Tax Reform, Deficit Reduction and the Outlook for Employee Benefits Western Pension & Benefits Conference Seattle Chapter James A. Klein American Benefits Council February 19, 2013
The (Political) Science of Employee Benefits Policy
Abstract Political Chemistry Gravitational Pull of Retirement Policy Anatomy of the Affordable Care Act Evolution of Deficit/Debt Reduction
Political Chemistry House of Representatives: 233 Republicans 201 Democrats 1 Vacancy Periodic Table of Congress Senate: 55 Democrats 45 Republicans Noble Gases: inert; resistant to change (Ideologues) Malleable Metals: change composition when they come in contact with other elements (Moderates)
Atomic Structure of Legislative Interaction Number of Electrons bonding with Protons and Neutrons determines its ultimate composition Electrons/ Republicans Protons/ Democrats Approximately 335 of House seats are safe Neutrons/ Moderates
It often happens that scientists say, You know, that s a really good argument. My position is mistaken, and then they actually change their minds I cannot recall the last time something like that happened in politics. i -Carl Sagan Astronomer
Cynic s Theorem: If the opposite of pro is con, Then the opposite of progress is Congress
Gravitational Pull of Retirement Policy
Geological Origins of Defined Plan Sponsor Need for Stabilization Benefit Pension Policy Pension Benefit Guaranty Corporation (PBGC) Deficit Status of Public Pensions Source of Revenue: -PBGC Premiums -Funding Relief
Washington D.C. is the only place in the universe where sound travels faster than light. - Ronald Reagan
Defined Contribution Plans USA Retirement Funds Annuities & Longevity Insurance Savers Credit Auto DC Plan Deduction SEAL Act Auto IRA Deduction Definition of Fiduciary
The only reason for time is so that not everything will happen at once. Albert Einstein -Albert Einstein TIME Man of the Century
Anatomy of the Affordable Care Act
Anatomy of Affordable Care Act Insurance Market Reforms Exchanges ERISA framework Subsidies Pay or Play Employer Mandate Expand Medicaid - Align quality and payment - Coordinated care model Individual Mandate Small Business Tax Credits Cadillac Tax
So What Will Happen?
Prediction is very difficult, especially if it s about the future. Neils Bohr -Neils Bohr Nobel Prize Recipient, Physics
Anatomy of Affordable Care Act Insurance Market Reforms Exchanges ERISA framework Subsidies Pay or Play Employer Mandate Expand Medicaid - Align quality and payment - Coordinated care model Individual Mandate Small Business Tax Credits Cadillac Tax Complete Repeal
Anatomy of Affordable Care Act Insurance Market Reforms Exchanges ERISA framework Subsidies Pay or Play Employer Mandate Expand Medicaid - Align quality and payment - Coordinated care model Individual Mandate Small Business Tax Credits Cadillac Tax Significant Changes
Anatomy of Affordable Care Act Insurance Market Reforms Exchanges ERISA framework Subsidies Pay or Play Employer Mandate Expand Medicaid - Align quality and payment - Coordinated care model Individual Mandate Small Business Tax Credits Cadillac Tax Empower States
Evolution of Deficit/Debt Reduction
The National Debt Historical Debt Outstanding on an Annual Basis (1791-present) Source: U.S. Bureau of the Public Debt, U.S. Department of Treasury In trillions: February 5, 2013: $16.5 Trillion 18 16 14 12 10 8 6 4 2 0
Evolution of Deficit/Debt Reduction Tax Expenditures, Fiscal Years 2013-2017 (Projected dollars in billions) 1,200 1,000 1,012 800 727 600 606 400 200 295 239 0 Exclusion of employer contributions for medical insurance premiums and medical care Exclusion of employersponsored pension plan contributions tions and earnings (DB & DC) Deductibility of mortgage interest on owner-occupied occ homes Deductibility of nonbusiness state and local taxes Deductibility of charitable contributions, tions other than education and health Source: U.S. Office of Management and Budget (OMB), Analytical Perspectives, Budget of the United States Government, Fiscal Year 2013
Debt and Deficit Reduction Big Bang Theory A long time ago.
Debt and Deficit Reduction
Can Congress and the President Achieve Deficit Reduction and Tax Reform?
Cynic s Theorem: If the opposite of pro is con, Then the opposite of progress is Congress
The best theory is one that can t be disproven in your lifetime. -Fred Hoyle Astronomer
Disproving Cynic s Theorem e > + < 60 + Boyle s Law: At constant temperature, + > Pressure Volume >_
I was taught that the way of progress was neither swift nor easy. -Marie Curie Nobel Prize Recipient, Chemistry and Physics
In the long history of humankind, those who learned to collaborate and improvise most effectively have prevailed. -Charles Darwin Evolutionary Theorist
To Continue Your Scientific Inquiry www.americanbenefitscouncil.org jklein@abcstaff.org/202-289-6700