Treasury Secretary Jacob J. Lew gave further justification for the administration’s new MyRA program rolled out last week, and expressed hope that a bipartisan agreement to fix the nation’s ‘broken tax code’ could be made.
In an interview with Yahoo Finance, Secretary Lew also described the U.S. economy as “pretty positive” right now and indicated that the biggest risk came from “headwinds” outside of the U.S.
Responding to those who have criticized the MyRA program as not providing enough of a return to investors and saying they would receive below inflation returns, Lew said that was off base.
“These are people who aren’t saving and who have a fear of losing their principal. This is for getting started,” the Treasury Secretary said.
The stock market and index funds -- and the greater risk that comes with investing there -- makes more sense once these less wealthy individuals have accumulated more assets. The Treasury Department points to a 2015 Federal Reserve study that notes 31% of all non-retired Americans have no retirement savings or pension whatsoever. The Treasury rolled out MyRA last week -- the program was announcement by President Obama back in his 2014 State of the Union address.
As for the U.S. economy, Lew called it the ‘bright spot,’ compared to other countries, and said that vast amounts of progress had been made over the past seven or eight years.
“When I talk to other members of the G-20, they ask me what is the magic of the U.S. economy? And I say it is the resiliency of our people, plus we used all the tools at our disposal during the crisis. That means fiscal and monetary tools as well as regulatory and policy tools. In other parts of the world there has been a reluctance to use all these levers.”
Lew argued that one way to make the recovery even stronger would be to enact the Obama administration’s infrastructure proposal. When asked why it was so hard to pass this legislation since everyone’s for improving infrastructure, Lew said, “sure everyone wants new and better roads, bridges, tunnels and airports, it’s how we pay for them.” And so this issue becomes linked to taxes and tax reform, he said.
And speaking of, “…our tax code is broken and needs to be fixed,” Lew said. “We need to close the loopholes that contribute to inequality and inefficiency and inequality and lower rates on the business side. That’s why companies are moving offshore because our rates too high.”
Lew says he sees common ground between the Republican proposals in Congress and the administration, but again politics makes things difficult.
“There is pushback from lobbying groups that say we need to do individuals’ (tax reform] first. They’re saying that business tax reform would only benefit the biggest companies, and would hurt small business owners, but actually the businesses they are talking about are really some LLCs, pipeline companies and hedge funds.”
When asked if he was optimistic about tax reform, Lew said in fact he was "realistic," saying he knows the difference between good policy and good politics.