plan. And right now, just the thought and just describing to you because I think anecdote is very powerful. One of the key discussions is the Boston Globe is about to be sold. And by the way, that was the paper of record from New England for a long, long period of time. The New York Times is trying to figure out in the negotiation who's going to absorb the retirement plan of the Boston Globe. That tells you everything. And I would have some jitters if I were 60 years old. Because all of a sudden what one is planned for may not be what is met. And I think that this is one place in Congress to be very candid with you that there ought to be some room for agreement. So I'm going to resist changes in the code that was away from using tax incentives to promote personal savings. I think it's a very important consideration. And let's offer one more, I think, dimension to this argument. Right now, it's a lousy time for savers. It's a bad time for savers. Everywhere. You know, you get that passbook back and you set that money aside and you look at what the banks are paying or alternative investment opportunities. Pretty limited. And last point, Jim and I have worked on this for a long time. And I don't see any reason why this Ottawa IRA can't pass. I know there's some resistance because of the mandate that's involved. That's ridiculous. That is just a ridiculous argument that you can't use a mandate to get people to save. I think that that mandate that's involved in it, using tax credit to spare the employer, not requiring any contribution from the employer. And I've said to Dave Camp, who's a friend of mine, I've said, Dave, I'm telling you the insurance agents, community bankers and credit unions will jump at the prospect of marketing that Ottawa IRA because it will lead to additional sales of other products that they all use. So my position has been well met by many of the employers that I've noted in Massachusetts. And again, I think that there's a bipartisan opportunity to take this forward. Thank you. Well, good morning, everybody. Good morning. Thank you very much for the invitation to be with you here this morning. And it's great to be with my colleague, Congressman Neil. He really has been a great leader on retirement security issues over many sessions of Congress. So it's great to be with you, Richard, and continue to work with you on these issues. I'd like to, as we say on the floor, associate myself with remarks that Richard just made. I think he's spot on in his comments. And I would just only add a few other things to the mix as we get into the discussion. As you know, tax code reform is going to be a big part of what we do in Ways and Means Committee this year and next year. How far it gets in the process still remains to be seen. But we're embarking on an effort on the House side to really try to put together a good piece of legislation that's comprehensive. And it's really going to be an effort to try to achieve three goals. One to create more simplicity in the tax code. The stats that I got most recently is there was, I think, 1.4 million words in the tax code in 2000. There's 3.4 million words in the tax code today. And you hear constantly from your local business people about the complexity and the costs of compliance. So we want to try to simplify the code. We want to try to make it more equitable when that gets into the issue of what do you keep in the code by way of deductions, credits, exemptions, et cetera. What do you take out of the code? What are the loopholes that shouldn't exist there any longer? And the other issue that I think is so critical in our efforts is trying to create a tax code that will then encourage more investment in our domestic economy compared to the investment that's occurring in other economies around the world based upon the simplicity and equity of their tax codes. So that's some of the general marching orders that we have. And as you think ahead, how do you structure a code that is simpler, more equitable, fostering more economic growth in a way that clears out the junk that's in the code but keeps the stuff in there that's really going to stimulate the kind of activity you want to see happen, including employers and employees trying to save more money for their retirement years. And so that's going to be the challenge that we have in this process. We split the committee up into 11 different working groups now to try to discuss separate pieces and titles and sections of the tax code, report back to the full committee, and there's one particular working group on retirement security. And so I would encourage you, as you have your thoughts individually or as associations or companies or organizations on this issue, now would be the time to start offering your thoughts and advice and suggestions and ideas on what the recommendations ultimately ought to be to the full committee and ultimately what comes as a piece of legislation for us to consider. I happen to think as we look at the overall debt issue of our nation, almost $17 trillion in national debt, eventually, and I don't know when it's going to be, it could be this year, it could be next year, it could be who knows a number of years down the road, we are going to get to the point where we are going to have to address entitlements, Medicare, Social Security, Medicaid. And part of that, it seems to me, will probably be some piece dealing with means testing. Means that or an approach that will deal with trying to make sure that are the benefits in place and the services in place for those that are truly needy, but looking at those overall beneficiaries to see if some at higher income levels should be dealt with differently in terms of the amount of benefits and services that they will receive down the road. And if that is going to happen at some point in some way, shape, or form, and I can't certainly predict who it's going to impact and what the changes might be necessarily, but if that is going to happen, and I believe at some point it will happen, who are those people and what situation will they be left in if they do not have the same structure of programs available to them at that point in time when they are 65, 68, 75, and 80. So should we not therefore be looking, as we are doing this tax code reform today, at strengthening the provisions in the code that make sure there are opportunities for them as employees and as individuals to be putting more weight today during their working life, so that as changes do occur down the road, that they are still better protected, better able to handle their retirement years. And it seems to me that ought to be one of our goals also in this process as we get through these 11 working groups and ultimately hopefully to some consensus piece of legislation. So as we look ahead, retirement security is going to be absolutely critical to our nation, seniors, and that senior population as you all know continues to grow, almost 10,000 retiring every single day now, the baby boomer generation. And so them having more resources, them having more assets, them having more ability to control the kinds of lives that they want to have in their retirement years requires us, I think, in Congress to recognize that, to give them every opportunity