Who Is This Myra Lady and Why Does She Want My Money?

Pictures of Greek ruins are what you get when you Google "Myra." Isn't that interesting?I spent the State of the Union
Address high on the CVS generic version of NyQuil (not as part of
Peter Suderman’s
drinking game
, so it wasn’t even fun). Most of the speech was a
blur to me, other than a brief bit of rage when he described his
murderous use of drones as “prudent.”

Nestled into the seemingly neverending speech was the
introduction of some lady named Myra. She was going to help
Americans save money for retirement. Now that I’m off the drugs, I
see that he is actually referring to a new federally operated
savings program. Here’s the text from the speech:

Let’s do more to help Americans save for retirement. Today, most
workers don’t have a pension.  A Social Security check often
isn’t enough on its own.  And while the stock market has
doubled over the last five years, that doesn’t help folks who don’t
have 401ks.  That’s why, tomorrow, I will direct the Treasury
to create a new way for working Americans to start their own
retirement savings: MyRA. It’s a new savings bond that encourages
folks to build a nest egg.  MyRA guarantees a decent return
with no risk of losing what you put in.  And if this Congress
wants to help, work with me to fix an upside-down tax code that
gives big tax breaks to help the wealthy save, but does little to
nothing for middle-class Americans.  Offer every American
access to an automatic IRA on the job, so they can save at work
just like everyone in this chamber can.”

I am a middle-class American, and my bank is constantly asking
me if I want to open up an Individual Retirement Account with them,
so I’m a little skeptical that people aren’t saving for retirement
because they just don’t have access.

There wasn’t much information about this plan last night, but
this morning Josh Barro at Business Insider offered an
. He says, “MyRA would be a program of small Roth IRAs
with access to a special, safe investment that pays a little better
than Treasury bills. Remember, a Roth IRA is a retirement account
where you contribute after-tax earnings, and can then
withdraw money in retirement without ever paying tax on your
investment returns.”

It does seem like a modest plan, compared to something like Iowa
Tom Harkin’s proposal
to create a national retirement pension
system (pdf).  

But this program will have costs. Barro calculates:
“Essentially, instead of issuing short-term Treasury bills at
almost no cost, the federal government will do a little bit of its
borrowing through this G Fund-like security, paying an extra point
or two of interest in the process. If you imagine a program at
scale with 50 million accounts averaging $5,000 in balances, the
cost to taxpayers would be $2.5 billion per year for every point of
interest rate premium.”

I’m not so much concerned about the costs so much as: one, the
suggestion that the administration has no idea why people don’t
save money on their own (and still thinks that home-ownership for
everybody is the way to go); and two, anything the government
provides as a voluntary service has the potential to be made
mandatory. It’s easy to imagine this new government program put
into place, and then in order to increase the “success” of the
program, pushing for more and more sign-ups. It is very easy to
imagine a future where anybody who doesn’t have an
government-recognized IRA or 401(k) plan being forced to
participate in this program.

from Hit & Run

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