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| retirement (Photo credit: 401(K) 2013) |
Press Gaggle by Press Secretary Jay Carney and Treasury Secretary Jack Lew Aboard AF1 en route Pittsburgh, PA
The White House
Office of the Press Secretary
January 29, 2014
Aboard Air Force One
En Route Pittsburgh, Pennsylvania
En Route Pittsburgh, Pennsylvania
11:35 A.M. EST
MR. CARNEY: Good morning, everyone. Welcome aboard Air Force One as we make our way to the great city of Pittsburgh in the great state of Pennsylvania.
I'm sure you all heard the President deliver his State of the Union address last night. This morning he had a terrific event at Costco in Lanham, Maryland, where he highlighted the need for hardworking Americans to receive a living wage, and highlighted the action he’s taking through executive order to lift the minimum wage for new contracts under federal contractors to $10.10 an hour, and calling on Congress to reward hard work and responsibility by raising the minimum wage across the country.
Now we're headed to do an event where the President will talk about his proposal for a new, simple, safe retirement account -- MyRA. And to discuss that with you today, I have the 76th Secretary of the Treasury, Mr. Jack Lew. Here he is...
SECRETARY LEW: Thanks, Jay. And good to be with you this morning. Let me just go through a few of the details of what MyRA is. MyRA is going to be a very simple, very safe retirement account that will, we believe, bring people who are now not participating in any kind of retirement savings into a place where they are. It’s got a very low threshold for participation -- takes $25 to open an account; minimum contributions per pay period are $5. It fills a niche which gets people who have not yet participated in to a place where they’re both comfortable doing it because their principal is protected and guaranteed, and it’s easy for them to do at the workplace on each pay check having just a little bit come out.
When you look at the landscape of the retirement savings market, this is really a space that's not well served right now. It’s hard for people to participate for the first time. They need something that's simple, that's provided in a way that they can do that requires -- has very little friction. It needs to be in a small-dollar amount, and I think the safety feature, the fact that the principal is protected, will give people who are not accustomed to saving the comfort that they should do this, can do it.
And what we've learned is that when people start saving they get into the habit of saving and they ultimately save more and for longer. So this is something that is, I think, going to lead into a natural transition for people to participate in more traditional 401(k) kinds of savings, IRA kind of savings. But you’ve got to get started; this is a great place to get started.
It is modeled on the Roth IRA, so the contributions to it will be after taxes. The income will be tax-free until you retire. It will be something that rolls over at $15,000 into a vehicle of your choice -- it’s capped at $15,000. It’s not meant to be a replacement for, it’s really a bridge to the other aspects of retirement savings.
It is not the entirety of what we believe we ought to do on retirement policy. We have had proposals over the years. We think there are other things like the proposal the President has had over the years to have the opt-out instead of the opt-in feature. But we think this fills a space which, very importantly, we can do by our own authority. It’s something that we have the authority at Treasury, the same authority that's used to issue savings bonds, where we can make this product available. And it’s something that we're going to have in place by the end of the year, and we're very excited about it.
Why don't I stop there and take questions?
Q The return -- we got a fact sheet that says the return is modeled on the federal plan. Can you tell me what that return is like?
SECRETARY LEW: It’s the same structure as the G Fund in the Thrift Savings Plan, so it’s the average of yields that are above four years. And it’s something that we're very familiar with because most federal employees have a Thrift Savings Plan and it’s really the same mechanism.
Q What was the yield maybe in a recent year?
SECRETARY LEW: I'd have to go back and check. Obviously rates have been very modest recently, but it is the safest and most guaranteed investment product. It will fluctuate as interest rates go up and down, but it’s a rock-solid, safe contribution. The principal is never at risk and it will be at the rate of Treasury bills.
Q Is the main difference the threshold where people will participate? Is the main difference then between this and other vehicles the threshold which people will participate?
SECRETARY LEW: Well, it’s a challenge to get people into a retirement product. That's one of the reasons that in the past we've proposed taking away frictions for people who opt out instead of opt in. This is something that if you're an employer and you offer the option for someone to get in, it’s like a savings bond plan at work. It’s very easy, very simple, very small contribution levels. And we think that it is important for building the nest egg, $15,000 is obviously not enough for most people to retire on -- but you have to start with something. And if you can graduate from this kind of a program to being in the habit of savings, people over a career will be much more secure at the point when they reach retirement.
Q I'm sorry, I'm trying to understand. When people say what’s the difference between this and other things you can already do, the difference is the low threshold?
