IT’S SUMMERTIME! LET’S TALK BASEBALL: IT’S MORE THAN JUST A GAME

First, full disclosure. I love baseball. I was born 2 blocks from Wrigley Field and walked to Cub games alone when I was 7 and sat in the bleachers. As a lifetime Cub fan it’s a mixed blessing- a life of both affection and affliction. Happily, the Cubs are having another good year and the White Sox are resurging. Baseball is a fun game for sure, but it’s more than just a game. This week’s Economist’s article “Baseball and Exceptionalism” examines how our national pastime reflects America’s desire to be different and successful.

You may have heard that a young man named Abner Doubleday invented baseball in 1839 in Cooperstown, New York. Doubleday later was credited with firing the first shot for the Union at Ft. Sumter and became a Civil War hero.

Actually, that story is untrue. Doubleday was at West Point in 1839 and he never claimed to have anything to do with baseball. The Doubleday myth was created by A.J. Spalding, a sporting goods magnate. In the 1930s the National Baseball Hall of Fame was established in Cooperstown. However, if you visit Cooperstown today, you’ll see a plaque admitting that the Doubleday myth is untrue.

The real history of baseball, like many things, is more complicated than that. References to games resembling baseball in the United States date back to the American Revolution. Its most direct ancestors appear to be two English games; cricket and rounders. However, American promoters in the 19th century, including Mr. Spalding, saw political and commercial profits to be gained from promoting a uniquely American game that was both different and exceptional. Actually, no surprise, American baseball teams raided cricket clubs (Philadelphia for example had 100 such clubs) for players, while the great American poet Walt Whitman proclaimed “Baseball is our game- the American game.”

Anglophobia, stirred by Britain’s trade with the Confederacy during the Civil War, pushed the issue. Alarmed by the persistent claim that baseball was invented by the English, Spalding bankrolled a commission, fueled by “patriotism and research” to produce a better explanation. The Doubleday myth was the result.

For Spalding and many Americans then and now, baseball was (and is) more than just a game. It reflects the triumphs, defeats and tensions of our nation. American baseball is the story of our country over the last 150 years. A common endeavor, yet with periodic problems and disputes between communities, owners and workers, and cultures. Mexicans, Irish, Jewish and African Americans saw baseball as a point of entry to American culture. Author Philip Roth called baseball “this game that I loved with all my heart, not simply for the fun of playing it…but for the mythic and aesthetic dimension it could give to a boy’s life in participating in a core part of America.”

The Economist makes three very good points about Americans creating, and in many cases still believing, the untrue Doubleday myth about our national pastime. First, America is often less exceptional- because, like baseball, it is more of a “European- accented hybrid”- than it considers itself to be. Second, there are costs to self-deception such as isolation in sport and otherwise. For example, right now 2 billion people are avidly watching the Cricket World Cup while baseball remains basically an American game. Third, our country’s belief in our exceptionalism may be at the core of our achievements. Believing you are different and exceptional increases your confidence and that can produce greater success.

Henry Ford is known not only for his fantastic success with his automobile empire but also for his great quotes. I really like this one: “Whether you think you can, or you think you can’t- you’re right.” Henry Ford inspired Americans to be more confident-exceptional and different- and therefore more successful. Spalding’s myth about Abner Doubleday inventing baseball isn’t true, but certainly has helped Americans believe that we are exceptional and different and this had helped lead to many of our successes.

And, now, “Take Me Out to the Ballgame.”

SECURE – Update on New Retirement System Legislation

Capitol.jpg

Two weeks ago, the House of Representatives almost unanimously passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act, adopting their version of long-awaited retirement legislation that can now be introduced for deliberation on the Senate side and ultimately head to the President’s desk.   While Congress has discussed this for many years, these policy changes come at a time when life expectancy has increased and a greater number of American retirees must ensure that they don’t outlast their savings. The bill is now in the Senate Finance Committee, where action has slowed as a handful of Finance Committee members have some issues they want addressed before agreeing to vote on it.  

The marquee provisions in the House bill, estimated to cost $16.8 billion over 10 years, include providing tax credits and removing barriers for small businesses to offer retirement plans and boosting the minimum age for required minimum distributions (RMDs) to begin from 70½ to 72 years old. Other significant changes written in the House bill would make it easier for tax-deferred retirement plans, like 401(k)s, to offer annuities and also repeals the age cap for contributing to individual retirement accounts, currently 70 ½. There are also beneficial measures for part-time workers, parents, home-care workers and employees at small businesses, as well.

As reported by the May 23rd WSJ article, the House legislation also repeals a 2017 change to the “Kiddie Tax” that can boost tax rates on unearned income for low and middle income families that had caused surprise tax increases for many, including many military families of deceased active-duty service members . This policy change would also benefit survivors of first responders and college students receiving scholarships. This provision helped accelerate the passage of the bill to resolve a problem for military families right before Memorial Day.

To help pay for these changes, the House bill limits the “stretch IRA” provisions for beneficiaries of inherited IRAs. Currently, beneficiaries can liquidate those accounts over their own lifetimes to stretch out the RMD income and tax payments. The House bill would cut the time down to 10 years, with some exemptions for surviving spouses and minor children.  

A handful of Republican Senate members have some concerns about the House bill, including the House’s resistance to a provision that allows 529 accounts to pay for home-schooling costs. The Senate Finance Committee has introduced a bill closely resembling the House legislation – the Retirement Enhancement and Savings Act. Republican Senators are considering whether to make even broader policy changes than the House bill.

Here are the key items included in the House bill that are of most interest for our DWM clients:

IRAs if you are over 70 ½ – This bill would increase the age for the required minimum distributions (RMD) to begin from 70 ½ to 72. This will allow the accounts to grow and save taxes on the income until age 72. Also, there would no longer be an age restriction on IRA savings for people with taxable compensation – the age had previously been 70 1/2.

401(k)s – Small business employers would be allowed under this legislation to band together to offer 401(k) Plans to their employees, if they don’t offer one already. Long-standing part-time workers would now be eligible to participate in their employer’s Plan and new parents would be allowed to take up to $5,000 from 401(k)s or IRAs within a year of the birth or adoption of a child. Employers would also be required to provide more comprehensive retirement income disclosures on the employee statements and it would be easier for employers to offer annuity options in their 401(k) Plans.

Student Loans/529s – The House version of the bill would allow up to a $10,000 withdrawal from a 529 to be used for student loan repayment.  

At DWM, we are always watching for legislative changes that might affect our clients and will continue to report on these important developments. Please don’t hesitate to contact us with any questions or comments!