through the provisions in the tax code to be successful as they plan out for their future. And so I look forward to working with Richard and all of you in that process here in the coming months and years. But otherwise, thanks for having us, look forward to the discussion. Good morning. I work for Mayor Bloomberg in New York, and I wish that he was here this morning, although there wouldn't be a seat for him. Probably take my seat. The reason I wish he was here is because I think what we're already here in this morning is something that is very near and dear to our perspective in New York, which is that whether you are looking at, from one side of the aisle or the other, the basic ideals around financial security and the benefits that it brings to families and communities, as well as to the economy, all point in the same direction, which is toward helping people stabilize their finances in the short term, and even more importantly, as you heard so eloquently a few moments ago, really build for and plan for a stable future as well. What we have experienced in New York in our work at the Office of Financial Empowerment is that for many the problem is not a lack of education about the importance of connectivity to the mainstream banking system. It's not a lack of understanding that savings is a good idea or motivation that one should want to save because they love their children and they want to retire. It's not about education. It's about opportunity and it's about realistic on ramp onto those opportunities. The tax code has come a long way in recent years when it comes to incentivizing retirement. There's obviously exciting new ways to make that even more robust. But what we have found is that that first step towards savings is for far too many, too big of a first step. And so what we have been working on in New York and now replicating with our partners in cities, other cities across the country, is trying to structure an incentivized approach to that on ramp to help people begin to save and to begin to use the tax code to be able to do that. That's important not just because you want to have people start into savings behavior and start to build the kind of nest eggs that would allow them to take the bigger step of sequestering money for their future, but also because we see in the recent Hello Wallet study that people are draining retirement savings in order to meet their everyday expenses. So the financial stability is key and the on ramp is huge. In 2008, New York started a program called Save NYC and that program was very basically this. We took the moment of tax time when people were getting their EITC. We took the opportunity of the split refund and we incentivized people into splitting off part of their refund before it hit their pockets into essentially a safe CD. If they were able to keep their money saved for a year, then we matched them 50 cents on the dollar up to a $500 match. This program proved very successful is now being replicated through the President's Social Innovation Fund of Save USA with a partner CEO or here today in New York, San Antonio and Tulsa as well as New York. And I think what we're finding there is instructive, which is people are saying yes to the opportunity. They're smart enough to know that savings important. They're smart enough to take advantage of incentivized opportunities through the tax code. Three quarters of them who put their money aside were in fact successful at saving it for the course of the entire year. They received the match. 75% of them continued with that savings account into the future. 40% of them did it again. And so what we are seeing in New York and across the cities is that the tax code and incentivized approach to savings and an on-ramp version of getting people into the habit of saving money works and works for all the right reasons. The other thing we want to say is that our research has shown as we have followed the cohorts of these tax time savers through the years that not only were people saving and continuing to save, but that their lives were more financially stable and that when they were drawing the money down from this short-term emergency-based tax time approach, they were doing it for all the right reasons. They weren't buying the flat screen TVs. They were making sure that they were staying current on their bills. They were handling emergencies. They were doing the kinds of things that one does with savings. And as people experience a risk-free, on-ramp version of incentivized savings for emergencies through something like a financial security credit, which I know we'll be talking about in the next panel, what they do is they start down the path towards savings in bigger, larger, more important ways like for retirement. So we're very excited about this moment in tax code. We're very excited about the bipartisan version of this dialogue. And we're very excited about the outcome and hopeful that the experience of these cities across the country in literally getting people onto these on-ramps in a successful way is useful in the process. That was the most efficient three presenters I've ever seen in my life. So we do have a couple of moments for questions, and I'm going to get a chance for the first one. But building on what Commissioner Mitz just said, we are working with a community in Jackson, Mississippi of preschoolers and preschool in Mississippi. So just imagine what the income levels of those households are. We've set up children savings accounts for those children, and 50% of those families are saved because there's a credit union, Hope Credit Union, the perfect name, right there. Those preschool kids put their dollars in the account, and it's all about how we facilitate this with everything we know about behavioral economics, with our auto-serve, and others. So I'd like to start going down our panel to say, in addition, for the two of you, to retirement, what are the other savings opportunities that you see through tax reform? Well, I've been hot on that Safer's Credit, as you know. It's been a pet peeve of mine for a long period of time, and I continue to follow up on that. I'm not anticipating it. We're a lucky crowd. That's one example. And just again, I think that those of you who do this whole notion of encouraging people to save, try to get the attention of young people. You know, the idea of the defined benefit, it's gone. And for anybody who's promising that it's coming back, that's not going to happen. And I would suggest that encouraging people to understand in their 20s or even if you've said, described in Mississippi, that you're going to be in charge of what retirement looks like. And here's the one place that I think is important, and Jim noted it in his comments. Many people have begun to draw down Social Security at 62 because they've lost their jobs. Now, a few people realize that in the flexibility of Social Security, one of the things you can do, if you go back to work, you can put the money back into Social Security and postpone retirement. So I think that some flexibility of these plans is important. I think Commissioner Mitt is correct when he says, we've got to prevent leakage. This can't be for the 28-year-old male, Jim and I had that experience at one point