Senate split over retirement savings bill

WASHINGTON -- The House of Representatives passed the Secure Act, a bill that would create more opportunities for Americans to save for retirement, with overwhelming bipartisan consent in May. But the bill is stalled in the Senate.

The legislation could die in the upper chamber if it is not passed by a floor vote, unanimous consent, as an updated Senate bill or attached to another bill that must pass (typically these are spending bills). In other words, the bill is not a high priority for Congress. But it could be a pressing matter for the public.

A Northwestern Mutual study found that 78 percent of Americans said they are “extremely” or “somewhat” concerned about not having enough saved for retirement. The study also said 21 percent said they have nothing at all set aside.

The bill isn’t moving forward because it contains things that lawmakers don’t like, it’s what’s not the bill. A section featuring homeschooling language that was stripped from the legislation has senators like Republican Ted Cruz of Texas holding out.

Cruz has been a proponent of allowing parents to use 529 savings plans for homeschooling since 2017. He introduced the Student Empowerment Act to make the 529 provision a law, and this bill was attached to the draft of the Secure Act that passed the Ways and Means Committee in the House. However, to pass the legislation on the House floor, Democrats removed the 529 provisions from measure.

“What every Democrat is standing up to do right now is say we are going to discriminate against homeschoolers. We’re going to cut you out,” Cruz said on the Senate floor in 2017.

Other senators like Iowa Republican Chuck Grassley said there is “so little difference between the Senate bill and the House bill” in an interview on Tuesday. Grassley would like to see the bill passed with the 529 savings provision but is also open to voting on the legislation in its present state.

“I do support 529s to be used for homeschooling, but in the House of Representatives, that was a poison pill,” Grassley said.

Despite losing the section on homeschooling funds, the legislation is loaded with new tax credits that encourage small business owners to set up retirement savings plans and pension plans for their employees. But tax policy experts at the Heritage Foundation consider the bill worse off without the 529 savings plans.

“There’s some really great things in it, and then there are some stuff that increases taxes on middle class savers,” said Adam Michel, a tax policy analyst at the Heritage Foundation. “And so, with the 529s it sort of tips it into the category of it’s probably worth wild as a total piece of legislation.”

Since most lawmakers are focused on reelection campaigns, presidential campaigns and spending bills, the chances of the SECURE Act decrease as August recess approaches.