Today, Democratic frontrunner Sen. Hillary Clinton (D-NY) unveiled her plan to deal with what she calls “America’s retirement savings crisis” by creating American Retirement Accounts. These accounts are basically government subsidized 401(k)s. Her plan would give middle class families matching tax cuts in order to get them to save for retirement. Clinton also claims that her program will create no new bureaucracy, because it will introduce more competition into the private sector. Her plan will also offer $1,000 in federal matching funds to each participant every year.

Clinton’s plan would match the first thousand dollars for people who make less than $60,000 a year and the first $500 for those who make $60,000-$100,000. “I believe it’s time for a new bargain with the American people – a bargain that reflects the changing global economy and the new realities of aging. I believe that if you work hard and contribute to our country, you should have the opportunity to save and invest. And through the discipline of good planning and the miracle of compound interest, you should be able to build wealth for yourself, a better future for your family, and a secure retirement,” Clinton said.

Clinton says that her plan will put middle class Americans on the path to secure retirement. “They will help those who are currently falling through the cracks of our system, while reducing wealth inequality, increasing national savings, and encouraging economic growth. And they will ensure all Americans can save and build wealth for their retirement. This is a major commitment to ensuring a secure retirement for all Americans. My plan will help tens of millions of middle class families go from just getting by to getting ahead – putting them on a path to a secure retirement.”

Here is what Clinton doesn’t tell you. Her plan will cost $20-$25 billion a year. The campaign claims it will pay for the plan by raising taxes on estates worth more than $7 million per couple. Clinton has also said that her plan offers Americans choices between private sector plans and her American Retirement Accounts. The problem is that her plan forgets about another choice that most Americans make right now, the choice not to save. I don’t think tax credits, direct deposit, and matching funds are going to change the American mentality towards savings.

We have also found out what Clinton’s Social Security plan is. It appears that her plan is to get Americans to save, so that they won’t have to rely on Social Security. In short, her plan isn’t that far removed from the President’s privatization plan. When thinking about this proposal ask yourself one question, if her plan doesn’t create any new government bureaucracy, but is spending billions of dollars in tax payer money, where is all that cash going? My guess is that Hillary is giving a nice little subsidy to the banking and financial planning sectors.

This plan is completely unnecessary, and a political wolf dressed is sheep’s clothing. Instead of spending billions of dollars subsidizing 401(k)s wouldn’t it be easier to fix Social Security, and not have to raise taxes on anyone? Her plan is a bad idea, and nothing more than a gift to a special interest. The idea that Americans can be motivated to save more through tax credits and direct deposits shows a fundamental lack of understanding about Americans spending and saving patterns. This whole thing reeks of an attempt to pander to middle class voters.

Clinton press release 

Jason Easley is the politics editor at His column The Political Universe appears on Tuesdays and Fridays.

Jason is also the host of TPU Radio, which can be heard at every Sunday morning at 11 AM ET.

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