SECRETARY LEW: Well, the product itself, the guaranteed federal bond fund is new. That's available to federal workers through the G Fund, but that's something that’s new. The fact that it’s designed to be at a very low contribution level -- frankly, it’s a part of the market that the private sector is not served very aggressively because it’s something that they have not considered to be that attractive a market. They’re very interested in products that would be the kind of next-step products. So if this gets people to save and they save $15,000, there’s a world of options out there that they could graduate into. So this actually fills a niche that we think is a very important one to fill.
Q Mr. Secretary, you mentioned on the $15,000 -- is that per year, or the life of the program?
SECRETARY LEW: That's cumulative.
Q Cumulative. Do you have an estimate as to how many people might sign up or enroll in this?
SECRETARY LEW: Well, we're going to roll it out by the end of the year. We're going to work with employers of various sizes -- small, medium and large -- to get a good mix of employers in there. And we want this program to be up and running at the end of the year, beginning of next year, and then take off from there.
So I'm not going to give you an exact number, but --
Q A range?
SECRETARY LEW: No, we know that there are millions of people who are not now saving for retirement. This is a product that we want to get established and then grow it as fast as we can.
Q This can obviously be created just by the stroke of a pen, you don't need any congressional help for it?
SECRETARY LEW: That's correct. We have the authority to issue this product.
Q And where will the accounts be housed?
SECRETARY LEW: There will be a fiscal agent that manages the account, much as we do with other programs now. We're going out as soon as the program is launched and going to go through a competitive bid.
Q Will you have to encourage employers to participate?
SECRETARY LEW: We are reaching out to employers. I think we're seeing interest in it and I think it’s something that is going to be compatible with plans that employers already have that will help provide something to employees who are not participating now. And for those employers who don't have a plan, it will be a very simple, low-administrative barrier for them to put a plan in place.
Obviously for employers who offer matching and other incentives, there are good incentives for a lot of individuals already. But we still have many, many people who are not eligible for plans or who are not participating in plans, and we want to get them started.
Q Is there any chance that -- right now, as proposed, it limits it to one choice, government bonds. Is there any chance that you would expand the choice?
SECRETARY LEW: I think at the moment, we see this very simple, very safe product as being -- that's part of what makes this so attractive, that there is nothing as safe as a federal bond fund where your principal is guaranteed. And we think that that's the right way to start this program. Obviously when people graduate and roll into a different kind of investment fund they’ll have a world of choices, and that's something that we look forward to people making those kinds of choices.
Q Mr. Secretary, one thing you can't do with executive order is raise the debt ceiling. Is the timetable for that still what you have said before, end of February? And how are things going with Republicans in Congress on that issue?
SECRETARY LEW: I've tried to be very clear throughout that we will share information as we have it. I wrote to Congress last week. What I told them was that we reach the debt limit on February 7th, as they know, that our extraordinary measures will run out at the end of February in all likelihood, and that they needed to act in that window because it was the only responsible thing to do.
I think they have accepted the deadline. All the discussions that I’ve had and the things that I’ve read show that they understand that they need to do something by the end of February. And I think they also understand that there’s not going to be any kind of a negotiation or a ransom paid for Congress to do what it needs to do, which is pay the bills that it’s already committed to.
Just to remind everyone, the budget agreement at the end of the year set a frame for two years of spending. Just a few days ago, Congress passed an appropriations bill that actually spends money. All the debt limit does is it gives us the ability to pay the bills that are already incurred. And since 1789, Congress has always done the right thing and they need to do it again.
Q Can you explain the confusion as some, even Democratic lawmakers had about the extraordinary measures going well into the spring?
SECRETARY LEW: I don’t think there’s any confusion now. I think that there are various people who do estimates of when extraordinary measures will run out. Ours are the ones that are based on the best data, the most current understanding. They’re the authoritative ones. I don’t think there’s any ambiguity now.
Q Mr. Secretary, can you talk a little bit more about the automatic IRA, the piece that you would like Congress to act on? It’s something you’ve proposed before, but just to go over it again.
SECRETARY LEW: Obviously, we need legislation to do that, so while we’re doing today something we think that’s very important to fill an important space, we know from many studies that if you make saving for retirement easier, if there’s no friction, more people will do it. That’s why we think the MyRA is going to trigger a lot of interest.
But we also know that if you are an employer and you set up a plan so that people are in it unless they choose to opt out of it, more of them will stay in it. Since we so firmly believe that it’s important for people to start saving early and save for the duration of their careers to have a safe and secure retirement, we continue to believe that that would be a good proposal.
Today, we’re doing what we can by putting MyRA in place. And frankly, they’re not one instead of the other. This is a different niche. For someone who it’s a step to put the $25 in and then $5 a pay period, we need to get them started. And this instrument that we’ve designed, that the President announced yesterday, that he’ll be speaking more about this morning is really a special opportunity where by our own authority we can create an incentive to make it easy for people to get in. We would love to do more and we remain open and willing to working with Congress on more. But this is a very important first step.