in life. They tend, you know, savings is really not on their minds. But leakage becomes important. You can put 100 bucks in this week and take out 75 next week and put 50 in the following week and take out 25 the next week. It doesn't work. So I think making sure that there's some penalty in the long term becomes very important in terms of consideration. Representative Hurley? Well, one of the things that I'd like to continue to work on as we do this reform effort, I had a meeting with a major information technology company in our area outside of Philadelphia who recognized the name right away who told me that as we were chatting about this issue of moving our tax code from an international tax code to a domestic tax code where we would allow for the repatriation of hundreds of billions of dollars in foreign earnings back to the United States that would be invested here. The first thing that this company would do with its repatriated dollars would be to shore up its existing pension program. While it's meeting its obligations today, you know, it understands as a company that there's going to be fluctuations in the business cycles in the coming years. And so its ability to continue to maintain those pension obligations are going to be very important to it. So rather than just bringing those dollars back and perhaps giving more money to shareholders or doing R&D or whatever, their first priority would be to make sure that pension system is shored up in a way that those current pensioners and future pensioners know they're going to get their dollars. And I think as we talk about the repatriation issue during this tax code reform, we ought to keep that particular issue in mind as well to figure out, as we restructure the tax code, how to prioritize that need of using those dollars to shore up those pension programs. I just want to add to the point about the incentive structure and the penalty structure, which I think is a really, I think that's exactly right. And I think it underscores why including in the tax reform to repeat the metaphor, sort of the on-ramp version of getting people incentivized through the code to save, because I think that the big first step of a 28-year-old male, I briefly was one as well, it's a big deal to put aside money for the far future. For people making $17,000, it's an even bigger deal. And so the ability to see that the tax code can be the place where incentives start to come in, where the first step, which is a risk-free version of the money that's there, but if I leave the money, I win something, I think is a way to show people how to get started and how to see the tax code as the vehicle to be able to start to plan for their future and to start to build the nest egg that you need to really have the base you need to start putting money aside, longer term in a way that really doesn't cut from you, perhaps in penalties. So I see that tapestry and our experience in New York has been that the savings market, the private savings market isn't geared toward the really small dollar savings that people need to get started. And so finding a way in the tax code to start to incentivize building up that first nest egg to launch into the mainstream system is proving very promising. And I think a whole new area of work is how do we combine emergency savings with longer-term savings so people see that they have two products working for them, not just one. So we can take one or two questions if someone would like to ask a question. Yes, and introduce yourself, please. David Ress, Building One America. To offer a framework for your work on tax reform, if you add up all of the federal-level taxes, state-level taxes, local government taxes for all purposes, including payroll taxes for Medicare and Social Security, and you compare that as a percentage of gross domestic product, the real tax rate in the United States is 24.8%. In other words, all our taxes we paid represents 24.8% of our gross domestic product. That is the third lowest tax rate of the 34 remunerations of the Organization of Economic Cooperation and Development. And you mentioned the Heritage Foundation series. They've used the same methodology for a much larger number of countries, and they find that the United States has the 131st lowest tax rate of 178 nations. So as you look at the issue of tax reform and the issue broadly of what would need to be paying as a nation to meet our obligations and to build for the future, this suggests that you've got a lot of room to work with, much more so than is generally perceived by the members of Congress, and I certainly appreciate any comments on that. Well, in general, the Heritage Foundation does not endorse most of the things I agree with. I think that's a fair description. And at the same time, my point is that people that are diametrically opposed to many of the things that I embrace agree with me on this. And I think that's the way the Congress that I came to once worked. And I would note that in your description that at 24 cents on the dollar, that's two cents higher than Simpson-Bowles. But they've embraced 22 cents on the dollar. The argument here historically is whether or not it ought to be 18.5% or 20%. And I think that in terms of GDP, that's an accurate reflection. However, I think the challenge for us really here is incremental. And I think the three panelists, we've all agreed on that, just getting people to get into that pattern of savings. And by way, again, in my own example, I recall as a child in the strength of the public school system where we never thought of ourselves as being rich. Nonetheless, on Tuesday mornings, we brought that dollar-ending bank. And I think that's what we've gotten away from. And I think that as you've described, Mississippi, just encouraging people to have it becomes very important. And then you can have a discussion about social security. And I've been adamant in my position on social security. Social security works because we're all in. And the wealthiest people contribute. And I just would say this to you today, and I've had this discussion many times with the financial services industry, and they've been pretty good on it, that if you ever move away from the contribution of social security and it becomes a poverty program, it will lose its constituency. And I think that's a very important consideration. Social security works because it's community. And I think that philosophy being applied to savings ought to be consistent. Well, that's a really interesting statistic and not one that I've heard before. And I would just argue that, or stay, not argue, but state that for the 700,000 people in my district, most of them, as they think about or talk about whether tax issuers should be increased on them as individuals, they're not thinking in terms of what their tax responsibility is in relation to the gross domestic product, they're looking at what they have by way of take-home pay and how it affects their ability to do what they want to do every day for themselves and their family and whether they think that they're paying enough or not paying enough. So while you may be correct on your statistic, whether that's a fair barometer of how we ought to be conducting tax policy here at the federal