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Friday, July 21, 2000

Encouraging people
to save for retirement

Bullet The issue: The U.S. House of Representatives has passed a bill that would raise the investment limits for individual retirement accounts and 401(k) plans.

Bullet Our view: These are reasonable ways to encourage people to save more money for retirement.

The U.S. savings rate recently dropped to zero as a percentage of after-tax income. That start-ling number, at a time of great prosperity, indicates a need for inducements for Americans to save more and spend less.

The need becomes more urgent when you consider that 75 million Americans have no employer-sponsored retirement plan and the aging baby boom generation faces a Social Security system that could be in financial jeopardy in the future. The U.S. House of Representatives has responded to that situation by approving increases in individual retirement accounts and 401(k) employer-based investment plans.

Despite President Clinton's opposition, 182 Democrats, including Hawaii's Neil Abercrombie and Patsy Mink, joined nearly all Republicans in favor of the measure. The bill also encourages businesses to offer pensions for their employees and permits employees to carry retirement plans from job to job.

The bill would gradually raise annual IRA contribution limits from $2,000 to $5,000 and boost annual 401(k) plan contribution limits from $10,500 to $15,000.

IRAs were authorized in 1974 but contribution limits have been increased only once, by $500 in 1981. More than 36 million people now participate in 401(k) plans -- roughly a third of the U.S. work force -- but the average account balance is only about $37,300.

Both plans offer tax advantages over standard investments. Both have generated enough interest to suggest that the proposed increases might stimulate more saving.

A White House statement correctly observed that the bill would not help lower-income workers. The Democratic alternative proposal is a 50 percent federal tax credit for lower-income worker contributions to a maximum of $2,000.

But this misses the point. Even with such incentives, those workers probably can't afford to save.

The proposal to let people keep a portion of their Social Security taxes and invest it -- endorsed by Texas Gov. George W. Bush -- addresses this problem directly. It would permit workers to retain some of the money that the government now takes in taxes, which means they would have something to save.

The White House statement, although expressing strong opposition to the House bill, didn't threaten a veto. And it appeared possible that a veto might be overridden.

Senate Finance Committee Chairman William Roth of Delaware noted that the Senate endorsed a similar approach in votes last week and said he would push for final passage this fall in the waning days of the congressional session. Raising the limits for IRAs and 401(k)s could help millions of people save for retirement.

Restore the crosses

Bullet The issue: State parks officials have removed small wooden crosses from Sacred Falls after receiving a complaint that they violated the constitutional prohibition against government establishment of religion.

Bullet Our view: If that was the basis for the crosses' removal, they should be returned to the site to restore protection of free speech.

CONSTITUTIONAL separation of church and state does not mean that government property must be devoid of any manifestation of religion. Eight wooden crosses memorializing the victims of the 1999 Mother's Day rockslide at Sacred Falls in Windward Oahu were an expression of First Amendment rights, not a violation of the same amendment's prohibition of government establishment of religion. The crosses, which were erected by a grieving relative of one of the victims, should be returned.

The U.S. Supreme Court ruled in 1984 that government -- the case involved a city hall Nativity scene in Pawtucket, R.I. -- could not place symbols indicating a religious preference on public property. Two years later, the American Civil Liberties Union caused the dismantlement of a large, illuminated cross at Camp H.M. Smith on Halawa Heights. The Camp Smith cross was an inappropriate memorial because it was erected and maintained by the military.

That was not the case with the eight three-foot-tall crosses at Sacred Falls. A relative of one of the eight people who were killed in the rockslide had erected the crosses at the entrance to the Punaluu landmark. Relatives went to the site periodically to replace flowers next to the crosses.

Mitchell Kahle, president of Hawaii Citizens for Separation of Church and State, complained last month that the crosses created "the appearance of a government preference for the Christian religion." Kahle's deduction was mistaken, as far-fetched as concluding that a cross seen at the location of a fatal traffic accident is anything more than the sign of a family's expression of grief.

State Parks Administrator Ralston Nagata said the crosses were removed after he received Kahle's complaint. But Nagata denied that the removal was a response to the complaint. He explained that, like the roadside crosses at sites of traffic fatalities, the crosses were considered temporary and abandoned and so were removed.

However, relatives of rockslide victims say the memorial was being maintained and object to the crosses' removal.

If government officials were mistaken in assuming the crosses had been abandoned, relatives should be allowed to retrieve the signs and return them to the Sacred Falls entrance. The government should not interfere with free speech by confiscating privately owned religious signs just because they were posted on public land.

Published by Liberty Newspapers Limited Partnership

Rupert E. Phillips, CEO

John M. Flanagan, Editor & Publisher

David Shapiro, Managing Editor

Diane Yukihiro Chang, Senior Editor & Editorial Page Editor

Frank Bridgewater & Michael Rovner, Assistant Managing Editors

A.A. Smyser, Contributing Editor

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