Q And the proposal with the automatic IRAs is that employers would then have to offer this, right?
SECRETARY LEW: It would make it a default.
Q If they had a 401(k) program -- that the default is that you --
SECRETARY LEW: Yes. And obviously anyone could opt out of it. It wouldn’t be required that you stay in it.
Q Mr. Secretary, you’ve been in multiple administrations and you just talked about one of the virtues of this being that you can do it without Congress. Can you talk about this larger approach for the next three years, how much you feel like using executive authority is going to be satisfying to various priorities that you and the President have?
SECRETARY LEW: Look, I think that we have from the beginning looked to see what we can do to address the problems that the country and the American people face. We’ve done it through executive action; we’ve done it through legislative action. I think what the President said last night is that we continue to be ready to work with Congress, but we’re also going to continue to use the tools we have. And today’s announcement of MyRA is a perfect example. It’s a great idea. It’s something that we don’t need legislation for. We should be doing it. And we should still try to do more things working with Congress.
Q Do you think there will be examples coming up that will be broader in scope and more --
SECRETARY LEW: In my current role, I would be happy to offer my opinion, but I’ll let Jay speak more broadly.
Q Can I ask you one other question about your current role? Argentina just made some changes to its currency rules. There’s been a lot of fluctuation in emerging markets recently. Are you guys concerned about that? Are you talking to your G7 counterparts about it?
SECRETARY LEW: I talk to my counterparts all the time, both when we’re in meetings and when we’re not. And I’m not going to comment on kind of day-to-day movements in markets. But I will say that we’re seeing a lot of differentiation in the marketplace and we’re seeing the countries that have taken tough actions and managed well are having a different experience. I’ll leave it at that.
MR. CARNEY: Thank you, Mr. Secretary.
Just to pick up where Secretary Lew left off, in answer to Peter’s question, the President is not President of Washington -- he’s the President of America. And there’s a lot of activities happening around the country that is moving this country forward, that’s expanding opportunity, and that creates the possibility of further rewarding hard work and responsibility. And the President is embracing that and pushing forward in any way he can.
As Jack said, it’s not a question of only pursuing actions through his executive authority or the power of the office and not pursuing legislation -- he’s doing both. As he made clear last night, there are a wide array of things that the President believes he and Congress can work together on and he spelled those out last night. He also made clear that there are a number of things, whether it’s raising the minimum wage for federal contractors, or creating simple, safe, new retirement accounts for the American people, that he can do on his own using his authority. And he’s going to put every tool he has to work on behalf of the American people.
Q Jay, how many people will the executive order to raise the minimum wage for federal contractors with new contractors affect?
MR. CARNEY: It’s for new contracts, as you know. I don’t have a figure related to that. I find it extraordinary that people are dismissive about the possibility of helping those Americans who will be affected, and obviously there will be a growing number of Americans affected as new contracts take effect.
This is a perfect example of the President using his authority to help as many Americans as he can, and in calling on Congress to do the job of helping even more Americans. And that’s what he did last night. He’s using the authority he has to lift the minimum wage for federal contractors and he’s calling on Congress, as he did last year, to pass legislation that would raise the minimum wage across the country.
Q Is there a reason you can’t give a ballpark figure?
MR. CARNEY: I’m not an economist. I don’t have the data --
Q But no one in the White House is, and certainly they have the data.
MR. CARNEY: No one in the White House is an economist?
Q No one in the White House is giving us a figure.
MR. CARNEY: I don’t have a figure. I think if the point is that it’s a portion of the population smaller than everybody working for the minimum wage, that’s accurate. And it’s even, obviously, because it’s new contracts, it’s a building population that grows as new contracts are established. But the point is the President can take this action to raise the minimum wage using the authority he has, as he calls on Congress to fulfill its responsibility to the American people and give America a raise.
Q Jay, you don’t have a figure or the White House hasn’t bothered to look at it? The President just announced a policy and he doesn’t know how many people --
MR. CARNEY: I haven't seen a figure, Peter.
Q Valerie said yesterday a couple hundred thousand.
MR. CARNEY: I don't know if that’s the figure or not. What I know is what stands to reason is that if you’re talking about federal contractors and you’re talking about new contracts -- because there are obviously some contracts that are in place now and some of them expire sooner rather than later, et cetera, et cetera -- that the population affected directly by the order to raise the minimum wage will continue to grow as new contracts are drawn up and take effect.
Q Shouldn’t somebody have done the research knowing how this would affect people before it was announced?
MR. CARNEY: You can keep asking me if I have a figure. I don’t have a figure.
