Transcripts For CSPAN3 Politics And Public Policy Today 20151109

Levels, 40 of the people who save in open accounts dont go through the paperwork to get the savers credit. And as gary said, we dont put that credit into the account. So i think if the states look and say were going to create these accounts, one of the ways to grow these accounts faster is to put the match in the accounts and then the other piece to make it simpler is lets make that match stick. You know, i think there would be a lot of agreement of saying at least the match that you get cant come out until youre retired. Weve heard earlier my son plight not go into this if he know he can get that money out until hes 65, well, maybe let him take his money, but not let him take out the money that goes in from the tax code. So, i think theres some things that we could definitely do to make it better. I think we all have a lot more ideas. I was thinking earlier, everybody commented i would Say Something about what they have to say, well have a great discussion. Lets get on it. Were just at the very beginning. Exactly. Plenty of time left. So i want to get each of you a chance to also weigh in on additional policy steps that should be on the table. Weve heard about the savers credit, weve heard abou the auto i. R. A. S. A general sense, a report out makes this point, tax code is lopsided, theres a lot more that benefits higher income households than those at the bottom, refundability is key there. What additional policy steps have we not been talking about that also need on the table at federal or state level . Ill start. I know im going to sound like a broken record a little bit here. I apologize. Because i want to pick out what diane said. I really the reason why i am a big supporter of expanding the savers credit is because i think its doable and can get bipartisan support. One of the keys for the savers credit, its not making it refundable, but having it go into the account, dont parse me with words. Dont debate the language for a second. Having it go into the account is ultimately our goal because what we want to do is build assets, right . And i think that will make it simpler than will compliment. One of the things i said my initial comment, we should complement the features and the policies that we know work and are effective. Providing more access to payroll deductions savings plan we know is an effective feature. Doing it through auto enrollment we know is effective. The states are taking up where the federal government sort of fell off, as shawn mentioned in terms of the auto i. R. A. At the federal level, at the very least, we can have a savers credit. I think its important to emphasize this is, i think, something thats achievable in tax reform and meets a lot of our goals. Yeah. I would add, i think it depends on the problem we are trying to solve more specifically, right. Are we trying to improve adequacy for current savers in some way . That leads you down a certain path. Are we trying to bring into the Retirement Savings system those that have been left behind or not engaged . That takes you down a different kind of road because you start to think about, who are we talking about . Right . Talking potentially lowwage workers, those who dont automatically save in any other way that may be disconnected from the banking system, moving from job to job. That means a different set of things that you want to look at and you want to see how the tax system is influencing or affecting particular workers and families. So ill say a couple of things on that. It was great im going to plug a cap study recently, earlier this year. Well let you do that any time you want. Yes, right. Where they looked at demographics, right . The big picture there was weve got three states majority minority now. Thats going up to 14 in the next few decades, right, whats happening to minority workers, how are they saving . Its an Important National question but really important in a few states, right . Look at whats happening, for example, in california, were looking at Retirement Savings issue, you know, 3 million latino workers dont have access, right, to Retirement Savings in california. Weve got to be able to dive into that, unravel that, figure out whats going on with those particular workers if were able to substantially increase overall savings over time. The other issue that i think is really important related to this is, you know, a lot of the data thats coming out looking at wealthy inequality and whats happening amongst households, based on Race Ethnicity is finding, even if you control for income, even if you control for employment status, you find real disparities in savings and wealth between africanamericans, latinos and whites in upper 20s, good College Degrees but they have student loan debt, right . They have significant amounts of debt preventing them from being able to engage in regular savings behavior. So even if you have strong incentives, even if you have good access, youre going to run into problems if were not also addressing some of these problems, and tax reform can look at whats happening for certain populations and segments and try to provide some relief and i thik ultimately the right kinds of incentives. I agree, you look at this is the issue with the savers tax credit i mentioned, we can get changes to credit in a major tax reform overhaul but at what cost. Ultimately, thats going to include a lot of other provisions in a tax reform package that could skew to the upper half of the income or upper 1 , and youve got to wonder, are we really addressing the problem if thats the result were getting, right . I mentioned weve got savers but also a refundable Child Tax Credit in 2001. But i and other civil rights organizations oppose that bill, for justifiable reasons. We have to think about this more holistically. But i think, on the whole, it depends on the problem were trying to solve. I fundamentally think its about works who are not in the system, not saving, orwho have different kinds of situations that we should be looking at as a longterm investment in improving Retirement Savings. And building off of that, and i want to bring you on in this, shawn, given the political restraints weve been talking about this morning that frames so much of what happens in washington, are we in a place where if we want to see those kinds of improvements and we want bipartisan support, where were going to have to find a way to pay for those improvements . Shawn, do you have thoughts on that . First, i want build on something that eric was making. Sure, go for it. Actually, a good conversation we had at larosa earlier in the week talking about this is. A lot of the folks were talking about uncovered also dont have Emergency Savings. And certainly relates to some of their earlier discussion about leakage from Retirement Plans. How we think about that . I think right now, in the most proposals out there, theres no way to really grapple with that, other than to concede that okay, some people going to have to access this money, so lets put them into a roth i. R. A. So they can take out their contributions and not pay a penalty. And i think this is an area where more work needs to be done and think of it as a way to pair the need for shortterm savings with some kind of features in the plan design to help people in that respect. So, i think its an important area that we need to think about, because otherwise, we are going to have the leakage problem for people who go in or plenty of people who arent going in because they feel like they cant access the money easily enough and they may need it. You know, i think on this question of paying for the reform, i think, i noted earlier, my biggest concern is that the Retirement Savings system is going to be asked to pay for other things, who were going to take money away from it. And you know, thats certainly something that i would caution against. Finally, lets have a discussion about how do we use this money more effectively . But i think it would be a bad idea to talk about taking money away for deficit reduction or to pay for eliminating reducing Capital Gains taxes. So you know, i think thats that would be my biggest concern, i think. You know, if youre talking about a lot of people talk about tax reform as something might do that revenue neutral. Also a lot of proposals that frankly would blow open giant holes in the budget because they dont replace the revenue. But even in the context of where its being paid for as a whole, i use former ways and mean chairman camps proposal as an example again, where he supposedly revenueneutral on the whole, but it did take money away from Retirement Savings. Diane, you wanted to comment . And again, look back at that 2001 tax bill. The savers credit was scored by gary and some of the folks in joint tax at about 10 billion of lost revenue. The score for the rate revisions and the reductions and the bracket changes, i think, was probably about 800, almost 900 billion. When you look at the scale, you know, i think one of the hardest things we have if you look at how much if you were to i think the original, one score, one of the obama budgets about making the savers credit refundable and linking that with auto i. R. A. , you put that together, youre probably somewhere maybe 50 billion that that was back in 2011, so its probably more than that. Looking at 50 billion. Some of it depends on what youre doing. It sounds like a lot, but if your going to turn around and do major rate reduction and major restructuring of corporate taxation, how do we not do something for half of the americans who right now feel theyre in a crisis, you know . Theres been some analysis if you look at the top fortune plans, which has been done by a group, they have publication. They said even among career employees at these large corporations where many of them still have even defined benefit plans as part of their retirement portfolio, one out of five, only one out of five, are going to be able to maintain their standard of living. What they also suggested, even if their circumstances, 19 or 18 of individuals really wont be able to retire until their 75. Thats in the best plans. Those arent for the latino, africanamerican population where majority of people have nothing saved. When we look at populations at risk, they are minorities, they are women, they are single individuals, and they are our children. And we have to do something for their future. Diane, you mentioned dollar figures that might sound large as raw figures. But you and i were talking about the piece that no one thinks about the cost of doing nothing here. Could you talk a little bit about that . The reality is i dont think weve put anything on the cost of doing nothing yet. Its a figure we havent looked at. We know, for example, from our data, that when retirees spend their defined benefit pension money, they generate a trillion dollars of Economic Activity in the United States roughly in one year. What concerns me is when we have generations coming up that will have half the amount of resources that our current retirees do and we have baby boomers who no longer will be able to spend and help fuel the economy as they have done throughout their entire, you know, time in the workforce, what happen does that mean . And at the same time, we also know we have millennials coming out and theyre being challenged to buy houses, save for retirement, to pay off student loans. Whats going to happen to our economy if people dont we have a consumer economy. When we dont spend, what happens . And we asked individuals in our Public Opinion survey, what will you do to respond to the crisis that you tell us youre in . 