The Republican Study Committee’s American Worker Task Force has released a report called “Reclaiming the American Dream: Proposals to Empower The Workers of Today and Tomorrow.”
The framework, released by Task Force Chairman Rep. Andy Barr (R-Ky.) and RSC Chairman Rep. Mike Johnson (R-La.), contains 118 recommendations designed to empower the American worker as our economy turns the corner on the COVID-19 pandemic.
Here are five key proposals from the Task Force report that will help American workers and rebuild our economy.
Codifying Trump’s EO Allowing Americans with 401(k)s to Invest in Private Equity
The report recommends allowing American workers that utilize 401(k)s to invest in private equity, expanding investment options for millions of American families.
This proposal would codify President Trump’s June guidance allowing private equity investments to be a component of professionally managed investment funds offered to Americans with a defined contribution benefit plan.
Previously, Americans with a 401(k) were unable to invest in private equity funds, even though this investment option was widely used by public pension funds and large investors. The Trump administration’s deregulatory action will open up private equity investment to the roughly 80 million American families and individuals that actively participate in a 401k or other defined benefit plan.
Expanding Tax-Advantaged 529 Savings Accounts
The Task Force recommends expanding popular tax-advantaged 529 education savings accounts to cover Pre-K, homeschooling expenses, additional education expenses, short term degree programs, job training programs, and other educational programs.
529 accounts allow parents to save and invest after-tax income for education costs. Any money earned through 529 investment is tax-free, making these plans a popular choice for parents looking to save for future education expenses.
529 plans are also popular with the middle class – in December 2019, total assets have reached an all-time high of $371.5 billion, and there a record 14.25 million 529 savings accounts in use today. The average account balance is also $26,054, another record high.
As students across the country are forced to learn from home due to government-mandated school closures, expanding 529 accounts is a commonsense move that will help millions of American families save and prepare for education expenses.
Creating Universal Savings Accounts
The Task Force advocates creating Universal Savings Accounts (USA), a tax-free savings account that can be used for expenditures of any kind.
Currently, there are approximately 15 tax-advantaged savings accounts that can be used for healthcare, education, and retirement. When used correctly, these accounts can drastically reduce the tax burden for individuals and families. Unfortunately, the complex requirements of how these accounts can be utilized causes many individuals to under-save.
USAs solve this problem by allowing individuals to save or invest a certain amount in tax-free accounts without limitations on how the money can be spent. By introducing a simple, streamlined saving account available for any expenditure, Americans will save more, be taxed less, and be able to better manage their finances.
Getting Able-Bodied Americans on Social Security Disability Insurance Back To Work
Welfare reform is a critical part of rebuilding our economy and getting able-bodied Americans back to work. Over the past two decades, enrollment in the Social Security Disability Insurance (SSDI) program has grown by 60 percent, and the Labor Force Participation Rate has plummeted to 63 percent.
To remedy this discrepancy and encourage Americans to reenter the workforce, the Task Force has several recommendations, including:
- Establishing a flat benefit level, increasing benefits for low-income beneficiaries and decreasing them for the highest-income earners.
- End double-dipping of SSDI and normal unemployment, which would prevent individuals from drawing benefits from both programs simultaneously.
- Include unearned income in the definition of income, which would include all investment and passively earned income in the assessed income of potential applicants and beneficiaries.
Taken together with the numerous other SSDI reforms the Task Force proposes, these recommendations will remove disincentives to re-enter the workforce for Americans claiming SSDI.
Reforming the Supplemental Nutrition Assistance Program (SNAP)
Under current law, the Supplemental Nutrition Assistance Program (SNAP) disincentivizes work and keeps Americans from being self-reliant.
- The Task Force recommends several steps to reform SNAP, including:
- Eliminating waivers to locations where the average 24-month unemployment rate is 20 percent higher than the national average. These waivers unnecessarily separate a SNAP beneficiary from accessible labor markets.
- Codifying Trump’s EO that establishes a nationwide metric for strengthening SNAP’s work requirements.
- Enacting other reforms that would prevent individuals from receiving SNAP benefits without the requisite need.