Permanent Value

Week in Review 12/05/2016

Bruce Doole
December 5th, 2016

The Blue State Plan to Fix Retirement

California, Oregon, Illinois, Maryland and Connecticut want more workers to have the chance to save for retirement at work

The last time millions of Americans were signed up for a new government-mandated benefit program, it didn’t go so well. The initial rollout of the Affordable Care Act, or Obamacare, resulted in broken websites, angry employers, and lots of confused consumers.

Now five states, where one in five Americans lives, are attempting a similar feat, this time with retirement. The goal in California, Oregon, Illinois, Maryland, and Connecticut over the next few years is to give nearly every worker the chance to save for retirement at work.

Currently, 36 percent of U.S. private-sector workers don’t have access to a pension or 401(k)-style plan on the job, according to the Pew Charitable Trusts. Even those who have a plan at work don’t always find it easy to sign up. As a result, 55 percent of workers aren’t saving for retirement at work. Young workers and Latinos are the least likely to have access to workplace retirement options.

The states are trying to get more workers saving for retirement by requiring employers either to offer a plan to workers or to connect them to a portable, state-run retirement option.

“It is an ambitious step that is part of a growing national movement aimed at protecting millions of Americans who are on track to retire into poverty,” California State Controller Betty Yee said in a speech earlier this month.

Almost 7 million people could end up enrolled in the California Secure Choice Retirement Savings Program, the state estimates. All employers with five or more workers would eventually need to comply.

It won’t be easy to set up such a program, Yee and other state officials acknowledge. “Other states will be watching closely,” Yee said, “and we are going to succeed. I’m confident of that.”

Legislators in dozens of states have explored ideas for improving workers’ retirement options. The five states that have enacted employer mandates have the support of unions, the AARP, and the Obama administration.

And Americans seem to like the idea. Nearly 80 percent of U.S. workers believe employers should be required to offer retirement plans, according to a survey of 951 Americans by Natixis Global Management released Nov. 21. Almost three-quarters of workers said employers should be required to provide matching contributions, something not required in any of the five states.

It’s no coincidence that all five of the states preparing retirement mandates are heavily Democratic. Business and financial industry groups, which usually support Republicans on such issues, aren’t nearly as enthusiastic about the proposals. The Investment Company Institute, a trade group for fund companies, opposed the California plan, saying it opened up the state to legal and financial risks. The California Chamber of Commerce initially opposed Secure Choice as well.

“Businesses are saddled with a lot of government mandates, and they’re worried about how this is going to work,” Marti Fisher, a policy advocate at the chamber, said at a Nov. 17 forum in Sacramento. The group dropped its opposition after lawmakers made several concessions, such as limiting employers’ legal liability. Fisher said the chamber is working with the state to address business owners’ concerns about the new program. For example, businesses want to make sure the state is well-equipped to handle workers’ questions about the new savings scheme so the burden doesn’t fall on their managers.

Before offering millions of workers a brand-new retirement program, California officials and policy experts say, they are trying to learn lessons from the rollout of Obamacare.

“This program is going to thrive or die based on usability,” Nari Rhee, manager of the retirement security program at the UC Berkeley Center for Labor Research & Education, said at the Sacramento forum. “You want to set things up in a way that’s really easy for everybody—really simple and streamlined.”

Source: Ben Steverman


  • U.S. Existing Home Sales October home sales jumped 2% to an annualized rate of 5.6 million.
  • U.S. Durable Goods October durable goods orders jumped a larger-than-expected 4.8% as transportation orders posted a 12% gain.
  • U.S. Jobless Claims The week of Nov. 19 saw jobless claims increase 18,000 to 251,000.
  • U.S. New Home Sales September new home sales increased 3.1%, indicating a solidly positive trend.

Source: Ivy Weekly


Week in Review – 11/28/2016

Bruce Doole
November 28th, 2016

5 education changes we might see under President Trump

During his campaign for president, Donald Trump took a strong stance on issues like immigration and foreign trade policy, but he didn’t say much about education. However, over the last few months he’s given us an idea about where he stands. Based on this, here are five education changes we could see over the next four years.

1. Performance-based pay for teachers

“Our public schools have grown up in a competition-free zone surrounded by a very high union wall.” Donald Trump, The America We Deserve

Trump feels that our public schools are failing, and that teachers’ unions have a strong stance against giving families school choice.

He proposes:

Merit-based pay for teachers, where students’ test scores would have an impact on salary.
Low-performing teachers would not be eligible for tenure.

2. Eliminate the Department of Education

“We want to bring education local so we’re going to be cutting the Department of Education big league because we’re running our education from Washington DC, which is ridiculous.” Donald Trump, 8/12/16

Trump has stated many times that the Department of Education gets in the way of local control of schools, and feels that its $154 billion could be better spent elsewhere.