75 of the people say, im going to spend less money in retirement. If im a drug company or a health care company, i want to be a concern about whos going to be my marketplace in the future. Its not just what are we going to spend more people who need the help to stay above the safety net and the safety net cost can be up to 2,500 a person per year. This is from an estimate, a study done by aarp in utah, for people who need that type of direct assistance, that can be a huge cost. Just to follow on diane, i think understanding that if individuals dont have assets for retirement, it could create greater burdens for big, local governments. Aarp sponsored work done by Oxford Economics because we wanted to look to see if we could increase savings, what would that mean for longterm growth . And its substantial. Increasing savings is a way for us to improve our economy. And i think thats on the left and right with both the desirable outcome. So savings can be part of that solution. And we have evidence to support that. So shaun, some people say that the looming Retirement Crisis is the result of poor choices or personal ineptitude. Amd i think its important to talk a little bit about messaging, right, because on this panel, we might all be preaching to the choir, but when were thinking about Building Public will, political will, what do you say to people who claim, oh, people just should have saved more, right . Its on them if they dont have savings and theyre not prepared for retirement . Clearly, if you look at the experience of the vast majority of working people in the last couple of decades in which you had, you know, at best, stagnant wages, you have more recently, Surging Health care costs, which by the way, are probably going to cannibalize Retirement Savings for many people Going Forward if we dont address outofpocket costs. You know, its clear that we have, you know, an economy thats out of balance, that has had enormously destructive effect on individuals and families, Financial Security. So that is the context. And i think its, you know, indisputable that particularly for middle and lowincome americans, thats been unfortunately the trajectory that weve been on for far too long. You know, i think also that, weve talked about some of it here today, theres sort of these enormous differences in peoples experience based on whether or not they have the benefit of a workplace Retirement Plan. I think it was lily from the first panel pointing out how few actually saved directly into an i. R. A. , where you have the Tax Advantages there, you compare a similarly situated person who has workplace plan to one who doesnt have a workplace plan, right . And the odds of them saving for retirement tremendously different. So really underlines how we have a system that doesnt necessarily work that well for people and there are real problems with the Retirement Savings system. Look at the reality of that, its very clear, this isnt about moral virtuousness, its about the larger economic storm that people are facing and a system that doesnt work well for them. Diane, you wanted to comment . I think its really important for us to get some real pictures of where the typical american is. So many of us in the policy sphere you, know, some people are lawyers, some people were economists, some people are different things, but were not the average family or the the average family, for example, in california, thats not covered by a pension, the average income is 25,000. And so, you know, a lot of individuals dont understand that. If they can even save 500 a year, thats huge. Thats a huge thing for them. First of all to understand that thats important. The other piece is to understand really where the assets go. And i used to work for a congressman from north dakota on the ways and means committee. I, as a staff person, gave him a statistic one night that he couldnt believe and it was from the Government Accountability office. They had looked at the assets of baby boomers. They looked at all of the Financial Assets of baby boomers, and their assessment was that you know, the bottom half of baby boomers owned just 3 of the baby boomers Financial Assets. And that was startling to him. He couldnt believe that. Of course, the top 5 of the baby boomers owned 58 of the baby boomers assets. This was before the financial crisis. We looked at this a couple of years ago, after the crisis came about, and as it was into recovery, that ratio was about the same, in fact a little bit more concentrated at the top, but the bottom half still only had 3 of the baby boomers Financial Assets. And we took it a step deeper and looked at look at those assets dedicated for retirement and retirement accounts. We have a lot of stuff in the tax code to make sure those plans dont discriminate. Well, we got the bottom half of the baby boomers Retirement Assets to be 4 of all of the Retirement Assets. The very, very top dont get as much, but a little bit more goes to the top 20 . In reality, theres a real big myth out there that, you know, people are supposed to have something besides Social Security. But look at the income that goes to people who are actually retired and no longer working. The seniors over 60, you know, the bottom half, almost all of their income is coming from Social Security, and that is something, if we really want to change, we have to start getting real convincing data points that will never leave the minds of policymakers. Earlier this week, we had reports let me see if i can get this right, the top 100 ceos have savings equal to the bottom 41 of American Families. Just to highlight the staggering statistics as well. Eric . This is a common issue. What we tend to get on our side is, they cant speak english, foreignborn, lower education, levels of course they cant save for retirement. A lot of it does boil down to looking at the outcome of savings, wealth levels, income levels and putting the focus on individuals and in this case, its about increasing access, opportunity, increasing incentives to save for those that are mobile or moving in relatively low income. But its an important distinction because if we continue to think its about people and their own behavior, then we never get to the Systemic Solutions that we need. And this is true of industry as well who have been our partners over the years, thank you very much. But ultimately, theres a plethora of Financial Education information as if its education and information thats going to change everything with respect to peoples situation. What we need is a coalition working on policy change. And policy change is some significant ways weve been talking about today. But the stuff can get pretty wonky, right . As were talking about messaging and still manage to devolve into acronyms, how can we talk about these issues and these goals as part of a Larger Movement and or in a way that might resonate effectively with the American Public . And ill take answers from anyone who wants to weigh in. Well, ill just start, say, you know, weve had an opportunity to engage latino workers in a lot of states and here nationally on the issues and theyre hungry. You know, they want to talk about the economy. We tend to think, well, they care about immigration, right. So once we finish talking about that we can move on. But in fact, its a lot of it is wages, income opportunity. They want the ability to improve the situation for themselves in their lives. And but whats happening is were not having that conversation as much. Were not in communities, were not doing town halls, were not doing the kind of work essential to build up coalitions. Its not just messaging effort we need, right . Its not just ads or you know communications campaign. Weve got to be in communities talking to people, organizing them, talking about whats good and to build up that coalition that i think needs to be multifaceted, much broader, as i said, about the collages weve had to date because the field has changed. And even though we have very, very good champions on capitol hill around these issues, very smart as well, they dont have the support. They dont have the constituency support that they need to make the kind of changes we want. Weve got to roll up our sleeves, get out there, and i think thats the way of the future. You know, our members and our member unions do a lot of work to provide Retirement Security. In the private sector, over 80 of Union Members have a Retirement Plan at work, twothirds of them are in a traditional pension plan, and thats, you know, starts with, you know, a set of values about what were trying to accomplish and what working people are trying to accomplish in bargaining. And because boil it down from a values perspective to on Retirement Security, wanting to make sure that, you know, people, after a lifetime of hard work, can afford to retire. And you know, on a panel like this we throw around a lot of number and acronyms but the discussion that we have to have, you know, starts with, you know, really talking about what do we want the country to look like for retirement . As a piece of that, what do we want it to look like . I think thats really important. And i think one of the things thats promising, from biggerpicture perspective, i think people are really paying attention now to the fact that we have an economy run by a set of rules that unfortunately arent designed to benefit middleclass workers or working people generally. So i think theres a real interest in making meaningful changes are that are going to lead to better outcomes. It i think its important to discussion of retirement discussion into the larger discussion. I think people are very much open to in having without us. Diane . You know, i think two things. Number one, the idea of working people, so many working individuals just feel that they have to spend so much time working, they dont have time to understand Financial Education we want to make them understand. They dont have time to do the advocacy necessarily. They need to have advocates, they need to have data. But the other reality of it is, the most convincing thing i think we can help understand is, give us something we can all relate to. We all have to understand that were human beings. And all of this is us together. And i think whats interesting, too, is when you start to look at millennials, theres a great deal of interest in Retirement Security in millennials and i think a lot of it is seeing parents struggle and they see grandma and grandpa, who might be lucky enough to have a pension. I heard somebody say pension is like a foreign word to me as a millennial. I know im never going to get a pension. But reality is, they are willing to save. In fact, some of our data, we asked people, could you save another 3 , could you save another 5 . And actually, millennials are twice as likely to say that theyre willing to save more than the baby boomers. They say theyre willing . We say were willing to save more . But are we seeing savings behavior that matches those i think we are starting to see saving behavior to match that where they feel they can. Even though they have to pay student loans, they do get it when you start to explain to them that, gee, you dont want to leave the match on the table, you want to at least get into the plan. Theyre not backing away from auto enrollment. So they are embracing some of those things. So i do think we have to give them the facility to save and thats the biggest thing about the savers credit and the auto i. R. A. When you put the two of them together, and this is data from the Government Accountability office, they did a study, what they showed in the bottom half, we would increase Retirement Income by about 20 for individuals who today are relying only on Social Security. Thats a huge benefit to our economy and to our future. And its a huge benefit for millennials. So people do understand the need to save. I think they want to save, and i think its incumbent upon policymakers to design a system that makes it easy for them to save. And were not there yet. Im optimistic. I think we can get there. I think that can be part of the tax reform. Building on what shaun said, i do think thinking about Emergency Savings is really important because thats really what people need initially is some money for an emergency and then they can go and Start Building up their retirement saving. If they dont have Emergency Savings and building up Retirement Savings, theyre more likely to dip into that. I think i think people want to say i think they understand the need to save, but i think its difficult. I