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‘The 401(k) industry owns Congress’: How lawmakers quietly passed a $300 billion windfall to the wealthy (www.politico.com)

submitted 7 months ago by [email protected] to c/[email protected]

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Greased by lobbying and campaign cash, tax breaks for retirement savings are one thing Congress agrees on. But they also blow out the deficit and add to income inequality.

Five months before Congress faced a near-catastrophic standoff over the debt ceiling, with Republicans demanding restrictions to food and Medicaid programs to rein in spending, a bill that raised the cost of private retirement savings accounts to $282 billion per year was quietly signed into law.

In this era of deeply divided politics, the 2022 bill known as Secure 2.0 was hailed as a bipartisan success — a victory for average Americans. It had sailed through the House by a whopping 414-5 vote. It followed four other major bills passed between 1996 and 2019 that dramatically expanded taxpayer savings – all equally lauded as bipartisan victories.

But that rare issue that brought a divided Washington together also increased wealth disparities and the federal deficit. And the victory was most strongly applauded by the burgeoning financial services industry, for whom tax-advantaged retirement savings has transformed a $7 trillion retirement market in 1995 to a $38.4 trillion behemoth in 2023.

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[–] [email protected] 2 points 7 months ago (1 children)

We've learned that a good chunk of leaders don't care for three legged stools. They know the best way to destroy them is to knock out one of the legs.

Look at the individual mandate in the ACA as a perfect example (the other two being pre-existing condition coverage and plan subsidies).

I do have to wonder if the absence of company defined pensions are a big part of the reason people job hop so much. A good pension was a good reason to lay down roots at a company. My current employer has a really good 403b match but the only thing really keeping me around is waiting to get fully vested.

[–] [email protected] 3 points 7 months ago (1 children)

Nah, people job hop because they've realized employers will never give them a raise that keeps up with inflation, so they leave for a higher paying job that let's them, y'know, make rent and pay bills.

[–] [email protected] 2 points 6 months ago

Yes, that's a factor...for some reason employers think that paying more for new talent is better than paying the same amount for people that already have institutional knowledge.

But anywhere you go is going to be giving the same raises year over year.

Which really makes me wonder why salaries haven't spiraled out of control or how this ever became an issue. You'd think the "new employee" rate would grow faster than the "current employee" rate. If the "current employee" rate climbs by 2% each year, and the "new employee" rate increases by 4%, it wouldn't take long for a very wide gap to appear.

But that doesn't happen. Somehow we manage to be perpetually able to find a new job with a higher salary every few years.

I think the "quitting for a raise" is overblown. Whats happening is quitting for a promotion, and that leads to another problem of title inflation and disparity between employers.

I could search for my title at my current employer and find jobs I'm nowhere near qualified for, paying about the same. And I could search for my original title and find jobs paying 1/2 as much as what I was hired at a few years ago. Shit makes no sense.