He proposes:

Downsizing or eliminating the Department of Education and allowing education to be governed at the state and local level, so Iowa makes education for Iowa children, New York for New York, etc.
Shift the DOE’s office for civil rights which, among other duties tracks incidents of sexual violence on college campuses, to the Department of Justice.

3. Greater access to early-childhood education

“For many families in our country, child care is now the single largest expense—who would think that—even more so than housing. Yet very little meaningful policy work has been done in this area.” Donald Trump, 9/14,16

High costs of child-care especially hurt working families, who depend on these services in order to return to their jobs.

To solve this issue, Trump proposes:

Guaranteed six weeks of maternity leave for new biological mothers.
Child-care costs could be deductible from taxes up to certain income levels, including stay-at-home parents.
Federal tax incentives for employers to provide on-site day care
Earned Income Tax Credit dollars for lower-income families would be placed in a savings account for “child enrichment activities”, which would include private school tuition.

4. School choice for disadvantaged children

“If we can put a man on the moon, dig out the Panama Canal, and win two world wars, then I have no doubt that we as a nation can provide school choice to every disadvantaged child in America.” Donald Trump, 9/08/16

Trump believes low-income students should have the opportunity to attend a private, public, magnet or charter school of their choice, which would be funded by state grants.

He proposes:

Eliminate the Common Core Standards; bring education to the local level.
Redirect $20 billion in federal dollars to establish a block grant to pay for low-income students to attend a school of their choice.
In addition, use $110 billion in state and local funds to support this effort.

5. Less student loan burden for borrowers

“Students should not be asked to pay more on their loans than they can afford.” Donald Trump 10/13/16

The president-elect wants to help young college graduates pay off their student loans.

He proposes:

Colleges should have more “skin in the game”, and could be held partially responsible for missed loan payments, high drop out rates, etc.
Reduced federal regulations on colleges.
Colleges would face penalties if they fail to devote more money to make their degrees affordable for students.
Student loan repayment would be capped at 12.5 percent of a graduate’s income, and remaining debt would be eliminated after 15 years.
Student loans should originate with banks, not the federal government.

Source: Kathryn Flynn


  • U.S. Existing Home Sales October home sales jumped 2% to an annualized rate of 5.6 million.
  • U.S. Durable Goods October durable goods orders jumped a larger-than-expected 4.8% as transportation orders posted a 12% gain.
  • U.S. Jobless Claims The week of Nov. 19 saw jobless claims increase 18,000 to 251,000.
  • U.S. New Home Sales September new home sales increased 3.1%, indicating a solidly positive trend.

Source: Ivy Weekly


Week in Review – 11/21/2016

Bruce Doole
November 21st, 2016

Senate Finance Lawmakers Introduce Retirement Bill

Bill would allow individuals older than 70 ½ to continue contributing to IRAs

The Senate introduced bipartisan legislation, the Retirement Enhancement and Savings Act of 2016, which includes provisions to make multiple employer plans (MEPS) more appealing as well as allow individuals older than 70 ½ to continue contributing to IRAs.

The bill was reported out of the Senate Finance Committee on a bipartisan basis in September, along with the Miners Protection Act of 2016. The next step for the bills is a vote on the Senate floor, but such a vote is to be determined by the Senate Majority Leader.

In commenting on the legislation, Lynn Dudley, senior vice president, global retirement and compensation policy for the American Benefits Council, said that the lame-duck congressional session “presents lawmakers with an opportunity to advance several measures that would improve workers’ retirement security. We urge Congress to focus its energies on enactment of retirement policy reforms with broad bipartisan support.”

Senate Finance Committee Chairman Orrin Hatch, R-Utah, said the bills are the result of “bipartisan cooperation by members from both sides of the aisle that will assist employers, beneficiaries and hard-working Americans. … We now have a real opportunity to enact legislation that will allow open multiple employer plans for employees working for companies of all sizes, increasing access for a number Americans hoping to save for their future.”

The Retirement Enhancement Savings Act repeals the prohibition on contributions to a traditional IRA by an individual who has reached age 70½. As Americans live longer, an increasing number continue employment beyond traditional retirement age.

Source: Melanie Waddell


  • UK CPI Consumer price inflation was surprisingly soft in October. A 0.1% monthly rise in the CPI was comfortably below the market consensus and even weak enough to reduce the annual inflation rate by a tick to 0.9%, its first fall since April. So far, Brexit effects have not been as marked as they might have been.
  • Eurozone GDP Flash The preliminary flash GDP estimate was unrevised in Nov. 15 updated release. In addition to the 0.3% quarterly rate, annual workday adjusted growth of 1.6 was also unchanged at its previously reported mark. The outcome was in line with market expectations.

Source: Ivy Weekly