level, I'm not so sure that's the case. But online is how do we use the tax code back to the original comments? How do we use the tax code to encourage more saving? So that regards to what their tax burden is as an individual, they're making the right choices, the smart choices for themselves and their children and ultimately having the security they need in later life. That seems to me where we ought to focus. I would just add, I'm so happy to be in a room where New York's $5 billion budget deficit is not that big of a deal. But I will say, I would also be agnostic about the tax rate, I would say that I think that what we have really been focusing on at the municipal level is with the burden of caring for a population that dips below the line of financial security, our investments have very much been in trying to figure out how to get people above the line in a stable way that keeps them above the line, whether it keeps them out of shelters or gets them out of shelters faster, gets them off of public benefits, whatever it is, and again, whichever side of the aisle you're coming from, there are real realities to the crush of what it costs society and real budgets and real cities when people aren't able to care for their basic needs, and not only that, but whether the current public investments are as stable as they can be, you could invest a lot of money, for example, in a workforce development program, but if somebody doesn't have a little bit of a cushion in savings and their car breaks down and they can't show up for the job that you just spent all that time and money helping them get, they're going to lose that job, they're going to come back and they're going to ask for more help, and that's why the cushion of savings plays a key role in the municipal version of financial security. On that poetic note, I want to thank our panelists for joining us this morning, for being so thoughtful and most powerfully for offering the hope of bipartisan solutions. So thank you, my colleague Bob Friedman and his esteemed panel to take it away. My name is Bob Friedman, and I have the privilege of being founder and chair of the Corporation for Enterprise Development, COPD, and I am thrilled to be able to moderate this next panel who have four of the people who have led in the development of savings policy and who I most admire. Beginning on my right, Pam Everhart, Senior Vice President, I love her title, Benefit Policy Development and Thought Leadership for Personal and Workforce Investing at Fidelity Investments. Data John, Senior Research Fellow of the much-mentioned Heritage Foundation in charge of retirement security and financial institutions. Reed Kramer, Director of the Asset Building Program of the New America Foundation, and Lisa Mensa, Executive Director of the Initiative for Financial Security of the Aspen Institute. They have long and distinguished backgrounds, even though they're young, and you should read about them in their bios because I won't do them justice. But I do want to say that each of them has dedicated more than two decades to savings policy and leadership in this country. And because of their work, we are much further along to opening a realistic savings opportunity for every American. We have given them five minutes each, which is longer than the Academy Awards. And we don't have any JAWS music, but we do have a manual here. And I want to ask them to do two things. First, to give their signature savings idea for us, and this is like asking them to choose among their children. And they do have others. But to focus on one. And secondly, to talk about why savings matter. I think most people don't understand savings in this country. I had an editor for the Washington Post tell me about a decade ago that savings was a luxury of the wealthy. During the whole debate on stimulating the economy, all the talk was about consumption as those savings were something that went on the shelf to gather dust. So with that, let me start with panel. Yes, the cameraman says yes. Let's try and do this. Good morning. First of all, I want to thank Bob and CFED for this opportunity to speak about savings. This is something extremely important to fidelity investments. We provide 401k plans for millions and millions of working Americans around about 16 million, most of which are middle and low income workers. And we take very seriously the responsibility we have to help employees save early, to help them save more, and to help them save enough. The reason why I feel that this is important time to look at this issue is because I think we are facing potentially a retirement savings crisis or perhaps crossroads at this particular time. And as I think about that, there are three numbers that come to mind. There are lots of other figures, but three in particular, 240,000, 20% and 150. 240,000, that's the amount that fidelity has estimated that a retiring couple will need to take care of medical expenses in retirement. And that's not something for the rich. All of us could be subject to that. The other thing, 20% eBree has a study that suggests that 20% of retirees will expend all of their money in retirement within a mere 10 years. And the last one, 150. An aging expert has predicted that the person who will live to be 150 years old has already been born. So when you think about rising healthcare, when you think about savings and adequacy, and you think about longevity, now is the time for us to think about retirement savings. The signature idea that I would put forth in Fidella has been looking at this a long time, looking at the behavior of our 16 million workers in 401Ks, is that we should take advantage of the inertia that people experience right now. And when you look at the level at which people start to save, a lot of them, if they are in plans and start to save, they're saving at 3%. And the reason they're saving at 3% is because currently the Safe Harbor Rules suggests that 3% is where you should start. So a lot of workers look to the federal government to give them assurances around things. So if the federal government has said that 3% is where I should start, then that's where I'm going to start. And the same thing for a lot of employers. They want to feel safe. Someone mentioned there's a lot of complexity in the rules. There are a lot of responsibilities of employers. So what they do is take the government's USAD stamp of approval and starting at the level of 3%. I would suggest that policymakers seriously consider raising that 3% default rate to 6%. As we know, 3% will not get people where they need to be to have a secure retirement. And when we look at our data, most of our workers, if you're starting at a particular default level, they stay there. Almost 60% of workers in our plans remain at the 3% default rate. Around 32%, interesting enough, increase that default rate. So if they're starting at 3%, they increase to 4%, 5%, 6%, 7%, 8%. And the other 9% or so decrease or opt out. So I would propose that starting at a 6% level, you would get almost 90% of workers starting at the right step. A positive step that will lead them to a secure, potentially a secure retirement. So as I said, let's give people a jump start. Let's have them start to save more. Let's have them save early. And let's have them save enough by moving that default rate from 3% to 6%. Thank you. Oh, this is a great way to start a morning, actually. And I'm delighted that CFED put this together in America for broadcasting it. Why is saving so important? My wife is a social worker. She works with disadvantaged populations in our area of West Virginia. The slightest financial bump in the road is the difference between people living in their cars and people who are still staying in their own homes in their own beds, eating their own food. This affects not only themselves, but it affects their kids. And it certainly doesn't do any good for a child to wake up in the back seat of a car, gulp down a bit of soft drink, maybe some crackers from a vending machine, and then go off for a day in school. In West Virginia, they get breakfast, thank goodness. But that's not the way that we want people to learn, and it's not the way we want people to live. Savings makes a real difference. Now, let me go back to some figures that Andrea used just to remind us for a moment. 