Obama pitches retirement savings options at U.S. Steel's Irvin Plant
Saying he wants to “restore some sense of economic security” in an economy in which the middle class is losing ground, President Obama on Wednesday called on Congress to expand workers' access to retirement savings options.
Obama spoke at U.S. Steel's Irvin Plant in West Mifflin, where he signed an executive order starting a new kind of savings bond that he said would help workers build a “nest egg.” But some financial analysts say the low rates of return likely to be offered by Obama's “MyRA” program won't generate the kind of income people will need to retire comfortably.
“If you've worked hard all your life, you deserve a secure retirement,” Obama said.
The stop occurred a day after Obama delivered his fifth State of the Union address, which focused on the challenges confronting middle- and low-income workers. His speech to the 1,500 or so invitation-only guests in West Mifflin echoed its themes.
Obama met briefly with U.S. Steel CEO Mario Longhi and company vice president Anthony Bridge as well as United Steelworkers International President Leo Gerard. He toured part of the Irvin plant with plant manager Amy Smith-Yoder and Kevin McKelvey, president of USW Local 2227.
After the tour and speech, he signed an executive order directing Treasury Secretary Jacob Lew to establish the savings bonds. Named and modeled after existing Individual Retirement Accounts or IRAs, the bonds offer tax benefits that regular savings accounts do not, don't lose value and can be withdrawn tax-free any time.
“It's safe. These balances will never go down in value,” Obama said.
Lew, whose agency will set up the bonds, accompanied the president, whose directive is one in a series of executive orders Obama said he's using to circumvent a divided Congress that's on pace to be the least productive in decades.
Obama said he hoped Congress would adjust the tax code to provide more incentives for people to save for retirement, but “I'm not going to wait for Congress.”
An executive order, signed on Tuesday and highlighted during Obama's stop at a Costco in Landham, Md., on Wednesday morning, requires federal contractors to pay workers at least $10.10 an hour, which Obama wants Congress to set as the minimum wage.
House Speaker John Boehner, R-Ohio, and his fellow Republicans cautioned Obama on use of executive orders to make sure he doesn't overstep his authority.
“We have a Constitution that divides power in government for very, very good reasons,” Sen. Pat Toomey, R-Lehigh Valley, said during a conference call with reporters. He said the proper use of executive orders is to implement laws Congress passes.
“We don't elect a president to unilaterally pass his own laws,” Toomey said.
Ken Jaros, a retired professor at the University of Pittsburgh's School of Public Health who attended Obama's event, said he's tired of the partisan gridlock that led to a government shutdown and prevented passage of popular laws. He doubts Obama's executive authority will be enough to get around it.
“I don't suspect he's going to be able to make major policy changes without Congress,” Jaros said.
The MyRA offers an early example of Obama's limits. He wants to revamp the tax laws to give middle-class workers more motivation to invest, but he needs Congress to act on that.
The program Obama is establishing on his own doesn't offer the retirement security he desires, said Bob Fragasso, founder and CEO of Downtown firm Fragasso Financial Advisors.
“People will not retire successfully earning four, five, six percent interest,” he said.
MyRA could make a useful piece of a person's retirement plan, but if workers rely too heavily on the low-interest growth, it could undermine Obama's goal of offering more people a comfortable retirement, Fragasso said.
“Allowing people a false sense of security by peddling MyRAs does them a disservice,” Fragasso said.
Preparing for retirement security should begin in grade school, he said.
“We have failed our children in all aspects of functional financial education,” Fragasso said. People become adults without knowing how to negotiate a mortgage, or use compound interest to their benefit, or “the essence of investing one's money in the real world.”
Before people can begin saving for retirement, however, they need good-paying jobs, said Irvin Plant employee John Pressley, who runs a machine that binds steel coils for storage and transportation. He worked at U.S. Steel's Homestead Works before it closed and became a shopping district. He joined Irvin's workforce in 2000 and is nearing retirement age. With his two partial pensions — from Homestead and Irvin — he said he'll be OK.
“It won't be a sustainable wage, but along with Social Security, I ought to be able to live comfortably,” said Pressley, 63, of Verona. He paused a moment before adding, “As long as I stay healthy.”
Obama landed at the Pennsylvania Air National Guard 171st Air Refueling Wing in Findlay about 12:15 p.m. with Sen. Bob Casey, D-Scranton, and Rep. Mike Doyle, D-Forest Hills.
He flew to Allegheny County Airport aboard Marine One, with three Osprey aircraft and a Sikorsky as escorts. Obama returned the same way and left Pittsburgh International Airport for Washington aboard Air Force One about 3:30 p.m.
Staff writer Bob Kerlik contributed. Mike Wereschagin is a staff writer for Trib Total Media. He can be reached at 412-320-7900 or email@example.com.