Retirement Savings in Jeopardy: The Alarming Consequences of Biden-Harris Policies
The recent stock market turmoil has exposed the devastating impact of the Biden-Harris administration’s policies on U.S. markets, putting the retirement savings of average Americans at risk. The Securities and Exchange Commission (SEC) has continued Obama-era policies that are drastically reducing the number of public companies in the U.S., limiting investment choices for Americans, including those in their 401(k) or IRA retirement accounts.
A Steep Decline in Public Companies
In 2021, the U.S. saw 1,035 initial public offerings (IPOs), including many transactions involving the merger of public special purpose acquisition vehicles (SPACs) with private companies. However, after the Biden-Harris SEC implemented its policies, U.S. initial public offerings plummeted to 181 in 2022 and 154 last year. This decline is a direct result of the administration’s policies, which have actively discouraged companies from going public.
The Chilling Effect of Regulation
The Biden-Harris SEC’s sudden assertion that SPACs are investment companies that should be regulated like mutual funds has sent shockwaves through the market. This move, made without a law or a rulemaking proceeding allowing for public comment, has chilled the SPAC boom that had previously reversed the decline in public companies. The Obama-era Dodd-Frank law has also added to the regulatory burden, requiring public companies to make various disclosures on political hot topics, making it unpleasant and expensive to be a public company.
The Consequences of Fewer Public Companies
The dwindling number of public companies has resulted in biweekly reductions from worker’s paychecks pouring into 401(k) and IRA accounts that can only invest in liquid securities like public stocks. This has led to a concentration of retirement savings into fewer and fewer stocks, making steep market declines particularly unsettling for older investors. The Wilshire 5000, an index that tracks the performance of the entire U.S. stock market, has seen a dramatic decline from around 5,000 stocks in 1974 to below 3,500 today.
A Solution to the Problem
Common sense policies can restore the vibrancy of U.S. public stock markets. The SEC must remove the regulatory uncertainty surrounding SPACs, reduce the disclosure and accounting burdens on all public companies, and encourage successful private companies to access the public markets for capital. By doing so, everyday Americans will have the chance to invest in innovative companies, and retirement savings will be protected.
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