"We are now locked in a rolling filibuster on every issue, which is totally gridlocking the U.S. Senate. That is wrong. It is wrong for America."

Who said that? Democrat Harry Reid, majority leader of the Senate? Guess again. Try former Republican leader Trent Lott, bemoaning the troubled state of the Senate in the late 1990s.

No recent majority leader of either party has been saved the headache of trying to lead a Senate in which minorities can exploit the rules and stymie the chamber. This is not a new problem. Harry Reid may face a particularly unrestrained minority. But generations of Senate leaders from Henry Clay to Bill Frist have felt compelled to seek changes in Senate rules to make the chamber a more governable place.

Some things never change.

Twice this week, the Senate has opened debate with its party leaders engaged in a caustic battle over Reid's plans to seek changes to Senate rules in January.

Read the full piece at CNN.com »

Egypt needs a new inclusive and equitable economic growth model. Unemployment has spiked since the 2011 revolution, clearing over 12 percent, a figure which is not expected to decrease for several years at least and the situation is even more dire for the country’s youth. While the likely IMF program will offer the macroeconomy a measure of relief, it cannot reverse decades of mismanagement. Egypt’s private sector may therefore not experience a recovery in the near future. The government’s situation looks similarly stressed as its gross debt is projected to rise from 73 percent of GDP in 2010 to 79 percent this year. Combined with the confusion surrounding the government’s structure and organization, it is unlikely that the public sector can fill the jobs gap or provide the needed high quality and affordable goods and services. However, the legal limbo surrounding inclusive business models (IBs) as well as intermediary support organizations (ISOs), which are supposed to provide the needed support to IBs, has unnecessarily shrunk this sector of the economy and disabled it from playing its necessary role.

In his inaugural speech, Egyptian President Mohamed Morsi portrayed himself as a president for all Egyptians, including the menial and underprivileged rickshaw drivers. The Muslim Brotherhood’s Al-Nahda Program emphasizes social justice and a consensus vision across all groups in society. The new leadership is committed to social innovation with “a national strategy to develop mechanisms to support innovation dealing with community issues.”

Although the constitution has not yet been drafted and there is currently no parliament, this moment in time contains a golden opportunity for the government of Egypt to capture the energy, civic engagement and entrepreneurial spirit in the country. Under Mubarak, Egypt’s economic growth and business policy reforms helped foster the private sector, but 85 percent of the population continued to live under $5/day and this ratio did not change during the decade of growth prior to 2008. Safeguards against abuse and incentives for inclusiveness were missing, and the economy became dominated by crony capitalism with wealth concentrated in the hands of a few. People’s perception of inequity and dissatisfaction with public services increased. The governance indicators of “Voice & Accountability” and “Control of Corruption” deteriorated from 2000 to 2010, even though there was a steady improvement in “Regulatory Quality.”

Egypt needs an enabling legal framework to promote a more equitable growth model. Such a framework should encourage forms of inclusive businesses (such as cooperatives) and ISOs that could help micro and small enterprises. These firms (with less than 50 employees) represent nearly 99 percent of all non-public sector, non-agricultural firms and provide about 80 percent of employment in Egypt. But their expansion has been restricted because of the weakness of the ecosystem of incubators, angel investor networks, microfinance institutions (MFIs) and impact investors necessary to allow young entrepreneurs to start up and grow. This policy paper argues that legal and regulatory reforms that encourage ISOs and allow new forms of inclusive business to register and operate are a necessary first step towards a new inclusive growth model.

Downloads

• Download the full paper

Event Information

Since the Rose Revolution in November 2003, Georgia has grappled with the many challenges of building a modern, Western-oriented state, including implementing political and economic reforms, fighting corruption, and throwing off the vestiges of the Soviet legacy. On the path toward a functioning and reliable democracy, Georgia has pursued these domestic changes in an often difficult international environment, as evidenced by the Russia-Georgia conflict in 2008.

On March 17, the Center on the United States and Europe at Brookings (CUSE) hosted President Mikheil Saakashvili to discuss Georgia’s approach to these challenges. A leader of Georgia’s 2003 Rose Revolution, Saakashvili was elected president of Georgia in January 2004 and reelected for a second term in January 2008.

Vice President Martin Indyk, director of Foreign Policy at Brookings, provided introductory remarks and Senior Fellow and CUSE Director Fiona Hill moderated the discussion. After the program, President Saakashvili took audience questions.

Video

• Georgia Is a Transformed Country
• Georgia Is a Valuable Asset to Europe
• The Key to Effective Change Is Youth

Audio

• From Popular Revolutions to Effective Reforms: The Georgian Experience

Transcript

• Uncorrected Transcript (.pdf)

Event Materials

• 20110317_saakashvili_transcript

American experience strongly suggests that the coming UK pension freedoms sound better in theory than they will work in practice. After nearly a decade where the UK has been the gold standard for retirement savings policy, it is about to take a step that it may regret.

As annuity purchases are not required, very few Americans buy them, feeling that they are spending a great deal of money for a comparatively small monthly income. Even those in traditional DB pension plans usually take a lump sum if they are allowed to do so. As a result, many US retirees spend unwisely, trust the wrong financial advisor, or make other financial mistakes.

Many people greatly overestimate how long their savings will last. Most others assume (often wrongly) that they can manage their own money as well as anyone else or that they can live comfortably on Social Security alone. U.S. Social Security pays a benefit that depends on the retirees’ individual income history. The average annual amount is about $13,000 (GBP 8,700).

One survey found that in West Virginia, a state with a relatively low average income, 78% of those near retirement and 67% of those at retirement would likely outlive their financial assets. Workers with lower incomes are most at risk. A recent national study found that by the 20th year of retirement, more than 81% of Americans with incomes up to $27,000 would run short of money, as would 38% of those earning up to $42,000, and 19% of those with incomes up to $65,000.  Even 8% of those with the highest incomes could not meet their expenses.

Advice alone is not likely to help. US experience shows that literally every minute that passes after general advice is given reduces the chance that the consumer will act on it – even when they have decided to do so. And even a significant number of those who consult with a financial planner fail to act on that guidance.

What does show promise is income illustration. In a 2014 U.S. survey, 85% of plan participants found estimates of the income they could anticipate from their retirement savings useful, and 35% said that they would save more. Income illustrations change the framing of retirement saving from gross amounts saved to retirement income.  Annuity-like products become insurance against running out of money, something Americans are increasingly concerned about.

Two other potential developments may help. One is longevity insurance, an annuity that provides income only after a set age. Purchasing a policy defines how long one must make retirement savings last, and the retiree is protected against running out of money. Because longevity insurance is deferred, one can receive higher amounts of monthly income for a lower cost.  In 2014, $50,000 would buy $275 a month at age 65 or $1200 a month starting at age 80.

Another idea is an automatic enrollment trial annuity. As developed by several Brookings Institution colleagues and me, new retirees would automatically use part of their savings for a two year annuity unless the retiree refused it. The rest of their savings would be available as a lump sum. After the trial period, the annuity would become permanent if they did nothing or they could cancel it and take the rest of their money as a lump sum.

The many annuity horror stories from the UK show a definite need for change, but the coming reforms go too far. US experience suggests that too many UK retirees are likely to see their savings exhausted all too quickly. There are alternatives that could do a better job of protecting retirees.