Sen. Hillary Rodham Clinton, D-N. Y., on Tuesday proposed a new multibillion-dollar retirement plan — billed as a universal 401(k...
WEBSTER CITY, Iowa — Sen. Hillary Rodham Clinton, D-N.Y., on Tuesday proposed a new multibillion-dollar retirement plan — billed as a universal 401(k) plan with federal matching funds — to supplement Social Security for middle-class workers.
She said the program would be paid for through estate taxes.
At the same time, Clinton said she has given up another idea for a savings incentive: giving every baby born in the United States a $5,000 account to pay for college or a first home.
She said her “American Retirement Accounts” would cost the Treasury $20 billion to $25 billion a year, making it the second-most-expensive initiative of the many pricey proposals Clinton has rolled out recently. The most expensive, her plan for universal health care, would cost more than $100 billion a year.
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“I am not proposing anything I don’t have a way to pay for,” she said.
Clinton’s plan would allow all workers to open portable retirement accounts and put up to $5,000 a year in them on a tax-deferred basis. The federal government would match the first $1,000 in savings for married couples who earn up to $60,000 a year and would match the first $500 for married couples who earn $60,000 to $100,000 a year.
Individuals probably would receive less generous matches, said Gene Sperling, a Clinton economic adviser. The government also would give new tax credits to small businesses to help defray setup costs.
Clinton would pay for the plan by freezing the estate tax at 2009 levels, rather than allowing it to expire temporarily in 2010. Freezing the tax at $7 million a couple would provide the Treasury with more than $400 billion over 10 years, according to Congress’ Joint Committee on Taxation.
What amounts to a tax increase on about 7,000 wealthy families would help millions of middle-class Americans “get an estate of their own,” Clinton said.
But Wayne Brough, chief economist for the anti-tax group FreedomWorks, said the burden would fall disproportionately on smaller estates because the very wealthy could “adjust and monitor” its impact through sophisticated planning. Also, because the estate tax accounts for about 1.5 percent of federal revenue, “it’s not a sizable base to be founding an entire new program on,” he said.
5 Democrats to skip Michigan primary
LANSING, Mich. — Five Democratic candidates withdrew from Michigan’s Jan. 15 presidential primary, leaving what amounts to a beauty contest for front-runner Hillary Rodham Clinton and a handful of lesser-knowns.
Barack Obama, John Edwards and Bill Richardson filed paperwork Tuesday, the deadline to withdraw from the ballot, said Kelly Chesney, spokeswoman for the Michigan Secretary of State’s office. Two other candidates, Joe Biden and Dennis Kucinich, said they also were bypassing the primary.
Although Michigan is a critical Midwest state in presidential voting, it violated Democratic National Committee (DNC) rules by moving up its primary. The candidates are honoring the DNC’s wishes in skipping the contest.
Clinton broke with most of the candidates, with her campaign saying the New York senator will remain on the ballot. Sen. Chris Dodd, of Connecticut, also plans to stay on it.
— The Associated Press