If confirmed as Treasury Secretary, it doesn't look like Jack Lew will be helping find solutions to boost private retirement plans such as employer-matching 401(k). When pressed in a nomination hearing Thursday, Lew wiggled out of giving any commitments on the problems facing Americans looking to save for retirement.
In a Senate Finance committee hearing lasting almost four and a half hours, Senators grilled Lew on a variety of subjects, including budget cuts, entitlement reform and proposed changes to the tax code.
To be sure, these are certainly pressing issues that take priority, especially now as the nation faces a sequester on March 1 that would bring massive cuts to defense and domestic programs like Medicare, Medicaid and Social Security. But nonetheless, the issue of retirement savings is an important one and will have to be addressed in the near future.
During the exhaustive hearing, Sen. Ben Cardin (D-Md.) and Rob Portman (R-Ohio) took time to question Lew on his approach to retirement savings, asking the Treasury nominee how he thought the government should work to promote saving.
Cardin specifically questioned Lew’s support of proposals for company retirement programs in which people needed to opt-out, rather than opt-in. Lew agreed that these types of programs could help people save, but did not throw his full support behind such a measure.
“I believe that it’s important we have policies that encourage people to save for retirement, “ Lew said.
Portman also addressed the government’s role in helping people save for retirement, saying that he supported measures that would encourage small businesses to offer 401(k) programs that could take the pressure off of Social Security. He noted the importance of what he called the “three legged stool approach:” IRAs, 401(k) and Social Security.
Lew agreed that we do need a “three-legged stool” approach, but said that the 401(k) and IRA programs tended to work better for people at the higher end of the pay scale. It’s hard to save when all your discretionary income is being used to support yourself, Lew added.
There are "things we can do" to make it more attractive for Americans to save, Lew said, but again stopped short of offering his full-throated commitment toward providing incentives for the private retirement approach.
Then again, perhaps the longetivety of the hearing was simply getting to him. In any case, the U.S. has a severe savings problem and—as we've reported before—people can no longer rely on future payments from entitlement programs. Something must be done. But is Jack Lew the guy who will do it?