think savings, because of financial challenges, because of having to go out and open up an i. R. A. And go to a bank, that is actually a significant barrier to a lot of people. So, i willingness is there. I think we as policymakers, policymakers design a system, though to make it more efficient and get people to do really what they want to do, what they aspire to do. Sort of a final lightning round before we do audience question and answer. If you had to pick one takeaway from the mornings twopart discussion that you hope the audience leaves with, what would you pick . And ill start with you shaun. You know i think theres, at least in a small group, right, i think theres an understanding that you know, at least in the Retirement Savings and pension space, we need to not only think about savings incentives but make sure the right kinds of savings plans and systems are in place. So you know, that can mean Employer Paid Retirement Plans, as well as making sure that people have access, because talking about Retirement Savings because that can make all of the difference as well. Gary. Whats happening at state level, i think shaun mention auto i. R. A. , used to be bipartisan. It became partisan. And the states have really picked up the ball on this. And aarp has been a big supporter, whats happening in the states. Diane mentioned five stated, three to five that have passed plans in the process of implementing them. Dozens of more that are set of commissions or exploring this. And that is a real opportunity for us to increase savings. And i think we need to support that work. Diane . I think we have to start looking at Retirement Savings as a win win for everybody. Its a win for the individual. Its a win for the lowincome individuals. Its a win for the highend income individuals because it means people might rely less on entitlement programs. Its a win for the Financial Services community. What we have to do is we have to find a way to come together as opposed to, you know, there defending our sacred cows. And i think thats the key thing. Eric doesnt get a chance to give a final word, he had another engagement to run off to. I think well open it up to audience q a. Please, raise a hand if youve got a question. Right here in the front row. Im going to go ahead. If i may start with a comment. I have a problem with the general premise that facilitating more Retirement Savings will solve the Retirement Crisis. I believe that the issue is much more complex and some of the problems with some of the complexity was alluded to by some of the commentators. For example, looking at the Macro Economic context, many people, due to the development, due to the development in the last 30 years, decline in wages, the fact that most people have not seen an increase in real wages at all, and the fact that the tremendous productivity increases during last 30 years was not passed on to the average american. And as a consequence, people just do not have money to save for anything. College costs have gone up, house costs, everything has gone up while wages are declining. The middle class is declining, as we all know. We hear it everywhere, we hear it from yeah, every corner. The middle class is shrinking, the incomes are shrinking, middleclass incomes are shrinking, so there is just not enough money. Thats the first point. The second point, if i may, and i come my question, as a former economist, work economist and investment banker i think i know a little bit about the financing. The savings issue also has to be looked at in a national and global context. What if we all save more . Then we need to have good assets to invest them in. If as if i believe currently the case we continue to have savings glut, meaning a lot, you know, all of the money is looking for assets to invest in, then what happens is that as prices increase but rates of return continue to fall. Right now, we are lucky if we invest to get 1 or 2 rate of return. I dont think thats going to change anytime soon. Especially if we push people or motivate people to save even more. Now to my question. Considering all of that, wouldnt it be better, instead of motivating people or spending a lot of money on tax credit to motivate people to save more for retirement, wouldnt it be bettor use that money, i think you mentioned 50 billion, to support Social Security, a program that the majority of Americans Trust and like and that seems to have worked throughout decades . Why not do that instead of stimulating the Financial Sector because thats what it is also, were stimulating the Financial Sector by giving tax credit for more savings because the money has to go somewhere. I want to give them a chance to respond. Thank you for that. So a lot there. I think probably three of the most common questions that you guys always get, right, people have flat incomes, rising costs. How can they possibly afford to save, i think was the first piece. The second piece, Interest Rates are really low, whats the point in saving anyway . That wont change for the foreseeable future. Reasonable minds might differ. The third, why not focus on Social Security . Who wants to take any and all of that . A brave man here in the front row. You know, i think your comments were at least parley consistent with some of the things that i said, youve got to look at bigger economic context. We dont have an economy that works for people. We have a much bigger problem, right . We have to look at these issues in that context. You know, absolutely agree with you on the basic point that we need to look at expanding Social Security. Certainly something that we in the Labor Movement here support. You know, as you mentioned very popular and also very efficient effective way to deliver Retirement Benefits. So, absolutely with you on that. You know, we have also, i think, invested heavily in trying to deliver Retirement Benefits that supplement Social Security. So any given age, youre getting a lower benefit as the age increases. Its per year that the full retirement age increases. The threshold for taxing Social Security benefits are fixed. So we have more people having more Social Security benefit subject to tax. My point in saying all that is we definitely need to look at the system as a whole, but i think we need, in addition to a strong Social Security, we also need individuals to have additional Retirement Savings in order to live the way they want in retirement. Diane . I couldnt agree more. Obviously, we need to fix Social Security. I dont think theres anybody on this panel that says we dont need to. In doing that fix, we need to make it a little bit better for people on the lower end because we do have women once they get to be about 85 have a substantial increase in the level of poverty just because of their lack of having any resources. At the same time, there is a reason that everybody should have some stake in i think every one of these gain. We should keep the highend people in Social Security and i also think we ought to make sure we keep the lowend people having some opportunity to save. What happens too often, and this gets into other things out there, individuals at the low end, their car breaks down, their house needs a new roof. If they are just living on Social Security, they dont have the resources to go and get that repair and they may be forced to do Something Like go to a payday lender and give them their Social Security check and get into that kind of financial downward spiral that others have done a lot of work on too. So we want to find ways to bring pieces of the retirement system. We have a very bifurcated retirement system in the United States, especially when you compare to our peers. I was in hearings with members of Congress Sitting next to one of our major mutual funds and they turn to me and said Social Security has to deal with the bottom half. We cant have that kind of mentality. I think we all have to have a piece of something to really make it work for everybody. Other questions from the audience . Right here. Im a Research Associate and student in economics at the new school. One thing that i heard and surprised me was that this is the issue that right and left both agree on. The thing is i personally work on account balances and i agree we need everyone should agree on the fact that there is not enough savings for individuals. The surprising point was i heard arp is saying that saving estimated grows, the growth reserve, this is something on the right. Is this something right and left agree on or moving to the right just because this is the right policy at the individual level and thats the only option, physical option right now . Thank you for the question. So gary, i think arp was mentioned. Do you want to respond . Sure. And i think what youre referring to is i mentioned that arp sponsored work by Oxford Economics, which look at savings and what that meant for longterm growth. And i the Research Found that it does help improve longterm growth. So i think your question was is this a left and right issue . I think Economic Growth is a left and right issue. How you get it . What is that . How you get at the Economic Growth. Right. Its maybe an issue, but i do think it has been in the past that Retirement Savings policy has been a bipartisan issue. Diane mentioned the 2001 tax cut bill. Where that came from it was the dollars were mainly the rate ductions. Twothirds of it was Retirement Savings and pension reform. And that came about from rob hartman and cardman, who were on different sides of the aisle when they were in the house and they worked together to build that bill and that became part of the tax proposal. So i think it does. I think what happened is with the automatic ira, we had the Affordable Care act and that created some issues, but i think fundamentally, having people save more for their future, i do think it is a bipartisan issue or i think it can be. It once was, i think it can be again. Diane, would you like the last word . I remember being at the saver summit that they had that was part of this bill to encourage people to save for retirement. And part of the discussion there was all about the growth we had created, but most of the growth we had created, and this was in 2006, was because we expanded debt and we were borrowing money. And i think we saw what happened when we expand growth on borrowed money, as opposed to when we create growth based on savings and investing in things like our infrastructure, investing in our employees and our students to give them better education, we end up with a better economy in the end. Thats the key thing we have to remember. If we do it on debt, were going to be in a really funny place again. Were going to have to leave it there. Join me in thanking our panel. [ applause ] and christian weller, i will welcome up to the stage. Thank you very much, rebecca, and the panelists for the interesting policy discussion. And it is my honor to introduce our closing keynote speaker for this conference. Dr. Karen diamon is an esteemed economist whose work has influenced my own thinking especially in consumer debt, labor market risks and other issues. She serves as the assistant secretary for Economic Policy and chief can economist. Throughout her career, she has been sharply in tune with the pressures facing American Families including the pressure to build wealth and save money for retirement. I reallyencourage you to pick up a number of pieces from her there. Very informative. Before her role at the department, she served as the Vice President of the Economic Studies Program at the brookings institution. She also served on the staff of the Federal Reserve board for 17 years and was a senior economist at the council of economic adviser from 2003 to 2004. She served as a visiting professor at Johns Hopkins university. Her career has been one of Public Service and her expertise in Financial Issues has provided critical insight in a time when middleclass families are being squeezed more and more between rising costs and stagnant incomes and its my pleasure to bring her to the stage. Thank you very much. [ applause ] well, thank you, christian, for