Not a “Democratic or Not a “Democratic or Republican” ResponsibilityRepublican” Responsibility

It is an AMERICAN ResponsibilityIt is an AMERICAN Responsibility

“These deficits [‘the primary deficit challenge facing our nation: structural deficits’] are projected to exist in coming years—even when the country is at peace, even when the economy is growing, even when unemployment falls …While we address our short-term unemployment challenges, we must also immediately establish a path to address our large, and growing, structural deficits.”

Larry Mishel, President, Economic Policy Institute and David Walker, Former President and CEO of the Peter G. Peterson Foundation 2/24/10

Not a “Left or Right” Not a “Left or Right” Problem Problem

It is an AMERICAN ProblemIt is an AMERICAN Problem“The United States faces a very serious deficit problem if current policies remain unchanged. The problem ultimately will threaten the economic health of the country and compromise the ability of the government to meet crucial national needs…I believe it is absolutely necessary for policymakers to address this problem, and the sooner the better…If the budget is not put on a sustainable path, it is likely that low- and moderate-income Americans will suffer the most from the inevitable erosion of the average standard of living in this country. No one with particular concerns about the well-being of low- and moderate-income Americans can afford to ignore the long-term budget problem.”

Bob Greenstein, Executive Director, Center for Budget and Policy Priorities 1-21-10

The Long-term Budget Outlook: One The Long-term Budget Outlook: One ViewView

Source: EPI Analysis of CBO Long-Term Budget Outlook and Budget and Economic Update

Other Mandatory

Medicare & Medicaid

RevenueSocial Security

Net Interest

The Long-term Budget Outlook: Another The Long-term Budget Outlook: Another ViewView

Source: EPI Analysis of CBO Long-Term Budget Outlook and Budget and Economic Update

Other Mandatory

Medicare & Medicaid

Revenue

Social Security

Net Interest

5

DOD Budget 1948-2011DOD Budget 1948-2011($Billions, Constant 2011$)($Billions, Constant 2011$)

0

100

200

300

400

500

600

700

800

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

DOD Budget $BN Cold War Average ($440)

Source: Wheeler, Center for Defense Information

($ billions)

Employer pensions and retirement plans 85

Mortgage interest 79

State and local taxes (property, income, etc.) 74

Accelerated depreciation 57

Capital gains 53

Capital gains step-up at death 41

Charitable contributions 37

Deferral of foreign income 32(Source: Office of Management and Budget, Analytical Perspectives, February 2010

Forgone Revenues from Tax Expenditures versus Income Tax Revenues ($billions, 2009)

Source: Joint Committee on Taxation; Congressional Budget Office

Wage Percentile

Access Participation

Take-Up Rate

Lowest 25% 38.4% 27.7% 72.1%

Second 25%

59.2% 49.7% 84.0%

Third 25% 67.3% 60.1% 89.3%

Highest 25%

72.9% 68.6% 94.1%

Source: “Pension Sponsorship and Participation” 2009

Retirement Benefits: Private Industry Workers , By Wage Percentile 2008

78% of Americans concerned about having adequate retirement savings

92% state there is a retirement crisis/ 61% more afraid of outliving assets than they are of death (2010 Allianz Life Insurance poll)

2010 retirees with avg. annual earnings eligible at 65 for only 40% of their pre-retirement earnings ($16,500) (Social Security Administration estimate)

2008: 90% of people over age 65 received SS benefits, was the major source of income for 57% of families

“We need to solve our budget problems, of course, but in a way that doesn't worsen our retirement problems.” – Ezra Klein (Washington Post, 11/29/2010)

GuaranteedRetirement Accounts Universal Coverage Mandatory 2.5%

Minimum Contribution From Workers and Employers

Government refundable tax credit of $600 for all workers, regardless of income

Portable Benefits Minimum 3% Annual

Real Return guaranteed by the Government

PLUS Accounts

Universal, Lifelong Account

$1,000 Government Contribution at Birth

Mandatory 1% Minimum Contribution From Workers and Employers

No Withdrawals Prior to Age 65

Child Development Accounts

Universal, Lifelong Accounts

Greater Financial Incentives for Low Income Families

Provide Initial Deposits, Savings Matches, and Encourage Third-party Deposits

Asset Building for Higher Education, Homeownership, Entrepreneurship and Retirement Savings

Accumulation Phase

Universal Coverage Government Aide Adequate Income Require Contributions Portable Benefits Voluntary Savings Wealth

Payout Phase

Lifetime Payouts Payouts Could Begin

with Permanent Disability

Possible Partial Lump Sum at Retirement

Investment Phase Professional Managers

and a Reasonable Choice of Investment Options

Guaranteed Accounts Efficient and

Transparent Administration

Effective Oversight