- On Capitol Hill
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- Policy Reform Work
Our projects are designed to empower policy makers to create positive change. With a focus on collaboration and outreach, we provide original, standards-based research on key policy issues.
SCEPA joined with the Economic Policy Institute on Capitol Hill to brief congressional staff and policy experts on tax expenditures, or incentives given through the tax code without scrutiny by Congress.
SCEPA economists are working on the prospects for a more progressive economic order to emerge from the shock of the recession. They have published papers and documents that place current events in a longer-term context as well as policy proposals to deal with short-term concerns. They are also documenting the emerging discussion of how the discipline of economics is reacting to the Great Recession and the questioning of conventional economic analysis.
Lance Taylor, a SCEPA Faculty Fellow, presents an overview of his new book, Maynard’s Revenge, in a Google Tech Talk.
The book, published this November by Harvard University Press, is a timely analysis of mainstream macroeconomics, posing the need for a more useful and realistic economic analysis that can provide a better understanding of the ongoing global financial and economic crisis.
The government spends $143 billion through tax breaks in an effort to expand pension coverage and security. Yet, over half of the American workforce does not have a pension. Retirement insecurity hurts business plans, workers’ lives and retiree well-being. Reform is needed.
SCEPA’s Guaranteeing Retirement Income Project, sponsored by the Rockefeller Foundation and in collaboration with Demos and the Economic Policy Institute, has a plan to guarantee safe and secure retirement income for all Americans.
SCEPA's new study, "The Automatic Stabilizing Effects of Social Security and 401(k) Plans," documents how the economic recovery is impeded by market-based retirement plans, such as 401(k)s, and shows how government-supported accounts such as pensions and Social Security stabilize and support economic recovery.
"This study makes it clear that the private sector's historic transition towards market-based retirement plans and away from traditional pensions has not only harmed investors who lost their savings in the Great Recession, but injured the overall economy," said Teresa Ghilarducci, SCEPA Director. "In fact, 401(k)s not only de-stabilize the economy, they significantly undermine the benefits of other stabilizing programs, including the federal income tax, unemployment insurance, and Medicare and disability insurance."
As the first-ever comparative study of how large pension institutions impact the long-term business cycle, the study compares the effects of Social Security against market-based retirement vehicles such as 401(k) plans. The size of both of these systems - 93% of American workers are covered by Social Security, and 63% possess 401(k)-type retirement plans - gives them a significant influence on the economy.
The study finds that market-based retirement accounts increase the volatility of the business cycle, contributing to an overheating of the economy during expansive periods and exacerbating economic contraction during recessionary spells. On the other hand, Social Security helps to reign in the economy during periods of expansion, and stimulating it during recessions - a function known as an automatic stabilizer. The study finds that for every $1 increase in real GDP, 401(k) plans reduce government programs' automatic stabilizing impact by 15%.
"Our study provides hard proof that 401(k)s are a lose-lose for both individuals and the economy. They expose individuals' retirement savings to market risk and hurt the economy's overall ability to create jobs and spur consumption," said Ghilarducci. "Economists of all stripes understand the importance of automatic stabilizers to the economy. Now is the time for policy makers to follow by addressing the unintended consequences of incentivizing market-based retirement accounts at the expense of programs that are a win-win for everyone, including traditional pensions and Social Security."
PLANSPONSOR, a magazine that describes itself as a resource for "America’s retirement benefits decisionmakers," and Workforce Management, a Crain Communications publication for human resources professionals, both reported on New York State Comptroller Tom P. Dinapoli's lecture at The New School on December 12th as part of SCEPA's annual Irene & Bernard L. Schwartz Lecture.
In articles titled "DiNapoli: 401(k)s No Replacement for Pensions" and "N.Y. State Official Blasts 401(k)s as DB Replacement," reporters describe the Comptroller's statement that, while the state legislature continues to explore areas of pension reform such as the level of pension contributions and controlling overtime abuse, he drew the line at replacing traditional defined benefit plans with 401(k) plans. He called 401(k)s "woefully inadequate for those who rely on them for their primary retirement income....From my point of view, this is unacceptable."
On December 12, 2011, SCEPA was proud to host New York State Comptroller Tom P. DiNapoli for the annual Irene & Bernard L. Schwartz Lecture. Presenting a lecture on "The Promise of Public Pensions," DiNapoli, the sole trustee of the $146.9 billion New York State Pension Fund, discussed the health and affordability of the New York State Pension Fund, analyzed the potential economic and human costs of leading pension reform proposals, and considered the wider implications of the ongoing erosion of retirement security for both public and private sector employees.