that very gracious introduction. Thank you for inviting me to participate. Im really so glad that cap is digging in on this topic. In the twoplus years ive been in the administration, ive learned things that have really underscored for me the importance of higher saving in the retirement context and in other contexts as well. I have also learned just how complicated it is to develop policy options on this front. So, i think its great youre digging in. I also will say im glad you assembled such an allstar team of experts to participate in this conference. Really, speaking to people who have influence, peoples research, ive been in research for years now and the group that you had on the agenda this morning was just a group thats influenced me as well. So, id like to thank that group for doing that important Public Service. Today im going to offer some remarks that talk about the importance of saving and then after that get into the question of what policy can do and what the administration has proposed to foster higher saving. And so im going to start with the macro case for higher saving. So the u. S. Personal saving rate, which is loosely defined as saving net of new borrowing divided by aftertax income has declined markedly over the past several decades. Americans saved 12 of their incomes on average in the 1970s. And about 9 on average in the 1980s. 7 on average in the 1990s. Since 2000, the personal saving rate has averaged just under 5 , which is about where it is today. Its a very low level, by historical standards. My researchers dont understand the source of this decline in the personal saving rate, but some have pointed to lower Interest Rates, higher aggregate wealth and a greater ability in willingness of households to borrow as possible contributing factors. Whatever the reason, low personal saving can be problematic for the growth of aggregate income and Living Standards over the longer run. Now higher saving would have been detrimental as the economy struggled to recover from the Great Recession because it would have held back private demand. However, over the longer run, higher saving will increase our Capital Invest and increase the income we receive in the future. That statement is true even with the substantial capital flows that we have, as some of the additional saving would increase the Capital Stock in this country, which would raise productivity and wages in this country. The remainder would increase the capital we own overseas and the return we receive on this capital. So, thats the macro case. So let me turn now to the crucial role that personal saving plays for individual households. So there really are several parts of this case. So first of all, individual households can better cope with unforeseen disruptions to their income and unanticipated consumption needs if they have assets accumulated. Even before the financial crisis, Household Income was trending up, increasing household exposures to declines in their incomes. And then the high rates of job loss and under employment experience result of the Great Recession served as a painful reminder of the need for these precautionary reserves. Second, saving provides individual households with opportunities. So funds accumulated through saving can be used to pay for College Tuition and to purchase bigticket items such as cars. Saving puts households who wish to establish businesses in a better position to do so. And given the tightening of credit in the wake of the financial crisis, saving is now even more important to obtaining homeownership than it has been in the past. A 2014 Federal Reserve survey provides evidence on the importance of saving in this context of the 87 of young adults who were renting but would like to own if they could afford it, 59 cited a lack of a down payment as a Factor Holding so third, this brings me to the themes that you have been discussing all morning, saving is important for individual households because it allows them to enjoy a better standard of living in retirement. Although most people will receive Social Security benefits when older and some will receive regular payouts from defined benefit pensions, these sources of income are often not sufficient to make up for the step down in earnings that people experience at retirement. As a result, many older households will need to supplement this income with accumulated wealth if they wish to maintain the consumption levels they had when younger. And the need for retirement saving has increased over time given rising life expectancy. Today, more than three out of five 65yearolds will reach age so unfortunately for all the potential benefits of saving, many households seem to have a great deal of trouble doing so. According to the 2013 survey of consumer finances, only 53 of households reported having saved over the proceeding year. Lower and moderate income households have especially low levels of accumulated assets. Among households with heads between the age of 45 and. 54, so thats around the age that saving often peaks, the typical household in the lowest net worth distribution have Financial Assets amounted to approximately one week of income and had had liquid assets that amounted to only a few days of income. The typical household had five and a half weeks and just over one week in liquid Financial Assets. So while these latter households in the second highest kwin tile are in a better position to temporary disruption, the amount of assets could only support a short period of retirement in the absence of considerable pension income. Theres also a wide range of evidence that subjects many households have insufficient savings. A 2011 brookings paper was the ability to withstand financial shocks and determined one quarter of respondents were financially fragile in the sense they were certain they could not come up with 2,000 in 30 days. Including those reported unable to come up with 2,000, half of respondents would be viewed as financially fragile. Saving was the key underpinning of the result as people reported they turned to their own assets to deal with shocks. In addition, Many Americans report that adequate saving for retirement is a challenge. In a 2014 poll, only half of respondents reported being confident they will have enough money to live comfortably in retirement. Research validates this concern and suggests in particular that households in the lower part of the Income Distribution are most likely to be squeezed. So for example, lower income households are much more likely to experience a material drop in their consumption at retirement than their higher income counterparts. So this brings us to the crucial questions of why people dont save enough and how federal policy can encourage them to save more. So to start, its not uncommon to hear people say they cant afford to save. We lack research that concretely documents this phenomenon and surely is the case that some of these people are just not prioritizing saving for one reason or another. However, it does seem plausible that some households are stretched too thin to be putting any money aside. And this problem has likely been exacerbated by the stagnation of wages in the lower and middle parts of the Income Distribution over the past several decades. Although my remarks on policy are going to be focused on initiatives that directly encourages saving, this consideration just adds to the need for policy measures like many of those proposed by the administration and policy measures being researched by cap that are designed to support Income Growth for households in the lower and middle parts of the Income Distribution. A second problem is that many of the tax incentives put in place have little effect on the return to saving by lower income households. In particular, as this crowd knows, households in lower tax brackets achieve smaller reductions in their tax liabilities for each dollar of saving and tax deductible form. In households with incomes so low they have no federal income Tax Liability at all received no benefit at all from savings preferences that are not refundable. A third and broader challenge is that many people arent making the sort of rational calculations about saving that economists models often assume. The simplest models predict that a person saving and dissaving will depend on several factors including the return to saving as well as how they expect their income to evolve over their lifetimes. However, the Available Evidence suggests that the incentives that policy has incorporated to encourage saving seem to have limited effect on many peoples decisions including people who would benefit from the savings tax preferences. So for example, in a very comprehensive study that was cowritten by john freedman, who was talking earlier this morning, researchers examining the danish pension system, which is similar to ours, found that only a minority of savers responded to incentives in a way that was roughly consistent with traditional economic theory. Most individuals about 85 were what the researchers termed passive savers who did not respond to these incentives. So what is it that blunts the response of many households to changes in the return to saving . Probably one significant factor is that people are focused on other aspects of their lives. So they use simple rules of thumb to determine their saving rather than complex complications. So thats not necessarily irrational. I could do a show of hands this morning to demonstrate this fact. The thing is that making the theoretically optimal decisions about saving takes both time and financial sophistication. And many households may rationally decide not to require that time. In addition, research has demonstrated that some households lack basic Financial Literacy, have particular difficulty planning and are prone to making rudimentary financial mistakes. These findings can explain limited response among some types of households to complicated savings preferences in the tax system. And low Financial Literacy has contributed to limited use of savings vehicles like individual retirement accounts, not just because tax benefits are not understood, but also because individuals have to take active steps to research and set up and maintain these accounts. The lack of Financial Literacy among some households is more worrisome because of the shift of pensions to contribution pensions, which increased the need for financial responsibility. So between 1989 and 2013 the share of workers participating in benefit Pension Plans fell from 32 to 13 while a share of participating Contribution Plans increased from 25 to 38 . So given these findings, what can we do to help people make savings positions to serve better in the longer run. A key step in the right direction is to make saving easier or more automatic. For example, as this crowd probably knows, a large body of Research Documents that employer provided Retirement Savings programs with automatic enrollment for households. The challenge is that only 60 of workers outside the military currently have employers that offer 401 k s. And the last part of my talk i want to build on this point and describe four specific changes in federal policies that would encourage the savings. First, we should pass legislation consistent with the proposal in the president s budget to ensure that americans without access to workplace Retirement Plan are automatically enrolled in an ira. Under this proposal, every employer with more than ten employees that does not offer a plan would be required to sign up their workers for an ira. They would be allowed to opt out, but many would save and appreciate having this opportunity without having to figure out the logistics themselves. Second, we should provide support for firms that enroll in Retirement Plans. The president s budget proposes a tax credit for any employer with 100 or fewer employees that enrolls its employees in an auto ira. In addition the tripling the existing start up credit so small employers who create Retirement Plans would receive a 4,500 tax credit. If they offer a plan and add automatic enrollment would receive a tax credit. These