Our editors weigh in on the economic recovery, new retirement savings rules, and health care reform.
>> Eric: Welcome to Reality Check. I'm Eric Schurenberg, Editor-in-Chief of CBSMoneyWatch.com and I'm joined here by Editor at Large, Jill Schlesinger. And there are 3 things we'd like to talk about today and the code words are, VW, IRA and DC. Alright, VW Jill, most people think, most economists think, anyway, that we're in grave danger of a W shaped recovery, that is we go down, we get a lot of money from the government and we go back up and then we have a double-dip recession, that would not be desirable. But there's a growing minority who are saying we'll actually have a V shaped recovery, that we've had such a bad recession that we'll spring back and have a much better recovery than anyone anticipates. What do you think?
>> Jill: Well, you know, when you think about that V it does start to be a possibility, right? You go down so far then the money comes pumping in from the government, $3 trillion and then maybe you go back up. I'm not inclined to believe that we're going to snap back in that way. I'm more of the maybe we're going to muddle through for a while and then, hopefully, get better. But I also want to caution people to really consider the other side. Whatever you hold in your belly as like the consensus or your feeling look at that other side. In 2003 I learned a painful lesson. I was really fighting that rally after the 2000-2002 Bear Market. I learned a bitter lesson about that and that was if you fight it so hard you may be ignoring what's going on around you.
>> Eric: That's right no one anticipated that 2003 rally either.
>> Jill: Exactly
>> Eric: I would say, too, one thing to remember is that at inflection points, at turning points the consensus is always wrong by definition. So I think the take-away from this is have conviction about what you believe in but don't commit everything to one side or the other.
>> Jill: Abso --
>> Eric: You never know.
>> Jill: That's exactly right. And so we had some news out this weekend which was interesting the Obama administration looking at retirement savings, so what happened?
>> Eric: Well, President Obama wants to help us save for retirement and so he's made some tweaks to some of the rules regarding retirement plans that don't require approval from congress. Now, the rules themselves aren't that important you can now have your tax refund invested in the form of savings bonds, and it's easier for companies to automatically enroll workers in 401K's and simple IRA's. But what I thought was really interesting was that these new rules implement a kind of new arm of economics called behavioral economics which take into account the fact that people don't always behave rationally, they sometimes act irrationally. And so these rules kind of are constructed around the way people actually act not the way they ought to act.
>> Jill: And maybe that's going to carry over into the healthcare debate, which is rolling out this week as well. And you think that a lot of what the Obama administration does in terms of behavioral economics is what they want to actually translate into the healthcare debate, they want to say, we can't count on employers to give people insurance we're going to mandate that they have insurance. We can't force people to actually buy insurance that they can't afford we're going to purpose that they actually have to enroll; this debate is really going to heat up now after the congressional vacation period. And the one question that I'm left with is, who's going to pay the bill?
>> Eric: If you want to make everyone have to have insurance and not everyone gets it through their employer you have to subsidize it and that is going to cost taxpayer dollars, there's just no way around it. Obama says that no one below a certain very high level of income will have to pay anymore taxes to support healthcare reform. I don't know.
>> Jill: I got to tell you if I could bet on anything right now I would bet on higher taxes for everybody. It may not happen this year, it may not happen next year but mark my words you're going to be paying some more taxes and I can't help you around that just prepare for it, that's your reality check today. Thanks for tuning in.
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