44% in the CFED study liquid asset poverty. In other words, they're right there. One bump on the road and bang, it's the back seat. 30%, according to the FDIC, have no savings account. If anything, even worse, perhaps it's an overlap there. This is still a real problem here. So how do we deal with it? I believe in that great conservative Chairman Mao's idea, let a thousand flowers bloom. So I'm not going to mention the auto-ira, which I regard as an absolutely crucial start here. Nor am I going to mention some research that Stuart Butler and I are doing on something called prize-link savings. That's a paper that will come out later this year. So instead, I want to talk about something called the platform account. It's a UK innovation. And what it does is to take the 401k IRA platform itself and it adds other types of savings to it. So hypothetically, for instance, more than hypothetically, you can add regular savings accounts to that, credit unions, banks, other things. You can use it for mortgages, including finding a mortgage, paying a mortgage, working out your credit cards, paying those off, hopefully. And college accounts and a wide variety of other things. It allows you basically to control your entire financial future in one place. Now, it has other things. We had mentioned earlier of the Hello Wallet study on leakage. One way to keep people from spending down their retirement savings, which basically puts them in deep trouble in future years, is to give them the ability to have non-retirement savings in the same platform. So one of the things that we'd like to see as part of this innovation is to have an auto enrollment, but have the auto enrollment split. And the split will vary according to your age and your financial circumstances and things along that line. Part of it will go into your retirement savings plan because you really need to be used to savings for that. I will say that I started to wait and will pay the price at some point for that. The rest of it would go into a regular savings account that would be available for emergencies, that would be available for whatever you need it for, whether that's for a house, training, college, or that inevitable financial bump in the road. The split takes the auto enrollment. We know that about 90% of people who are auto enrolled stay in the plan for a significant period of time. Last but not least, this, because it's a computer-based thing, it's something you can do at work, but you can carry it with you as you move from job to job. It's very portable. Is that you can put in targeted financial literacy training. So basically, when you reach a certain age or stage in life, you would be able to access small videos, small papers, things along that line to help you prepare for the next stage. This combined effort exists. I think your company has one like it. This in the UK, it's being built. It's just a matter of now taking it to the next stage where we take the auto enrollment and use that for a variety of purposes. Thank you. Great. Welcome. It's great to be here. A lot of great remarks this morning. It felt like a flashback, getting a little bipartisan conversation going the way Washington used to work and still may in the future. And as a bunch of earlier comments have been made that I would like to associate myself with those remarks. But a couple of points just to emphasize on the question of savings. I'll start with just the assertion that savings are beneficial for families. We've heard about it in a number of different ways. They play this foundational role for economic security and opportunity. They have associations with long-term mobility and social development impacts over time. So these are things that I think as a public policy matter we need to be thinking about. We need to encourage. And I think clearly they can do so through multiple mechanisms that really get us back into the theory but there are a pool of resources that they're there. They can provide a sense of long-term security. They can then be tapped strategically at key moments of time to make these productive investments, home purchase, a business, education. But then importantly, there's also this cushion when there are these unexpected events, income shocks. And I think a lot of recognition now needs to go into learning from even the recent experience of the Great Recession to see how families were burdened and really when they didn't have access to these, this pool of resources really could be quite debilitating. So the reality is that people have this hierarchy of savings needs that include long-term, intermediate, and short-term. And I think we need to elevate that conversation so that we can get a recognition among our policy makers that these things matter. And you heard the introduction this morning. I thought it was eloquent and then the congressmen were eloquent. But as soon as he got up here, it was retirement savings. The assumption was, that's the conversation. And this happens in Washington just all the time. Inside the Beltway, when you say savings, people assume you're talking about a retirement, having a retirement conversation. Outside the Beltway, I think people recognize there's a lot more needs out there. So the impact meaning that I think we need to think about savings is this continuum. As Jonathan said, it's important how to get people started on that path, meet them where they are, and begin the process long-term. The other thing that I guess I want to do is to associate myself with other remarks where there's things that we can do in the retirement sphere that will make a difference, connecting people with plans that they don't participate in now, automatically enrolling them, having the incentives that are there in the tax code be restructured so they actually work for the people at the minimum and the bottom. So as we think we know, but maybe needs to be emphasized, we need rules completely upside down where we reward high-income savers that might be moving money into setting it aside anyway. And really there's very few supports for people at the middle and the lower ends or hard-working families that don't have any support. So this is unfair and it's