credits would offset the expenses that employers would bare and provide for more firms to enroll workers in Retirement Plans. Third, we should ensure that parttime workers who have worked for their employers for sustained periods can contribute to Retirement Plans. Less than 40 of parttime workers currently have access to a Retirement Plan in their workplace in part because they work less than 1,000 hours per year. The president s budget allows employees who worked for at least 500 hours per year for three years to make contributions to the Retirement Plans. Fourth, we should encourage broader participation in the m. Y. R. A. Program developed by treasury. Myra oig is a safe no fee savings option designed for people without access it a Retirement Savings plan at work. People can arrange for contributions to be made. The accounts stay with them if they change jobs and theres no cost to opening or maintaining an account. The investment is backed by the u. S. Treasury and has no risk of losing money. From a tax perspective these accounts are roth iras so contributions are made using after tax dollars and, therefore, can be withdrawn without penalty whenever one would like and interest accrues until withdrawal. This year treasury worked with a small, Diverse Group of employers as part of the pilot phase to get feedback and ensure that the User Experience is as simple and straight forward as possible. We are looking forward to promoting it more broadly and soon. You can learn about the program by visiting myra. Gov. None of these options alone can entirely solve the problem of inadequate savings by households. However, each of policies can make a difference and together they can make a significant difference in the total amount of saving able for investment in this country and a significant difference in the Financial Security of many households. Thank you and i look forward to taking your questions. Ill open with a first question. How does the promotion of auto ira at the federal level interact with interest from the administration to promote state plans . So thats a great question. So theres a lot of interest at the state level. My understanding is the last statistics i saw suggested that theres a handful of states who are pursuing it concretely but if you add those to the states who are also considering doing it, youre getting like half of states. Were taking this interest as the strong signal that the president s proposal at the state level or at the federal level is something that americans are very interested in and people would really value. One of the complications that has arisen around these state plans are that there are some complications related to the rules. And the administration is work on providing clarification. They have said that the Labor Department will be issuing some clarification by the end of this year. My other question, wanting to ask everybody here and that is when we talk about tax incentives, arent we making a complex system even more complex . g cu so the complexity issue is a running theme in my speech. I do think that the complexity facing individuals is a true barrier to saving. I think the point of myra is something simple and easy to use from the persons point of view. It does add to it makes the system that we have to encourage saving bigger. But its feeling a necessary hole. I think from the individuals point of view, its not moving things in a more complex direction. Its moving things in a more simpler direction. Thank you for your presentation, which was very good. The question is has the administration thought about a program for retired people or giving a tax credit to employees to motivate them to employ more senior employees or retired people because i think that might be another part of the solution of the Retirement Crisis to provide more Employment Opportunities to people who want to work and are capable of working. So thats not something thats currently in our batch of proposals that we include in the last president s budget. I think we are thinking all the time about Labor Force Participation issues. I think we would like to reduce barriers to Labor Force Participation for all age groups, but older households would be contributing. We dont want to be pushing people into the labor force who dont want to be in the labor force. Part of our agenda to create a workplace that was better suited to Work Life Balance includes encouraging employers to take steps that would give Older Workers the flexibility that they need to be in the workforce if they need to do so. Im from the National Institute on Retirement Security. The question about myras. One of the things as shall people have been talking about the states moving ahead with auto iras at the state level had heard some criticism that while you dont need auto iras because you have myras. Could you share any comments that you have in that regard that would be a good way to respond to those . Thank you for asking that question. Myra is designed to be a starter savings account. So in fact, contributions are limited to i think its 5,000 or 6,000 a year and the total amount that can build up in those accounts would be 15,000. They are roth iras so you can roll them over once you have built that saving habit. But one important design feature was ensuring that we were filling a hole and complementing the existing system and not undermining the existing 401 k system or the existing ira system that when done well and when can it up with best practices is actually serving people well. Thank you. Appreciate you coming over from pressure treasury. That was fun. Coming up live later take on cspan, a discussion on afghanistans future. He previously served two terms as chief of staff to the president of afghanistan. And coming up on our landmark cases series, korematsu versus the United States where the Supreme Court upheld the removal of 20,000 to internment camps. 70,000 people were taken to remote areas of western and mid western states. You can learn about the people and the law behind that case tonight on landmark cases, historic Supreme Court decisions. See it live at 9 00 p. M. Eastern on cspan, cspan3 and lpisten for it on cspan radio. Now the life and career of british Prime Minister Margaret Thatcher this is about an hour 15 minutes. Good afternoon. Thank you for joining us here at the Heritage Foundation in our douglas and sara allison auditorium. We, of course, welcome those who join us on our heritage. Org website on all of these occasions, those who will be joining us on cspan. We remind our internet viewers that questions or comments can always be sent simply emailing speaker heritage. Org. And we have all, of course, posted todays program on our home page for everyones future reference as well. Were pleased today that our program is cohosted by the Anglosphere Society. It was formed in 2012. It is an independent educational nonprofit taxexempt Membership Organization and focuses on promoting the special relationship between the United States and the United Kingdom, free market economies, and cultural events for englishspeaking peoples. In pursuing its mission, the Anglosphere Society holds cultural events for sharing ideas based on the historic values of the englishspeaking peoples, encourages the Anglosphere Alliance through the arts, literature, music and historic travel, acts as a forum to promote and publicize ideas grounded in the values of freedom and democracy, and fosters networks and personal bonds to stimulate discussions on key issues. We are pleased that opening our program today, the founder of the Anglosphere Society, amanda bowman, will lead us. She previously served as the new york director of the center for Security Policy for eight years, focusing there on policing terrorism and the homegrown threat posed by radical islam. This allowed her to work collaboratively with policy organizations and Law Enforcement on both sides of the pond. Ms. Bowman has over 20 Years Experience in corporate, philanthropic and consumer Public Relations on both sides of the atlantic. She also serves as a board member of the intrepid Fallen Heroes fund. Please join me in welcoming amanda bowman. Amanda . Thank you so much, john, and my deepest gratitude to the Heritage Organization for cohosting this event and their generosity in making it all possible. Today we are celebrating the life of Margaret Thatcher who would have been 90 years old today. In april of 2013, the Senate Passed a resolution to recognize the life legacy and example of british Prime Minister baroness Margaret Thatcher. And id like to quote from the those that resolution because i think it sets the stage for this discussion tonight. Resolved that the Senate Honors the legacy of baroness Margaret Thatcher for her lifelong commitment to advancing freedom, liberty and democracy throughout the world. Recognizes that Margaret Thatcher, working with president Ronald Reagan, helped bring a peaceful end to the cold war. Reiterates its continued support for the close tie and the special relationship between the United States and the United Kingdom. And expresses admiration for barroness Margaret Thatcher and her legacy as an inspirational and transformative leader in the United Kingdom and the world. Needless to say, i couldnt say it better. Today, we have nile gardner moderating our conversation today, and nile brings, like the other speakers today, a unique perspective on the life of Margaret Thatcher. As you know, he is the director of the Margaret Thatcher center for freedom at heritage and has worked at the heart of the washington policy world for over a decade. And hes a leading expert on the u. S. uk special relationship and u. S. Policy towards europe. But before joining heritage, nile served as an aide to Margaret Thatcher and advised her on a number of International Policy issues. Working in her private office, nile assisted Lady Thatcher with her final book, state craft strategies for a changing world. And nile also received his doctorate and two masters degrees in history from Yale University and has a bachelors and masters degree in modern history from Oxford University. Oxford university is an important part of our conversation today because we have dr. Alice precassca, principal of oxford of which Margaret Thatcher is a distinguished alumni. Dr. Prohaska started her career as a curator and subsequently as an archivist in the Public Record office. She then became the director of special collections at the british library. In august of 2001, dr. Prokaska took up the position of University Librarian at Yale University, and she remained there until she was elected principal of somerville in the summer of 2009 and took up the position in september 2010. So dr. Prohaska has an expertise on the influences the academic influences on Margaret Thatchers life. We also are honored to have attorney general edward meese, now Ronald Reagan distinguished fellow emeritus at the center for legal and judicial studies at heritage. Ed meese is a prominent conservative leader and thinker and elder statesman and continues a quarter century formal association with the Heritage Foundation. And we are delighted to have him speak to the special relationship in Margaret Thatchers life as Prime Minister, and particularly her special relationship with Ronald Reagan. And we have also with us John Osullivan whos special adviser and speechwriter to Prime Minister thatcher and author of the president , the pope and the Prime Minister. John osullivan is both an author and a journalist and a senior fellow at the National Review institute and also editor in large of National Review where he served as editor in chief for almost a decade. In 1987 and 98 and 1988, he served as special adviser to Margaret Thatcher, covering health and Social Security, defense procurement and the arts. And during this period and after he left downing street, he served informally as a regular speechwriter for the Prime Minister. He was the principal author of the 1987 conservative election manifesto, and later one of the small team that assisted Lady Thatcher in the writing of her two volumes of memoirs. Were