Unleash America

The biggest pot of money to help Americans climb back to full employment and restart the thriving economy of a year ago is the also the hardest to unlock: the one holding the retirement accounts of millions of Americans.

To restart the economy, Congress needs to give Americans access to their own savings.

If Americans could withdraw up to half, or a third, or even a quarter of the funds they have saved for retirement, hundreds of thousands of Americans would do so. And they would use those funds to rebuild their lives and survive this economic storm. The economic takeoff would be sharp and prolonged.

U.S. retirement assets reached $29.1 trillion as of

March 31, 2019. You read that right: Americans had by that date tucked away more than

$29 trillion. And though that number would have dropped with markets in March 2020, it will have rebounded since then. A study by the Investment Company Institute showed that retirement assets accounted for a third of all household financial assets in the United States. The pool of funds to power the recovery is vast.

These assets are held in different ways and in all sorts of investments, most beyond the reach of individuals under present law. But trillions could be made accessible to individuals if Congress acted.

In the most recent “phase” of the rescue legislation crafted in large part by Senate Majority Leader Mitch McConnell (R-Ky.) and Treasury Secretary Steven Mnuchin, some small steps were taken to ease the burdens of the coronavirus on businesses and families by allowing loans from their retirement savings.

It’s time for bolder steps. Let Americans decide for themselves what to do with the money they have saved.

Better yet: a massive tax cut to allow penalty-free withdrawals of up to 50% of an individual’s retirement assets. Better still: Tax all 2020 withdrawals at a flat rate of no more than 15%, perhaps lower. The point is to get people back on their feet with their own money, not add to tax revenue.

Or — sit down, financial planners — make those withdrawals tax-free. That would be an unprecedented step. But right now Americans are hitting walls; they need an extraordinary measure for an extraordinary crisis.

Would a nationwide raid on Americans’ retirement accounts tank the stock market? Not for long, if at all, as the market would come back when the savings-fueled rebuild takes root, and some immediate boost would come as tax-advantaged savings are moved into equities. The impact on the deficit would be minor, as these assets aren’t generating tax revenue right now anyway. A low flat tax would actually help reduce this year’s yawning ocean of red ink.

Americans have saved and saved. It is time to allow them to decide for themselves what to withdraw and put to good use and what to leave still growing in tax-protected accounts. It’s a complicated calculation for every American. But free individuals are best positioned to make the calculation for themselves, and people prudent enough to have saved for retirement will make prudent decisions for themselves and their families.

McConnell is right to insist the Phase Four rescue bill include liability protection from covid-19 claims. Without that protection, there would be endless lawsuits against private businesses and institutions. No one would be spared a plague of lawsuits — not colleges, schools, hospitals, museums and certainly not deep-pocketed businesses — as the nation tries to return to normal.

That’s priority one. Priority two for the next rescue bill is the nation’s security. The shocking fire, injuring dozens, on the amphibious assault ship Bonhomme Richard opened more eyes to the perilous state of the U.S. Navy, charged with protecting the freedom of the seas. The Navy has got to grow in Phase Four.

But many ordinary Americans need a major boost, and it is hiding in plain sight. Congress must let Americans use their savings. It is their money, Republicans and Democrats. We’ve never been in this situation before.

Let Americans use their money.