ineffective. And when we're having a big conversation in D.C. and across the country about the fiscal policy choices, we can't afford to waste public resources on these kind of policies that are just rewarding behavior that would occur anyway. And we need to focus resources more effectively to generate net new savings in ways that are, I think, productive, not just tax sheltering. And that's, I think, part of the conversation that we need to connect to the broader discourse now around fiscal policy. One of the ways of doing that is this tax reform discussion. This is a very important moment where we could elevate the role of savings broadly, not just in the retirement sphere, but connected to a more sophisticated concept of people's savings needs and this continuum of savings. So the idea that I want to emphasize and put on the table that Jonathan mentioned is this concept of a financial security credit. This is where we would kind of reform the existing savers credit and make it a real incentive and help families meet their needs that they felt were most pressing. Give them some flexibility. So first, make the incentive real. Make sure that every dollar that a family commits into an account is matched, goes directly into the account. Up to $500 a year and it would be captured in the account. Make it flexible. Make sure that when people could make contributions to a range of resources, a range of accounts, they'd be able to qualify for this incentive. This could be a retirement 401k, an IRA, but also a 529 savings account, also a CD, also a savings bond, things that people can access. And third, we need to just prevent people from being locked out of the system. If they don't have a bank account, let's make sure they get one, connect them to an account right on their tax form. All the information is right there. Automatically enroll people when they're in the workplace and their employers are offering savings plans. So anyway, this financial security credit is the idea that we would use it to elevate the importance of savings broadly as a national goal. Do it in tax reform and make sure that people are rewarded for investing in their future. So regardless of where they are on the continuum, it works and it should be part of tax reform. Thank you, Bob. And this is my favorite topic. Can America save itself? Yes. And the moment is around tax reform because it really is a moment to address savings and financial security. I also want to echo and associate myself with the remark, savings is not a luxury. And when I thought about why have I been so obsessed with this topic of savings? I like shopping, but you know, why am I so obsessed? And I think it's because it really is core to the American dream of economic mobility. You really can't move up the ladder on wage alone. You only stay on the ladder if you hold something back. Mobility requires money that sticks. And if you want to get out of the back seat of the car and stay in the house and stay in the middle class, once you've struggled to be there, you need savings. You need a relationship with the financial institution and you need money that sticks. So to me, if you want to be serious about keeping America strong middle, we will all endorse these ideas that true financial security requires something that you save. So my big idea, very related, is that we expand something we already have. We already have a refund and we already have a savers' credit. It's already on the books. It just doesn't work. It's too small. It's missing 90% of the people who it should work for. Our research showed that the last time you could get these numbers in 2007, there were 69 million Americans who couldn't get the credit and they were eligible for it. I think if you had our congressman here and you said, you want to reach do something for 69 million Americans, I think they'd say yes. And the way to do this we renamed it and we called it freedom credit. But it's really a simple concept of match. Probably if there are three words you need to think about this financial security moment. You need the word automatic because that's the new wave of thinking around how Americans are going to do this better, make it automatic. And you need to think about longevity. Pam gave us the shocking notion of the fact that some of our children born just recently may look 250. Bless them. But the other big word of our moment is match. And I think this is where this tax reform moment matches money. Match is using the tax code. You had congressman Neil explaining what an expenditure is. Match is what many of us receive automatically. But there are so many Americans these 69 million taxpayers who can't get it. And we need to put them into this system and let them have a match. It may be easier to move than the account. And both I want. I hope we get a platform. I hope we get a child account. I hope we get an automatic IRA. But I really hope we use the moment tax reform to add match. It sounds crazy. More money when we know we're strapped. More money. The last time the president proposed this it was $29 billion over 10 years. That's less than $3 billion each year. On a tax code of expenditures which for retirement and other financial it may be over 300 billion. So it may be only 1%. There's a tweak in here somewhere. I know there is and wiser people the staffers than I will know where those tweaks are. We can find this tweak so my big idea is that's what we need to do. I want to speak one last point to how hard this is to do both long term and short term. It is hard. But we're really talking about getting yourself to $1,000 a year. So if you get a 50% match you need to get to $675. And what is that? That's $13 a week. I think this is doable even for a low wage worker. I think we can get to $13 a week. And then the match takes you up. And what are we talking about if you save $1,000 a year long time in some long term over 30 years? It's a six figure account. It's a six figure account if you are only invested in tips. If you do fidelity maybe you do a little better. But it's a six figure account. And you all have heard average accounts are around $40,000 now for many retirees and if they get near retirement maybe some of them get about $60. We need Americans to get this long term up there. And I think to do it small $13 a week matched gets us a huge way there. So that's my big idea. Be serious about the match. Call it a freedom credit name it, whoever you have to name it. Obama, Boehner, whoever you have to name it. But let's get this right. And I really think it's the chicken in the pot moment. It's the match we need to move forward. Thank you. But I think I will ask you the question that we already get on the hill right now which is how can we afford this? I'll start because I sort of alluded to this. I think everyone has told me for the 20 years you outed me but I've been working on this that moments to find money for match savings, for child accounts, for increasing our retirement are only possible when the restructuring is serious and big. So I'm not on the finance committee or on the ways and means committee of the two people you saw but what I know is that the scale of what they're tinkering with is substantial. I know that the current benefits that the