particularly lucky to have the opportunity today to have a look at Lady Thatchers life steadily and whole as t. S. Elliott would say. And its a unique opportunity. And im absolutely thrilled and delighted to have this opportunity to introduce everybody. Thank you. Thank you very much, amanda, for the very kind introductions, and a very warm welcome to our three distinguished guests with us today and also warm welcome to every joining us here this afternoon at the Heritage Foundation. Id like to start off, if i may, with the first question for dr. Alice prohaska, the principal of Somerville Thatcher and of course Margaret Thatcher was a student at somerville. She studied chemistry there. She started, i believe, in 1943 on her 18th birthday. And oxford was instrumental in shaping Lady Thatchers later career. And id like to ask an opening question with regard to the Margaret Thatcher scholarship trust, with regard to the thatcher scholarships, could you give us an insight into what Somerville Oxford are trying to achieve with regard to the scholarships, and perhaps some details about the launch of the scholarship trusts and what youre trying to achieve here with this tremendous project . Well, thank you, nile. The idea is fundamentally to create a permanent living legacy to Margaret Thatcher by creating scholarships that will bring people to study at oxford from all over the world who probably would not otherwise get the benefit of that education. So were following the narrative of Margaret Thatchers life. A woman from very modest circumstances. But tremendous promise and great academic attainment who made her way to oxford where the college of which i have the owner to be principal which is the same thing as president gave her her start. Somerville identified Margaret Thatcher, then margaret roberts, as somebody who was struggling financially and wouldnt be able to get the best from her oxford education without further financial assistance. And she was rewarded with funds and also with an academic scholarship. And she was taught by some of the most excellent tutors in the world. We may speak more about this and her main tutor, Dorothy Hodgkin was the one british woman ever to have won a nobel prize in science. So the college was a very special place. It nurtured and looked after its students, and it taught them at the highest possible level. And we want to continue that tradition in the name of Margaret Thatcher and bring people from all over the world to honor her legacy. People who are going to succeed in life with the same sort of determination that she displayed. And with regard to the thatcher scholarships, inevitably, they will draw comparisons with the Rhodes Scholarships, arguably the most famous scholarships in the world at this time. And scholarships established by the great empire builder cecil rhodes, a graduate of royal college. How do you see the thatcher scholarships differing from the Rhodes Scholarships, or are there indeed some similarities between the two . There are similarities in that we want to create an International Community of alumni of these scholarships. There are similarities in that we are looking for excellence. That is of paramount importance. Were looking for academic excellence, first and foremost. What Rhodes Scholarships do that our scholarships will not pay so much emphasis on is to look for wellrounded people who excelled with athletic prowess. Cecil rhodes was very keen on athletic prowess. We are actually looking for people with very, very strong academic potential and capability. And we then give them the opportunity to develop the sort of character and future and profile that we think will actually honor Margaret Thatcher. She herself, i think, would for the have been a Rhodes Scholar when she arrived at oxford. There are some other differences. That is that these will be scholarships for undergraduates as well as postgraduates, and the Rhodes Scholarships are for people who have already graduated from another university either from this country or in parts of africa, germany, india, and the former commonwealth countries. We are looking to provide scholarships for people from any part of the world, including this country. But they may come from any part of the world. And one distinguishing characteristic which is not specified in the Rhodes Program is that it will give particular preference to people who can demonstrate that theyve overcome adversity. Margaret thatcher overcame the adversity of coming from a very modest background with no university tradition in her family at all. And thats one form of adversity. We will be looking for people who can show already in their lives that theyve managed to overcome. Excellent. And its striking that Margaret Thatcher had to learn latin, i believe, in the space of about five months in order to enter into Oxford University at the time. As you mentioned, came from a very, very modest background, the daughter of a green grocer in grantham. And she epitomized, i suppose, the cando attitude of her generation. It certainly is a tremendous example to young, aspiring scholars who wish to study at oxford today. And one more question with regard to the scholarships. Margaret thatcher was famously denied an honorary doctorate by Oxford University when she was Prime Minister. Can you explain how, in spite of that, the relationship with Somerville College remained very warm for Lady Thatcher, and she always kept a special place at somerville in her heart despite her somewhat shoddy treatment perhaps by the senior officials of Oxford University. Well, she certainly was shabbily treated by the university, and that was a terrible mistake which i think it was great pity that that happened. Somerville college was where she had her roots in the university. And some of you may have picked up niles illusion to the fact that cecil rhodes came from oriole college which just gives you a flavor of the way the college loyalties show through amongst oxford graduates. So most oxford graduates, i think, feel a particularly loyalty to their own college. Somerville was margaret that much thatchers college. It was a very special place. It had high traditions with a large number of female firsts behind it. At that time it was an all womens college. And it really gave her the confidence and the support that she needed. And it was her intellectual and while she was at oxford her emotional home. I think that was very important to her. Furthermore, somerville did not disown her. The college made her an honorary fellow as soon as she became a caber in minister in the conservative government and retained very close ties with her. The principal of somerville, my predecessor, who was principal at the time that Margaret Thatcher was Prime Minister was an extraordinary woman in her own right named daphne park, the biography thats just coming out of her is daphne park, queen of spies when she became principal of somerville, she was the highest ranking woman in the security services. Although the college didnt know that at the time. And she became a close friend of Margaret Thatcher. A huge admirer. And she was absolutely devastated when the university voted against giving the Prime Minister an honorary degree. And Margaret Thatcher wrote very consolingly and very magnanimously to the long lines of sort of dont worry, daphne. Its all right. I love somerville. I was there. It was such a privilege to be there. It will always have a place in my heart. And youve got leaflets, i think, weve distributed amongst the audience quoting some of the letters that she wrote. So it was quite different. The college was quite different from the university, although, of course, the university really did dole out a really unforgivable insult. Well, thank you very much. Id now like to bring in edwin meese iii, my colleague here at heritage, attorney general under Ronald Reagan. And mr. Meese, you had an opportunity to meet with Margaret Thatcher on a number of occasions. And you were instrumental as well in setting up the First White House meeting between president reagan and Prime Minister Margaret Thatcher in 1981. Although the first meeting between reagan and thatcher being too place in england in 1975. Several years before. And my understanding is that Ronald Reagan had only planned a few minutes to speak with Margaret Thatcher at the time, the leader of the opposition. But that that short discussion was expanded into a twohour discussion. And immediately, the two figures got on incredibly well. What were the qualities that Margaret Thatcher possessed that so attracted reagan, and why did reagan admire Margaret Thatchers leadership and qualities so deeply . Well, i think it started out as a matter of philosophy. And in that first meeting, they discussed various issues. Im z you think she showed thengovernor reagan, or he had just recently left the governorship, actually, at the time. And that a lot of their ideas about free markets, about government limitations on government and the like were very similar. But also, i think it was her i would call it the aggressive or fighting spirit, if you will. The fact that she was willing to stand up for her beliefs, demonstrating that as leader of the opposition at the time. And i think that intrigued him also because he was trying to do the same thing when he was governor. He took over a very difficult situation in terms of the state which was very heavily in debt at the time. He also believed in terms of his views of the federal government, and also as they talked about dealing with communism, there was a certain similarity of views there which were very important to him. So it was both, i think, a combination of the philosophy and the ideas she expressed but also her style was one that was very attractive to him. And you were, of course, instrumental in that First White House meeting. Could you talk a bit about Margaret Thatchers visit in 1981 and how that actually transpired . What was the impact of that visit upon the angloamerican special relationship . Well, of course, the fact that she was the first head of government to visit Ronald Reagan in the white house was in itself quite impressive. And the fact that they talked and shared a lot of views, they had talked, of course, in england on a very informal basis. Now here you had two leaders of two very important countries. And the fact that she was the first one received at the white house in itself kind of focused upon the special relationship between our countries and the very warm conversations, the fact that the two leaders obviously got along well with each other, liked each other as what you might say an indication of symbol of the two countries being very close at the time. And, of course, this led, in turn, to a closeness that was implemented in many ways such as in the faulklands war as well as in their dealings with the soviet union. I think it was both a symbol of the friendship between the two countries but also an indication that these two leaders could Work Together very effectively. I was with the two of them following that first meeting in the white house in canada at the first meeting of the industrialized countries. What we now call i guess the big eight or big seven, some big something. It wasnt called big at that time. It was called industrialized nations, and there were seven of them. And it was Ronald Reagan and Margaret Thatcher were the only rightofcenter government leaders there. Everybody else was a socialist or from a socialist form of government in their countries. And it was very interesting. And also, most of the time when this group had met, they would take primarily about economics. And it was both president reagan and Margaret Thatcher that brought up the subject that we can talk about economics, but how do we deal with the major threat to our countries which was soviet communism . So i would say that that first meeting in the white house was kind of a precursor, if you will, to the very important work that they started with other countries as a team which began in june or july at that industrialized summit just a few months later. And that, of course, was