Will MyRA Be a Path to More or Less Financial Protection?
For the Good – Theoretically, it could end up being the humble start of a basic public banking system that would protect low income Americans from the worst practices in the financial system. Right now it is designed to only function like an automatic retirement saving account from the government, but it is easy to see how the thing could steadily expand into something much bigger by offering more and more services.
Already you can withdraw money anytime with no penalty so it is similar to just a traditional savings account. First the $15,000 cap could be lift. Next the IRS could start offer to put part or all of their rebate directly into this retirement account. Eventually the Treasury could offer a basic saving/checking services tied to MyRAs. ATM Cards could be issued with low fees and ATM’s installed at Post Offices. Any government checks could be distributed through it. Etc… It could morph into something like a basic bank account for every citizen.
For the Bad – The big danger is that it could eventually play a role in cutting Social Security. Many of the plans to cut Social Security were sold as “reforming” the system by replacing it with worse government supported automatic private accounts. I could easily see how something like MyRA could be appropriated to justify or “replace” a benefit cut.
Even if MyRA aren’t used as part of some privatizing scheme it still risks moving the Overton window. Democrats should be pushing to expand social insurance not making private retirement accounts simply less shitty. The whole concept of “individual responsibility” retirement is inherently flawed and that needs to be highlighted.
Since President Obama is selling MyRA as a way to eventually get automatic private IRA accounts I fear pushing the program is most likely to be a net negative over the next two years, but it is what the next President thinks which is probably important. The program is likely to start out very small so we won’t know if it will lead to anything for several years.
Photo by taxcredits, used under Creative Commons license