retirement system enjoys are substantial. I believe the only way to hang on to those benefits is to make them real for everyone with a small tweak and I can't point to the tweak but I actually think so in my tweaking it's 500 bucks a household that's 3 billion a year in an exercise that's in the trillions. So how can we afford it? We afford it by the hard work of governing that goes on here it is surgical, it shouldn't be meat-fleavers equestrian and I think it is very possible to find this and it's now that finally it's not just one idea that's floating by itself it's part of a more serious longer project. I agree with Lisa in what she said here but let me just also point out that the platform account doesn't make any changes in the tax cut so essentially there is no cost to the platform account as far as the federal government goes now adding what Lisa and what Reed are proposing and making the change that Pam will suggest are all very fine ideas and I agree with all three of them but the platform account itself we can do tomorrow we need to do some adjustments with the regulatory procedures and the like but that's not something that's going to cost money or be in the budget necessarily. And I would say with the raise of the default level right now lawyers can increase that default from 3 to 6 I mean the law permits that it's just they are reticent to do it because the government has not said it's sort of okay to do and also when we look at that I mean for people who are at the higher income they're already saving at the appropriate levels it really is the middle and low income and what we've seen at the Dallas Group and looking at our 16 million people as I said on our 401k plan those are low and middle income workers so if we're going to use the tax code to incentivize I agree we should use it to incentivize those who are most at risk and those are our middle and low income workers just changing default rates automatically enrolling people these are low cost things that policy makers can do to recognize the role of savings in multiple ways there are some other things that do take resources some of the ideas that were put on this side of the table but in the context of the bigger discussion where the money is 160 billion dollars a year are going towards retirement savings we're not really getting as much as we can out of that so when we revisit that in this tax reform discussion that's where these 4 billion dollar year proposals fit in they're modest they can even be dialed further down but it would be important to get them started and get some support behind them I can't resist just adding I think this is about growth so that whatever we invest now we will get back multiple times from the businesses the educations the skills the homes the retirement security that families are able to put away is there one question and back Hi my name is Shadra and I'm with Congressman John Lewis I have a question about how we can invest part of the institutions to encourage short-term savings so I noticed that Commissioner Nix he said in the book talks about voluntary income tax assistance insights oh easier I was just wondering how did that work with the financial institutions terms of partnering with them how can we incorporate that in reforming tax codes well I'm off the clock but I'm happy to ask you to be here just real quickly and thanks for referring to the brief our experiment is about using tax incentives and using the tax code in preparations for that wonderful moment we did work with bite sites that were doing the taxes for people so that these organizations at the moment people were discovering that they had this what was for many of the RTC recipients not most of them the largest chunk of money coming at that time that this was the opportunity and what we found in New York is that in the middle of an unbelievably expensive city at a terrible time people making between $17 and $20,000 were saying with this incentive I will try it and three quarters of them who tried it and so I think that what we're seeing is that when you make it easy and when you use the right moment and for EITC recipients tax time is definitely the right moment it works I would also just add to that I would echo that when you look at small employers I mean they import more workers than any other sort of organization and what we found is that these employers tend not to set up the plans because of the issue around complexity so the points around making it simple is very important cost is a huge impediment for small employers so looking at the tax code looking at the rules and trying to take out the complexity out of that and making it just easy for these small employers to set up plans also another big hurdle is fiduciary responsibility so taking another look at sort of the ARISA and trying to figure out what we can do in that respect to make it much easier for small employers I would also say as we look at reform and sort of the tax code in general let's focus on things that drive better outcomes versus I know we have to have rules to keep people in line I get that and understand that but instead of rules that are so draconian that cause people to just stand back and say I just cannot afford to do it because I don't want to get it wrong let's have incentives that will increase people's appetite to have a plan and make it very simple and easy for them to adopt plans for their workers so we have time for one more two more and could you identify yourself Sure, I ended the coverage with Enterprise Community Partners just picking up on something that actually David you were talking about in terms of the fact that people would have a hiccups sort of one step away from living in their cars and things like that maybe in the delivery of the social service system some of the other aspects of the social safety that define potentially that four billion that were the savings that we would have potentially achieved by giving people the ability to weather those minimal storms potentially reduce some of the cost savings of the seminal study around supportive housing sort of a million dollar Murray through the homeless system cost us a million dollars where if we just put them in a rental unit for five hundred dollars a month we would have saved tax payers infinite amounts of money as they're potentially a way of thinking about both not only the tax side of the conversation but unfortunately we often deliver programs through the tax code and then leave them hanging out there and honestly support them on the appropriation side but thinking about sort of collectively how we broaden the savings opportunities through some of the other touch points not only through the vital sites just some comments on that There's a number of things that we can do in the public assistance programs to both promote savings connect people to accounts and put some incentives in place that are quite productive there's a whole kind of agenda specifically around that that we have some material that's relevant I'll just mention the concept the principle that everybody receiving assistance should be connected to a bank account is one that I think we need to elevate in our approach to social policy when you don't have it it costs money to