the first of many, many meetings between the two world leaders. Margaret thatchers leadership was instrumental in taking britain off its knees and restoring britain as a great economic and international power. What was the influence of Margaret Thatchers policies upon the reagan revolution . How influential was Margaret Thatchers ideas in terms of shaping u. S. Politics in the 1980s . I think that they were very influential. And i think it was very comforting to president reagan to see that she had been successful in what was happening over in england. Because when he took over, he faced the same thing, the same problem here in the United States. We were in deep trouble economically. It was the worst economic crisis since the Great Depression in the 1930s. We were in deep trouble in terms of our military forces. They had deteriorated in the aftermath in the vietnam war. As many people said, we were no longer a credible deterrent to our enemies or a reliable ally to our friends. And so Ronald Reagan was determined to change all this. He had campaigned on that. But it was reassuring to him to see how successful Margaret Thatcher was and that she was doing the same things faced with, again, a serious situation that she took over. And so i think that her example was very helpful to Ronald Reagan. And also, it was a lesson he could point to to the people of this country, look, another leader has done it. We can do it here. Now id like to bring in John Osullivan who spent many years as a senior speechwriter to Margaret Thatcher. I had the privilege of working with john on a number of occasions and worked in Lady Thatchers private office in london. And john, on the theme of the special relationship, what drove Margaret Thatchers tremendous admiration for the United States . And the special relations certainly reached its pinnacle, i think, under the Reagan Thatcher era. But what was it that really drove thatchers thinking with regard to relations with america . Well, you must remember that mrs. Thatcher was a child of the war. I mean, she was quite a young woman about, what, 15 when the war starts. And, of course, for any intelligent english man or woman, an entry of the United States was a sign that we had won the war. Any number of people will tell you when they heard the news of pearl harbor, they thought oh, well, now weve won after all. So it was a huge element in her background and thinking. Secondly, as a young member of parliament, she had been taken brought to america under the state department distinguished Visitors Program. She spent about six or eight weeks here. And she went all over the United States. She was tremendously impressed by the technical efficiency of american industry and its advances in technology and by the general dynamism of american society. And she felt very at home in that. And she wanted britain which after all had been a Dynamic Society and a leader in technology and in every other aspect only in a matter of decades before. She wanted britain to recover that status and reputation in america. And then finally, as ed has already said, when she met Ronald Reagan, she discovered somebody who shared all her essential views. And if he were to become president , as he did, then she would be working with someone even when they disagreed, they would be able to solve those differences fairly easily. But most things they didnt disagree. For her, america, from the war, from her experience here in the Visitors Program and from working with Ronald Reagan was a place that was a country and a people whom she sympathized with and who could be great allies of her own country. John, as someone who knew Margaret Thatcher very well, how would you define thatcherism . And how does thatcherism differ from the brand of conservatism that we currently have in britain today with David Cameron and the whole of the conservative party . Well, in the first instance, and there are many different definitions of thatcherism which is a word, by the way, invented by the left in british politics. And they defined it. Andrew gamble may have coined the phrase as the combination of a free economy and a strong state. A strong, meaning authoritative state, not a big state. And thats not a bad definition, as a matter of fact. The other definition, which i would prefer, is that advanced by the american scholar, Shelly Robin Letwin who describes thatcherism as the encouragement of the vigorous virtues in society. You have some virtues which are softer ones, compassion. But you have the virtues of enterprise and of sobriety, of selfreliance, of determination. And she felt that britain had been an exemplar of these virtues in the victorian age but they had been lost under the kind of suffocating effect of socialism. And it was her duty to revive them again. That was shelly letwins view. She was a friend of mrs. Thatcher. I think its the correct one. I think that you have to look at all the economic policies, all the foreign policies, and you can see that theyre the application of these ideas to particular problems. But the real idea is lets revive britain. By reviving the vigorous virtues. And would you say, john, that thatcher is still alive and well across the atlantic . It was striking that the number of cabinet ministers referenced Margaret Thatcher, quoted her, and among the contenders for the leadership of the conservative party with David Cameron expected to step down in 2019 or 2020, there are a number of thatcherite contenders to replace mr. Cameron. Whats your view of the current state of conservatism in britain . Well, its a complicated state, id have to say. The fact that is that the conservative government has just won an election. But it won on a relatively small share of the vote. So it isnt quite as bold and confident in its approach as it seems to be. Secondly, there is no doubt that were living in a different world with different problems to the ones that mrs. Thatcher faced in 1979. So it would be not sensible to expect a thatcherism to be exactly the same kind of thing. I mean, after all, youre not dealing with overmighty unions now. Youre not dealing with rampant inflation. They were the problems she had to solve that are no longer the soviet union. There are different problems. But if youre going to have a society that works economically and which is Robust Internationally, youre going to have to have the vigorous virtues. And i would say that the present conservative party is a little too much concerned with demonstrating that its warmhearted and that it cares for everybody. I mean, its desirable that these things be done. But not to the point where we forget that what theres a lot wrong with britain today. It needs to be put right. And it can only be put right in a sense by the kind of vigorous virtues that she wanted. John, you worked closely with Lady Thatcher on some of her biggest speeches. And she was one of the greatest public speakers of our time. What would you identify as her most important speech . And also, could you talk a little bit about how as she prepared for her speeches, the process that was involved in her actually delivering, you know, a magnificent speech . Well, i think mrs. Thatcher was a very effect everybody public speaker in getting across her message. She wasnt an eloquent speaker in the theatrical sense. She was effective. And that was because she thought hard and long about the message she wanted to put across. And she tried to find a clear and simple way of saying it. So there are one or two phrases which are now out there and which people remember. I think the best one is the problem with socialists is they always run out of other peoples money. And the reason thats a good phrase is because its a great truth that shes drawing attention to. Most people, i think, would probably say that her most important speech was the famous speech at bruge in which she outlined her attitude toward the European Union. A slightly less strong attitude than she later developed. But that was a very effective speech. It was a kind of compromise between her own instincts and the caution of the foreign office. But she made it plain, as she said. She hadnt rolled back the frontiers of socialism in britain to see them reimposed again by brussels. That, i think, most people would say was her best speech. Thats not my view. In my view, its an extremely good speech. I prefer the speech she made after she left office. And she made one or two very effective speeches then because she was freer. She didnt have all the ministries, you know, every time she sent a speech out, every ministry would come back saying, could you please remove this . Could you please add that . She hated that, but, of course, to be an effective Prime Minister, she had to do that kind of thing. So i would say the best speech she made after she left office was one she made in the hague where she outlines her views on the European Union and the reforms that are needed with great freedom than she had previously, which reads well today, i think. Thats the 1992 speech . Yes. Yes. And you referenced a line by Margaret Thatcher on socialist governments running out of other peoples money which is recycled in one of the president ial debates, and its a line thats frequently used by president ial contenders. Another line, if i can give you one, she was trying to describe her attitude to Wealth Creation and redistribution. And she said the labour party believes in turning workers against owners. We believe in turning workers into owners which, of course, she did with salem counsel houses. Thats a tremendous line. Id like to focus now upon reagan and thatchers leadership on the world stage. And going back to mr. Meese, reagan and thatcher were known for their tremendous Robust International leadership and the willing to stand up to the enemies of the free world. With the rising threat today from isis and islamist terrorism across the globe, how do you think that reagan and thatcher would have responded to this threat in todays environment . Well, i think that they would first of all, i think they would probably be united in their approach. And i think they would do as they both did in dealing with the soviet communism. There are differences but theres also some similarities as well. And i think they would have tried to develop a pattern of bringing other countries together and also of determining a strategy. You know, you mentioned Margaret Thatchers most important speech. I think probably the most important speech that Ronald Reagan gave, he actually gave in england when in june of 1982 he delivered his speech at westminster in which he laid out a blueprint of how to deal with the soviet union. And it was this blueprint, then, that he and Margaret Thatcher were able to talk with the other leaders about and how that became kind of a strategic exposition. And i think that this is something that has been lacking, of course, unfortunately at the present time in dealing with isis and dealing with the problems in the middle east. And i think the first thing would have been to agree on a strategic approach of how you do this. Secondly would be to develop a true coalition of likeminded countries. And that would include a number of the countries in the middle east, many of which are looking for some sort of leadership. And then thirdly would be to develop the resources that would implement the strategy. And right now i think that one of our problems that were suffering from a lack of strategy, a lack of a coalition, and a lack of having resources readily available because the leaders of the countries see a goal and see a strategy of achieving that goal. And the london speech was the first mention, i think, of the evil empire. And then it was a precursor to a larger speech on the evil empire given the following year. Yeah, and he didnt actually used the words evil empire. That was in 1983 in this country. But he made it very clear that the problem in the world was the soviet union. And what he said there was that the three countries would eclipse communism, or eclipse the oppression of the other countries, that sort of thing. And so that it was very