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Retirement: Secure Act 2.0 a ‘positive for savers,’ policy strategist says

Stifel Chief Washington Policy Strategist Brian Gardner joins Yahoo Finance Live to discuss the $1.65 trillion spending bill for fiscal year 2023, the latest on the Secure Act 2.0, the state of the omnibus bill, and the outlook for the U.S. government.

Video Transcript

- After several delays, Congress unveiled its over 4,000 page, $12 billion spending plan for the upcoming fiscal year. The $1.65 trillion omnibus bill includes increases in military and domestic spending as well as major policy changes. Joining us now to weigh in is Stifel's Chief Washington Policy Strategist, Brian Gardner.

Brian, good to see you. Thanks for being here. When it comes to what could be most important to markets, to business going into 2023, what would you key in on this bill?

BRIAN GARDNER: So broadly speaking, I would key in on certainty. That the fact that this is getting done, it's going to pass, and it's taking a risk off the table for next year. Then at kind of the next step down on certainty is that being able to plan. So defense contractors can plan because the defense budget has been approved. And we're going to get an increase in defense spending.

Infrastructure projects go forward at higher levels because the budget's been approved. So there's a certainty of what government spending is going to be next year. And for contractors and firms that interact with the federal government, that's a significant thing. Again, taking the risk of a government shutdown off the table at the high level, that's a big deal.

- There's still some matters within this that could cause hang up within Capitol Hill. So what happens if this doesn't pass?

BRIAN GARDNER: So with the premise that I'm now highly confident it is going to pass, more confident than I was two days ago. If it doesn't, then Congress would have to switch gears really quickly, pass another one week short-term spending bill. Come back next week and figure out what's next. And they would have two options. One, pass what's called a continuing resolution for the entire year. So government would stay open, but there would be no increases for defense or anything else. So you operate at the same levels.

The other option, which I think is less palatable to some, is that you pass a further short-term spending bill into February, maybe March. Let the House Republicans figure out what they want to do and put their imprint on the spending bill for the rest of the year. That has a lot of risk to it to markets for a government shutdown, because I'm very skeptical that House Republicans are unified enough to pass a spending bill next year. And so the risk of a government shutdown under that last scenario go up.

- Brian, within the new bill it was supposed to be that easier for retirement. There's some new changes coming in there. Can you walk that through us and what does it mean to the average saver out there?

BRIAN GARDNER: So the Secure Act 2.0 changes some of the rules. Makes it easier for retirement savings. So they're going to be deferrals, delayed deferrals on with mandatory withdrawals. So once you get to 72, you don't have to withdraw anymore. You can wait until 75. That, as we're living longer, that's a bonus.

There are automatic-- the ability to automatically enroll employees and kind of force them to save. And as Social Security is in more of a question going forward you're going to have another level of savings. And the other is letting small businesses kind of collaborate to form their own savings plans and 401ks, which is something that's held back small businesses. It's just very technical, very cumbersome. This kind of makes it easier for smaller businesses and workers at smaller businesses to save for their retirement. So the amount of assets that brokerage firms will have at their disposal, be able to attract, are going to go up. And it's a positive for the industry. But it's also-- I think it's a positive for savers overall because it gives them more options to save for their retirement.

- Brian, I want to ask you about another aspect of the bill that didn't make it in and that's safe banking. That was the legislation aimed at making it easier for the cannabis business to do banking in the United States. So as I say, it didn't make it in there. What are the prospects for that going into 2023? I mean, the stocks have been all over the map sort of following the prospects for that part of the bill.

BRIAN GARDNER: So they definitely diminish next year compared to this year, but the bill's not dead. Some of the prime sponsors of the bill in the House at Perlmutter from Colorado's retiring, House Republicans will not prioritize this the same way Democrats did. But there is bipartisan support for it. It's not going to go away. But just not going to have that primary driver in the House to move the bill forward.

I think there has been some reaching of minds in the Senate about what a compromise bill should look like. So in some ways there were steps forward for the bill that could make it easier down the road. But again, it's just not going to be a priority in the House even though it actually did take a few steps forward in the Senate. So on the whole, I think the odds of it passing in 2023 are lower. But again, the bill is not dead. It's just it's just not going to get a boost that it has had the last two years.

- Looking forward to 2023, what do you believe will get done in Congress given that we do have a changing of the guards? Given that now you still have a pre-election year that's going to be taking place in 2023, where some politicians might be a little bit more adamant about signaling where they're going to take action on decisive matters. But is there anything that investors, the street should be paying close attention to actually getting through next year?

BRIAN GARDNER: So I'm going to take that from a little bit different angle.

- Sure.

BRIAN GARDNER: First, what you have to pay attention to the debt ceiling standoff. And that's not so much of what will get done, won't get done. It will get done, but there's going to be a lot of drama around that which could lead to market volatility. That is also a potential avenue vehicle for other items to get passed. Maybe on immigration, which is important not only just for the border, but for the business community. For certainty for higher skilled workers.

And I'm not predicting that's going to happen, but this is kind of an avenue where lawmakers can look to pass something that has really had a lot of difficulty passing. Given the FTX blow up over the last couple of weeks crypto is certainly rising on the priority list. And so I do think there is a kind of consensus that something needs to be done. There's no consensus yet on what needs to be done, but definitely there's going to be some action on cryptocurrency in 2023 into 2024 to give that kind of regulatory certainty around different products.

It may not-- it may be a broad bill covering all digital assets. It may be more tailored just looking at stable coins. But I do think that the political will to do something is rising.

- It sure seems that way. All right, Stifel Chief Washington Policy Strategist, Brian Gardner. Always good to see you. Happy holidays to you and your family.

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