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The Harkin Plan and the Retirement Crisis

By James W. Russell

Two days after President Barack Obama announced the establishment of MyRA accounts to help Americans without workplace retirement plans other than Social Security save for retirement, Senator Tom Harkin (D-Iowa) introduced Senate Bill 1979, to establish more ambitious USA Retirement Accounts for the same purpose.

Harkin’s USA Retirement Accounts received endorsement from several liberal retirement reform and labor groups. It faces an uncertain legislative fate.

The problem it seeks to address is real: the Bureau of Labor Statistics reports that 46 percent of Americans are not covered by workplace retirement plans other than Social Security, which was never intended to provide full retirement income.

But even if the Harkin bill were passed and signed into law, on its own, it would provide little relief to the retirement crisis. USA Retirement Accounts would share the same approach as 401(k)s—building up private stock market portfolios through investing to finance retirement. The 401(k) approach would be modified to incorporate professional investing and some risk pooling. Retirement benefits are based on the size of the accumulated portfolios.

That approach, first implemented on a large scale in 1981, has proven to produce far less retirement security than traditional pensions based on collective pooling and risk sharing of retirement savings.

The backers of the Harkin bill are aware of its limits, which they chose not mention at the bill’s unveiling. This bill is part of a larger strategy that includes Senate Bill 567, an expansion of Social Security that he introduced in 2013. If Social Security were significantly expanded, the USA Retirement Accounts could provide a useful but minor topping off. Together, there could be a significantly larger group of people with access to retirement security.

Unfortunately though, Senate Bill 567 to expand Social Security appears to going nowhere. According to, it has zero chance of passage.

Were the USA Retirement Accounts to be implemented without the Social Security component, it would produce more retirement savings for the financial services industry to profit off. For participants it would produce, like 401(k)s, more an illusion than the substance of retirement security

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James W RussellJames W. Russell is the author of Social Insecurity: 401(k)s and the Retirement Crisis. An authority on retirement policy in the United States, Europe, and Latin America, he led one of the first employee movements to successfully challenge the dominant trend and replace a 401(k)-like plan with a more secure traditional pension plan. He has taught at universities in the United States and as a Fulbright professor in Mexico and the Czech Republic. He lives in Storrs, Connecticut.