clear that he was drawing the battle lines of the good guys and the bad guys, so to speak. And that was a part of all of his speeches from that point on. Its interesting, he had this ability to be negotiating later on in the second half of his presidency. And negotiating with gorbachev on the one hand and at the same time maintaining his clear position of the wrongness of communism on the other. And that in itself was something that Margaret Thatcher echoed in her speeches so that the two, again, made a Formidable Team in is pursuing the common goals the two countries had. And a followup question for both yourself, mr. Meese, and John Osullivan with regard to reagan and thatchers determination to stand up to the evil empire and to ultimately defeat the ideology of communism, what are the lessons that should be learned today by contemporary leaders, president obama, David Cameron, for example, from the thatcher, reagan in terms of standing up to the likes of Vladimir Putin today . Ill start with you, mr. Meese, and then john. Well, i think one of the things that both of these leaders would have done is never put themselves in the kind of a position that, say, obama is at the present time. And that is by being forthright in their views, by being leaders, by having plans, by having strategies and by providing leadership for the other countries, they put themselves in a position where the other leaders and other countries followed. When you have weakness, leading from behind has never been a very good idea, in my opinion, because it means that, in effect, you are behind your opposition. And that and so i think its the fact that unfortunately in this country, theres been a failure of leadership which has allowed putin, then, to exercise his own ideas and to have a world stage, if you will, in which hes dominant. I dont think there is any time during the 1980s where either Ronald Reagan or Margaret Thatcher were not the dominant figures on the stage. Now, there were other leaders. Breznev was a leader. He was followed by others there very short times and gorbachev was a leader. But there was no question as far as the free world was concerned that they had that that world had good leaders who were selfconfident without being arrogant, but at the same time, having a plan where they thought the world should be going. And id like to ask the same question of John Osullivan as well. Well, i agree with what edwin just said. If you look at what mrs. Thatcher did on coming into power and the same is true for Ronald Reagan, it is quite a good kind of guidebook for what the next president should do in this country for a start. You have to get your economy right. Because if you dont have that right, youre not much of a threat to anybody else, and theyre going to have to take you into account. Secondly, you have allies. You have to work with them, stiffen their spines where theyre weak and give them assistance when you can. A good example of this was that the first one of the first things mrs. Thatcher had to do in 79, 80 and 81 was to ensure that this installation of u. S. Missiles took place. This meant going to the leaders of other countries and encouraging them to take the missiles. On one occasion, helmet schmitt, the proamerican, very strong cold warrior came to see her. He pointed out his own social Democratic Party was proving to be resistant. Didnt want to take the missiles. She offered to take some of the missiles originally destined for germany. In all these things, you have to be clear about where you are and what you are doing to your enemies as well as to your friends. From the word go, the soviets knew they had a formidable opponent in her. It doesnt mean being aggressive. It means preparing in a sensible way so that your enemy or adversary cannot really risk taking action against you. The things that happened, the countries agreed to raise the spending on defense to 3 . Once that is taken, it doesnt take effect right away. You have to have two or three or four years. The military builduptakes place. Soviets knew at one they could no longer continue to make the advances that they had made in the mid and late 70s. So, in a sense, dont do anything rash. Dont be unnecessarily bold. Prepare and let your enemies know that they cant get away with the murder they have been getting away with. I think one other aspect is that both of these leaders, once they said they were going to do something, they went ahead and did it despite the opposition and the resistance. When you mentioned the missiles in england, there were tremendous marches there. Thousands people marching in putting against the missile but was mrs. Thatcher stood firm and that in itself was a powerful exhibition of leadership. As you point out, the soviet leaders realized they had formidable leaders on the other side. Ronald reagan was the same way, whether it was the air Traffic Controllers when they struck. He was firm in holding the line on that. And i think that that was another example of living up to the quality of leadership in terms of doing what is necessary and what the job requires. I think you could say that the successful recovery of the falk land was a sign to the rest of the world that the british had to be taken seriously again. It was an active will similar to the successful act will, similar to reagans treatment of the air Traffic Controllers. That was an interesting time. I remember it very well. There were forces even within the United States that thought we ought to have a handsoff policy, even in highdiplomatic circle, you might say. Ronald reagan was absolutely positive we were going to support england, support Margaret Thatcher. They were on the phone frequently. We did provide some assistance that was farrell instrumental. I any getting the forces down to the Falkland Islands in time. It was very instrumental. John, an important issue facing the west today, the issue of the the huge flow of regis from syria, middle east, north africa, into western europe. Youve written a lot on immigration matters. You take a deep interest in this particular issue. Whoo lesson should be learned from Margaret Thatchers handing of the matter in regard to todays crisis which is the number one issue across the atlantic and europe . It is an important issue in the United States as well. It is also an important issue for Different Reasons in australia. I think we have to look at this from the standpoint that people dislike uncertainty. They dislike the feeling that things are out of control, that the government is not able to protect them against risks. Immigration has one is felt, people feel about immigration quite differently when the government is able to control it than when it seems to be out of control, as it does at the moment. Mrs. Thatcher dealt with this issue in 1978 before she even came in, because she was being interviewed on television, she said and at this time, i should tell you people were worried about the rise of the National Front, neofascist or unruly party of the right, growing i personally never took this seriously but there was a lot of anxiety. She went on television and she was asked a series of questions. To one of them she reflied, i think people are worried about the rise of immigration, they feel a father of being swamped. This caused an outrage and alarmed some members of her own party. She stood by it. She didnt retreat. The support for the National Front just went right down. Now, when she got in, and at the time, indeed, she wasnt proposing to make massive cuts in immigration or to expand it. She basically kept a moderate level of immigration throughout the period and because they knew the government was in control of this, they it ceased to be a major issue. Its become a major issue, precisely, particularly, of course in recent weeks in europe because people feel their governments have lost control and of course they seem to be, to some degree, right. The refugees and people who arent refugees, economic migrants, are simply storming through europe and walking over frontiers and moving into countries and having to be looked after by governments which some cases invited them in and in other cases theyre simply there, running areas in which the migrants are going through. I would say the key lesson mrs. Thatcher teaches us about this topic is that governments must be able to reassure their citizens immigration is something they can control, are controlling, and can rise or lower depending on the economic and social needs of their own society. John howard is a good example in australia. Because hes actually presided over a quite a large increase in immigration, which the australians want for their economy, and theres been little whats the word i want hostility or opposition to this because he also said, we will side here in australia, who comes to this country and under what terms. Once he said that, the steam went out of the issue because he meant it and voters knew it. We have the privilege of hosting john howard a few years ago for the Margaret Thatcher freedom lecture. He delivered a very, very robust message. Another question for you with regard to europe and the center of europe, an issue that was in very close to Lady Thatchers heart for many, many years, could you talk about the evolution of margaret nachers views on europe and also address the, i would say, rather mischievous suggestions by those that support britain staying inside the European Union. Margaret thatcher would have campaigned for britain to stay inside e. U. That is not what i gained from my conversations with Lady Thatcher in her final years but could you address the issue . Ander to the wider audience, britain is holding a referendum by the end of 2017 on this membership of the European Union made by Prime Minister, David Cameron. This issue is likely to dominate british politics for the next couple of years. Could you talk about Margaret Thatchers views on europe and set record straight on the issue and Lady Thatcher . Excuse my. Im suffering slightly from jet lag and a cold. We should always accept that when we are talking about how someone who is no longer around would react to a question, we are doing something that is somewhat questionable. We dont know with certainty. We have to acknowledge that. I think its also fair to say that different people who were close to Lady Thatcher would give different answers to the question you have asked me. I suspect i havent discussed it with him, i dont know that Charles Powell would probably give a slightly different answer to this than i will. We must be cautious. My view that is, let mow say one definite thing and one uncertain one. There is no doubt that mrs. Thatcher became increasingly skeptical about europe the longer she stayed in office and after she left office. In 1975 when she became leader of the conservative party, she wasnt particularly wellinformed on Foreign Policy but set out to change that. And she accepted the ovrt docky of the tory party at time, which was strong support for europe. When she was in office, she found europe a constant problem for her in financial terms and political ones. She was increasingly annoy with it. It was an issue. It was her obvious resistance to further integration in europe that one of the factors in her losing office because that resistance wasnt shared by many in the conservative party as it was later and perhaps today. What would she do today . We cant be absolutely certain, of course. I would say that the evidence of her was that she moved further and further. My conversations with her certainly suggested that. You mentioned the books state craft in which you worked with her. She comes right up to the edge and looks over the abyss and then ends the conversation. Things that have happened since then persuade me, thats the way she would urge people to vote. However, as i say, it is a legitimate exercise. We cant be certain. Others will take a different view. My view is that she would want britain to recover its full independence and freedom of action. She also took the view that the movement of europe towards a common defense policy was a threat to nato