Wednesday, February 17, 2010
Class Warfare's Next Target: 401(k) Savings by Newt Gingrich and Peter Ferrara
You did the responsible thing. You saved in your IRA or 401(k) to support your retirement, when you could have spent that money on another vacation, or an upscale car, or fancier clothes and jewelry. But now Washington is developing plans for your retirement savings.
BusinessWeek reports that the Treasury and Labor departments are asking for public comment on "the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams."
In plain English, the idea is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years.
They will tell you that you are "investing" your money in U.S. Treasury bonds. But they will use your money immediately to pay for their unprecedented trillion-dollar budget deficits, leaving nothing to back up their political promises, just as they have raided the Social Security trust funds.
This "conversion" may start out as an optional choice, though you are already free to buy Treasury bonds whenever you want. But as Karl Denninger of the Market Ticker Web site reports: "'Choices' have a funny way of turning into mandates, and this looks to me like a raw admission that Treasury knows it will not be able to sell its debt in the open market — so they will effectively tax you by forcing your 'retirement' money to buy them."
Moreover, benefits based on Treasury bond interest rates may be woefully inadequate compensation for your years of savings. As Denninger adds, "What's even worse is that the government has intentionally suppressed Treasury yields during this crisis (and will keep doing so by various means, including manipulating the CPI inflation index) so as to guarantee that you lose over time compared to actual purchasing power."
This proposal follows hearings held last fall by House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., of the Ways and Means Committee focusing on "redirecting (IRA and 401k) tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute," as reported by InvestmentNews.com.
The hearings examined a proposal from professor Teresa Ghilarducci of the New School for Social Research in New York to give all workers "a $600 annual inflation-adjusted subsidy from the U.S. government" in return for requiring workers "to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration."
I do. I'm living in one of the most heavily impacted areas of the recession, Riverside County, California -- the unemployment rate is near 14%, not counting small business people, consultants, independent contractors and all those other categories of people who are not counted in the stats. Best case nationwide it's 10% unemployment.
The "stimulus bill", a thinly disguised pork barrel hand out program designed to pay back the political hacks and parasites that helped propel Barack Hussein Obama into office, passed a year ago today. The total cost of the Bill was over $800 billion.
Maybe it depends who you ask. But most Americans don't work in multi-billion dollar companies. They work in small businesses, they all pay their taxes and they provided goods and services as they were able to manage it.
Everybody wants something for nothing. Barack Hussein Obama has made a high art of reading/lying from his teleprompter to desperate people who want to believe what he's peddling. I can't help but feel for them. However when they voted Obama, they backed a looser.