Q No, I’m asking whether the White House did any research on this.
MR. CARNEY: I'll have to take your question. I'm sure that the point that you and the Speaker of the House are making that the number is relatively small is understood. But I don’t think the American people believe the President should not take action to help those Americans who need help and then call on Congress to help the rest.
Q That's actually not my point. My point was just asking for the factual number.
MR. CARNEY: Yes, and like I said, I don't have it and we'll get it to you -- I'll check and see what we can get to you. I haven't seen that number.
Q Jay, the House passed the farm bill this morning. The Senate is supposed to do so this afternoon. Will the President be signing it?
MR. CARNEY: We are pleased by the progress that we've seen. As you know, the President made clear last fall that this was something that he believed Congress needed to and could act in a bipartisan way to get done. Obviously we're not there yet. Final legislation has not reached his desk. So we await that happening and hope it does. If the bill as it is currently designed reaches his desk he would sign it.
Q And on this broad question again of using executive authority, are there particular sectors where you think -- having done this assessment -- where you think it will be most effective? I mean, obviously you're very focused on a couple of economic initiatives now, but beyond that, can you just give us a sense of where are the areas where you think the President has the most leverage to do it?
MR. CARNEY: Well, it depends on what kind of use of the pen and the phone you're asking about. When it comes to executive orders like the one to raise the minimum wage for federal contracts, that depends obviously on analysis of where he has the authority to do things. He has a much broader capacity to lift up and rally support around issues like the need to expand educational opportunity, access to education, or the need to connect skills training to employers.
You saw that with the summit a few weeks ago. You’ve seen it, another use of his authority in the establishment of manufacturing institutes, and he said last night that he intends to create four by the end of the year. And that obviously has enormous beneficial impact on the continued revival of manufacturing in this country.
So I think the opportunities are pretty broad. But we shouldn’t look at what a President can do simply through the prism of what legislation can get passed, nor should we look at what a President can do using the power of his office only through the ability to sign executive orders or presidential memoranda, because another aspect of his office and the authority is not specific to those issues. I want to be clear. This is not -- I'm not foreshadowing anything. But obviously, the President did not enumerate everything he wants done and everything he supports in his State of the Union address. No President ever has.
When it comes to the Employment Non-discrimination Act, he is fiercely supportive of that effort, enormously gratified by the fact the Senate took action and very hopeful that the House will follow suit. Because as I've said many times, reflecting his opinion, members of the House who block this are being left at the station as the train moves forward on what would obviously be an America where equal rights are extended to all Americans. So I think his record on LGBT rights is crystal-clear, his position is crystal-clear, and he continues to press Congress to take action on ENDA.
More broadly, there is a great opportunity -- greater in 2014 than we've ever seen -- to pass comprehensive immigration reform in a way that meets the principles the President laid out, that reflects the support of one of the most diverse coalitions you’ve ever seen behind legislation, including business and labor, law enforcement, faith communities, Republicans and Democrats around the country. And we are hopeful and optimistic that the House will follow the Senate’s lead and this year pass comprehensive immigration reform.
The President has made clear that the way to address this issue is through a bill that takes action on security, on making sure everybody is playing by the same set of rules, on reforming our legal immigration system to make sure that all those super-smart people from around the world who come and study in our universities are able to stay here and start businesses in America so that the jobs of the future are here, and that creates a process by which the 11 million undocumented people in America are able to get in line and attain citizenship.
So we remain, as the President said, hopeful and optimistic that there is progress on this important matter. I think Congress will act.
Q Can you just preview very briefly tomorrow in terms of -- we know where we're going, but is there something you could say about what the theme is tomorrow?
MR. CARNEY: I don't have anything more on that. If I do by the end of the day, I'll come back and give it to you.
Q Why a steel mill for the retirement piece?
MR. CARNEY: Why a steel mill for the retirement piece? I think in this case these are workers who have exceptional or strong retirement benefits and I think the point the President will be making is we need to make sure that opportunity is out there for Americans across the country.
But we’ll have more detail. I’m sure we’ll have more data for you.
Q I had another question on the Earned Income Tax Credit. Last night, the President mentioned Senator Rubio and his proposal. Does he want the minimum wage and an Earned Income Tax Credit expansion, or if it came down to choosing between one or the other, which --
MR. CARNEY: I don’t think he suggested he wanted to choose between one or the other. I think he thinks both are important. I think what he said about Senator Rubio is that the Senator also acknowledged and recognized the fact that the Earned Income Tax Credit does not benefit in the same way it does other single Americans who are not with children -- custodians of children. And there’s an opportunity here to expand the benefits of the EITC to more Americans.
Q Thank you.
END
12:02 P.M. EST
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