Coming Soon: Universal Savings?

Just got off a briefing with OMB Director Pete Orszag. I asked him what part of the budget he was surprised hadn't gotten more attention. His answer: universal savings. One of the central planks of the whole nudge crowd of behavioral economists is automatic enrollment in 401k's. Turns out there's a huge difference between participation rates in pension plans when people are automatically enrolled and when they have to proactively enroll. But as Orszag pointed out, most low wage workers don't work at firms that even 401k's, so automatic enrollment doesn't help them. As part of the new budget proposal, almost every employer would have to automatically enroll every employee in an IRA. Only very small businesses would be exempt. This seems like a smart idea at first blush. And it's perfect example of the Obama folks' policy approach.

Some more thoughts on the budget TK.

UPDATE: Ben Smith has more.

Comments (3)

1. It's no wonder that the Obama Admin is talking very loudly about this; it's a massive welfare plan to steal from taxpayers and give more redistributed wealth to others.

   "He announced "tax-free universal savings accounts" as a solution to Social Security's crisis. This is a savings plan supported by federal matching contributions automatically deposited in individual accounts.

   Mr. Obama acknowledged that this spending -- which in the public sector's new vocabulary is always "investment" -- will be costly. His read-my-lips moment was that no family with an income under $250,000 will pay a "single dime" in new taxes to support the construction of this new federal skyscraper. If that's still true in 2015, Mr. Obama will be walking back and forth across the Potomac River.

   http://tinyurl.com/cddawc

   Posted by antisocialist at 02/26/2009 @ 3:10pm

2. govenment action to encourage savings and ensure portability of pension plans is a great idea.

   Posted by ibbleblibble at 02/26/2009 @ 4:14pm

3. Chris, not only is your math bad, your writing is suffering.

   "As part of the new budget proposal, almost every employer would have to automatically enroll every employer [employee] in an IRA."

   Say what? Get somebody to read your copy before posting. If I did not know what you meant, I would have no idea what it was you were trying to say.

   Posted by afrothetics at 02/26/2009 @ 9:18pm