cash your check to move your money around it's a waste and it also doesn't have give people the connection to a foundation to kind of move forward in the housing arena HUD has a program called family self-sufficiency that has an incentive as you increase your earnings money gets diverted into an escrow account that acts as a savings that you can eventually access that's one that I think is a lot of promise within HUD to be expanded upon and there are concepts like that in some of the other public assistance programs and also opportunities to kind of think about how to integrate them so that they kind of work well more together so a very important set of issues there also just throwing one thing and I'm not a specialist in any way on public assistance that I read that to my wife who understands that much better than I but one of the things that we can change here is the concept of bank that we've had the idea that a bank is something that you walk into and you walk up to the teller's window etc etc except that if there's none in your neighborhood that doesn't help you if the neighborhood financial institution assuming that there is one is a check cashing agency then that's a completely different situation or if the traditional one doesn't make you welcome that's another problem whatsoever but we've got at this point the ability to start to break that out so that essentially I haven't been in a bank now for four years and counting I really missed it I must say but there are a lot of other ways that we can deliver these types of financial accounts and services then just thinking in turn bank is a nice short hand but we need to think well beyond that. I saw one other question yes could you introduce yourself oh sure, sorry, Amidal with Ashoka around the manager are sort of increasing the foreign only contribution from three districts can you give what the thoughts around that are what is the right number for that if you look at Australia there's the name managerial and the rate is 10% managerial contribution which there increases to 15 it's interesting to know historically when employers have contributed to pension programs as a percentage of sort of aggregate wages and get a sense of like are we actually really funding like the kind of or encouraging full funding of retirement expectations just so it's a bit sort of longer but like you know 6% the right number or should it actually be 10 great question I'm not suggesting that 6% is the right answer that's where we can start fidelity would recommend 10 to 15% is probably the better level so if you start off with a 6% and add auto increase which we think is important a lot of employers don't do that large employers tend to do it small employers tend not to do it but let's say you add the 1% a year say up to 12% if you will with an annual 1% increase tied to your salary increase and then you have on top of that an employer match going to go out back to Lisa said it's important to get that match for the credit so you can add another 3 to 5 that will get you to the 10 to 15% so you're right 6% won't do it but it's just a start and I'm just saying the government just double that 3 and get it to 6 but very great question I'm going to add in there I agree with her on the 6 etc but it's going to vary according to what an individual can afford and how their individual finances but how you do that initial default is crucial there's a paper that was just released last week the NBER and something called retirement made simpler with an R at the end which is a coalition of AARP the retirement security project in FINRA and what we found was that a special low to moderate income individuals are likely to stick with the initial default so how you structure that default is absolutely crucial I would add that the difference between us and Australia is also our system has this amazing baseline of social security which for most people is 6% 6.2 and your employer is 6.2 and the challenge of adding to that in America is I think the one we're confronting we settled in the last administration that we're not going to carve out of it and come up with another account but our challenge in front of us now is what do we add on top of it and how much can we and we already have a workplace system it's been powerful it helps me, it helps my parents but it leaves half the people out so what is it that will bring everybody in and what's the right default and I think the point you raise is this powerful one about adequacy once you're in you know it's so clear that you would like your private money which is yours and it is different than the mandated annuity that comes with social security you'd like it to be bigger I really think that's the discussion here that you see at our poor what is it that we're going to build what is the next 20 years going to look like in America and I sincerely hope that there is this next tier of accounts and what you heard us describe today is that in order for it to really give Americans financial security and Bob thank you give our economy a boost it's about just spendable assets you hold money in accounts it's going straight to the NASDAQ or to you know the New York Stock Exchange this is a huge boost of our own investment and you're asking the question about what will drive adequacy and what I loved about this panel was that the adequacy question was also about short-term and long-term and what I really think we have in front of us here is the shot at doing something powerful that we've never done before which is to try to give a boost to adequacy from our own tax code for those who qualify thank you all but I do particularly want to thank the panel for motivating for leading for showing the path forward increasing the default rate for contributions platform savings financial security credit free of credit and all of your work and Jonathan and Andrea as well as the members I want to thank also and Kim at CFED senior policy strategist who a decade or more ago helped set up the savings and financial security caucus investment caucus in the congress and continues to guide us and set up today to Jeremy Greer our head of government affairs at CFED all of my CFED colleagues and particularly all of you who stood and sat through this many of you have been long-term partners of ours I think we have proven over the last third of the century that given a reasonable opportunity low income very poor people and therefore the middle class will save start businesses go to college become skilled workers plan build economic futures for themselves, their families and indeed the country I would simply say echo Lisa in answering the question can America save itself America is the only thing the American people are the only thing that can save us I think we whenever we have invested in the common genius of the American people we have been rewarded I think we do this not out of desperation not because it's a crisis but because it's an opportunity and our chance for long-term solid growth one of the first pieces of advice I got on coming to this town was that the rate at which things happen in this city differs from the rate you expect them to happen by a factor of 10 usually 10 times slower but occasionally 10 times faster I have great hopes