The American right to save



Tom Barrett

During the week before our fall break, Hillary Clinton unveiled her proposal for the new American Retirement Account, which would function similarly to a 401k account and the federal government would match one-for-one the first $1,000 for anyone making up to $60,000 per year.

For those making between $60,000 and $100,000 per year, there would be a 5 cent-per-dollar match. Republicans have accused her of making more promises she cannot keep without raising taxes, and they may be correct. On the other hand, her plan – while it certainly needs a great deal of revising – has the potential to decrease slightly the gross and self-perpetuating disparity between the richest and poorest members of our country.

According to research done by the Federal Reserve Bank of Chicago in 2001, the bottom 49.9 percent of the population controlled only 2.8 percent of the nation’s wealth, while the top percentile held 32.7 percent of it. Wealth allows people to take financial risks and make investments. It makes things like buying a home or funding a child’s college education that much easier, and it makes decent healthcare that much more affordable. For the bottom half of the country – especially those in the bottom 20 percent – it is disproportionately difficult to make these types of investments. For those in the country living under or just above the poverty level, the majority of their income goes towards day-to-day survival. Saving money for the future doesn’t compare to putting dinner on the table tonight. And so the cycle continues.

Wealth accumulation in the lower class would do much to lessen the degree of poverty, but how does one encourage investment by those who do not seem to be able to afford it? There must be some sort of incentive system created that would make it worth it for those in poverty to invest. This is where Clinton’s plan provides a good starting point, but it should be revamped to assist those who are in most need of it. So instead of matching dollar-for-dollar up to the first $60,000 of income, the government could instead incrementally match a portion of the money invested. For instance, someone making minimum wage could have a one-to-one match, while someone making double that would receive a percentage of each dollar invested. This subsidy would taper off to some set wage at which the government would match 0 percent of the money deferred.

Opponents of this program would continue arguing that this program is another attempt at institutionalized socialism and that it disproportionately benefits those at the bottom of the economic food chain. While it is true that this plan is geared towards the disadvantaged members of society, they are the ones who have the odds stacked against them from the starting line. In this country we claim to value that all citizens should have an equal chance to prosper and thrive, but the growing gap between the haves and the have-nots seriously questions our notions of democracy.

No one would disagree with the statement that anyone who works hard in this country should be entitled to a decent home and the ability to send their kids to school. Unfortunately, however, this is not the reality, and for it to become so, certain measures need to be taken to transform our ideals into more than lofty notions. Clinton’s plan, while it needs a great deal of revision, can be a crucial first step in creating a society that is truly just.


Tom Barrett is a junior philosophy major from Colonia, N.J. He can be reached at [email protected].