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Clinton Proposes 401(k)s, Matching Funds
Oct 9 12:49 PM US/Eastern
By NEDRA PICKLER
Associated Press Writer
WEBSTER CITY, Iowa (AP) - Every citizen could get a 401(k) retirement account and up to $1,000 in annual matching funds from the government under a plan offered Tuesday by Democratic presidential candidate Hillary Rodham Clinton.
At a cost of $20 billion-$25 billion a year, the plan is Clinton's largest domestic proposal other than her plan for universal health insurance. The New York senator said it would be paid for by taxing estates worth more than $7 million per couple and would help narrow the gap between the rich and those who don't have enough savings for retirement.
At the same time, Clinton said she has given up another idea for a savings incentive"?giving every baby born in the United States a $5,000 account to one day pay for college or a first home.
She made that suggestion last month before the Congressional Black Caucus, saying it was just an idea and not a policy proposal. The idea was criticized by Republicans, and she told The Wall Street Journal in an interview published Tuesday that it's off the table.
The campaign of her Democratic rival John Edwards suggested it was an example of Clinton setting her positions by polls. "Apparently, new polling data seems to have pressured the Clinton campaign to throw out the baby bond with the bathwater," said Edwards spokesman Chris Kofinis.
As for the retirement accounts, Clinton said during a campaign stop in small-town central Iowa, "They will begin to bring down this inequality that is eating away at our social contract." She said, "This is a major commitment to how I believe we can begin to right the balance again."
She said that for every $7 million estate that gets taxed, at least 5,000 families would receive the matching funds.
Clinton said she wants to create "American Retirement Accounts" in which everyone could put up to $5,000 annually in a 401(k) plan. The federal government would provide a tax cut to match 100 percent of the first $1,000 for anyone who makes less than $60,000 a year and 50 percent of the first $1,000 for those who make $60,000-$100,000.
She said she would encourage employers to have direct deposit from paychecks into the accounts.
Clinton said less than half the families in the United States have retirement savings accounts and those who have them aren't saving enough. She said she often meets people working even into their early 80s because they don't have enough savings.
"We don't have much of a nest egg to fall back on," she said.
Although the money would be intended mainly for retirement, she said people should also be able to use the savings to buy a house or pay for college and the government should consider letting workers use a portion for hard times like an illness or accident.
Clinton said the accounts should not be used to replace any part of Social Security and that she is committed to addressing the long-term challenges of that program.
"We have to fight and finally bury the idea of privatizing Social Security," she said.
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