Clinton eyes boost to 401(k) savings
WEBSTER CITY, Iowa - Expanding on her appeal for middle class support, Hillary Clinton yesterday unveiled her second-costliest proposal of the campaign so far, one that aims to boost Americans' retirement savings with up to $1,000 from the federal government a year.
Her proposal would make 401(k) retirement savings plans, traditionally offered by private employers, available to all Americans, even those who have their own businesses or do not work.
For a couple earning up to $60,000 a year, the government would match the first $1,000 they invested in their 401(k) each year. For a couple earning between $60,000 and $100,000, the government would match a maximum of $500 a year.
"I think every American deserves a chance to build a solid nest egg, to help save for that new home, to send a child to college, and to secure that comfortable retirement," Clinton said, adding that Americans are saving less than they have since the start of the Great Depression in 1929.
Clinton's American Retirement Accounts plan would cost $20 billion to $25 billion each year, the New York senator's advisers said yesterday, compared with about $110 billion a year for her universal healthcare proposal. She said she would pay for it by freezing the estate tax at the 2009 level, which would mean taxing inheritances worth more than $7 million per couple. President Bush wants to phase out the tax by 2010.
Her advisers said that for every wealthy family that would pay more in taxes, 5,000 other families would pay less. They cited research from the Congressional Budget Office indicating only 7,000 estates in the United States are worth more than $7 million and only 65 farm estates are worth that much.
Clinton got flak after the Democratic candidates' latest debate in New Hampshire last month because she refused to specify how she would overhaul Social Security. That is the basis on which the Republican National Committee bashed her proposal yesterday.
"Hillary Clinton has avoided answering how she would save Social Security, instead asking that Americans trust her on retirement security by pointing to her husband's record," said RNC spokesman Danny Diaz. "But that record is one of increased taxes on Social Security benefits and drastic cuts to Medicare."
Clinton accused the Bush administration of fear mongering about Social Security, and said her 401(k) plan would not come at the expense of the program. While Clinton has been highlighting a populist message on her "Middle Class Express" bus tour through Iowa, some of her rivals sought to portray her as beholden to the rich, playing off the news that the Senate is unlikely to pass a tax increase on private-equity firms. Though Clinton favored the tax cut, Senator Barack Obama of Illinois seized on the issue to recall Clinton's remark this summer that lobbyists "represent real Americans."
"If there was ever a doubt that Washington lobbyists don't actually represent real Americans, it's the fact that they stopped leaders of both parties from requiring elite investment firms to pay their fair share of taxes," he said.
Scott Helman of the Globe staff contributed to this report. 