If you listen to the media, it’s a "national calamity" that
Americans don’t save enough of their income for their retirement
years. Last month, a bipartisan group of congressmen proposed
boosting the amount individuals can set aside in tax-deductible
retirement accounts -- but, in spite of their professed worry about
national savings rates, the media have generally failed to report
the story.
Journalists recognize the problem: introducing a segment on
savings for the NBC Nightly News on June 4, 1998, anchor Tom
Brokaw called it "a national calamity in the making: more and more
baby boomers headed toward retirement, not enough Social Security
dollars to go around and not nearly enough personal retirement
savings."
On CBS’s Saturday Morning last October 30, reporter Stacey
Tisdale warned viewers that "in spite of our booming economy, the
average American family has only $1,000 in savings and the savings
rate is at its lowest level since the Depression."
That’s not entirely true -- the officially-calculated "savings
rate" doesn’t include capital gains from stock investments, which is
boosting many families’ retirement accounts. Writing in The New
York Times last May, economist Klaus Friedrich calculated that
"if the value of capital gains is included, the rate rises [from 0.8
percent] to 8 percent. By this more realistic accounting, the
savings rate has been rising, not falling, over the past three
years."
According to a
report issued last fall by the Cato Institute, "The Rise of
Worker Capitalism," at least 43 percent of American households own
stocks or stock mutual funds, so the savings rate of those families
is almost certainly understated by the official government figures.
But what about other, presumably less affluent households? Last
month, a bipartisan group of congressmen advanced a proposal that
would encourage working families to save more of their money for
retirement, but practically no one in the media has touched the
story.
Democratic Rep. Dennis Moore of Kansas and Republican Rep. Elton
Gallegly of California have pushed a bill that would increase the
maximum contribution to an Individual Retirement Account (IRA) from
the current $2,000 to $5,000. The increase would be phased in over a
yet-to-be-determined number of years.
It’s not a plan that would help the rich -- high-income
individuals and couples can’t deduct their IRA contributions. This
proposal would instead boost middle-class retirement coffers by
raising the contribution limit for the first time since 1981, when
it was set at $2,000. In real terms, inflation has eroded that cap
to just $1,072 per year.
Total television news coverage thus far? Zilch. Total newspaper
coverage? A Nexis search shows that the Associated Press’s Libby
Quaid has written about the story, a Reuters dispatch popped up in
Salt Lake City’s Deseret News, and The Wall Street Journal’s
Jim VandeHei wrote a story for the March 9 edition of his newspaper.
That’s not very much coverage for legislation that could
potentially affect millions of American families. So, with both
politicians and pundits worried about the long-term future of Social
Security, why are the media ignoring a proposal that could
substantially ease the dependence of working Americans on government
pension checks?
One reason may be that, although many Democratic congressmen are
backing the bill, Democratic leaders such as House Minority Leader
Richard Gephardt are voicing concern that raising the allowable
limits could deprive the government of too much money.
"[House Republicans] aren’t fooling anyone," Gephardt was quoted
as saying by The Wall Street Journal’s VandeHei. "They have
twisted and contorted the legislative process into nothing more than
a marketing scheme designed to make last year’s unpopular tax cut
more appealing."
Also on March 9, White House spokesman Joe Lockhart complained
that the proposed change in the IRA contribution limits, taken
together with other proposed tax reforms, could amount to "a
trillion dollars of tax cuts that we can’t afford, that will either
squeeze Social Security and Medicare, or eviscerate discretionary
domestic spending in this country."
It sounds like a battle is brewing inside the Beltway, between
those who worry about how much of their own money working families
will have for retirement, and those who worry about whether the
federal government will have enough money in the future. It’s an
important debate to have -- and it would be much more meaningful if
the establishment media told Americans that it was already underway.
— Rich
Noyes