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Economy
Class Warfare's Next Target: 401(k) Savings
2010-02-19
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.
That would be the point at which we'd see barricades in the streets ...
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."
Argentina did this a year back. A lot of good it did, too, though the Kirchners enjoyed spending the boodle ...
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-Soviet 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.
Obliged as in mandated, as in the pols take your 401k ...
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."
Posted by:Fred

#29  This might have been a trial balloon to see how people reacted to the idea; if it was, it just tells you how clueless the bureacrats are.

My thought too. But George Miller & Baghdad Jim McDermott were also mentioned so it could be some pinko staffer.
Posted by: Nimble Spemble   2010-02-19 18:20  

#28  By that I mean West is going to get clobbered in the money race, therefore publicity and name recognition. The district otherwise is winnable by West.
Posted by: ed   2010-02-19 17:54  

#27  I'm nowhere near Massachusetts, but contributed to Scott Brown

If you are still feeling generous, consider dropping a few bucks Col. Alan West's way. He's the only politician who really understands what America is up against. Unfortunately, he's running for office in deep pockets and deep denial Palm Beach, FL.
Posted by: ed   2010-02-19 17:35  

#26  There's also nothing against contributing in other district's races to get your agenda forward.

Excellent advice and worth repeating. I'm nowhere near Massachusetts, but contributed to Scott Brown (got others to do so as well) and feel it was money well spent. Got a nice letter from him yesterday, as well as an email from his 2 daughters.
Posted by: Gomez Threter7450   2010-02-19 16:46  

#25  I didn't find anything in a cursory search of the Federal Register's website, #23 NS. Don't have any more time to look right now since I have to go to work.

This might have been a trial balloon to see how people reacted to the idea; if it was, it just tells you how clueless the bureacrats are.
Posted by: Barbara Skolaut   2010-02-19 16:34  

#24  #19 wise and judicious standards, Gorb. Drink up!
Posted by: Frank G   2010-02-19 16:12  

#23  Does anyone have a link to the Treasury request for comments?
Posted by: Nimble Spemble   2010-02-19 15:42  

#22  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.

Just another scheme to loot the American people--just another Social Security Ponzi scheme. The government looted this trust fund long ago.
Posted by: JohnQC   2010-02-19 14:09  

#21  "Obligated" my sweet patootie.

Come get some.
Posted by: mojo   2010-02-19 13:43  

#20  My representative is John Boehner (pronounced bay'nr, for some reason), head of the Republican caucus in the House. He's been one of the leaders in the fight against the Democratic Borg, so I think I'll keep him on. But all other incumbents out, certainly. ;-)
Posted by: trailing wife   2010-02-19 12:38  

#19  Throw the bums out. Except for Duncan D. Hunter, of course.

Ya gotta keep it simple if it's going to catch on. People will figure it out and keep the good ones. Unless they live in Pelosi's or Murtha's districts. Besides, I don't want to add a bunch of exceptions to the rule because I don't feel like typing that much.

Oh, and if they drive an F150 they get an exception, too.
Posted by: gorb   2010-02-19 11:44  

#18  Deacon Blues....yeah, they're problabl working on that too
Posted by: Kelly   2010-02-19 10:33  

#17  I don't have a 401K. Got out og it years ago. I do have an add-on CD. Are they gonna take that? I've already paid taxes on that.
Posted by: Deacon Blues   2010-02-19 10:25  

#16  While I bow to no-one in hostility to the McDermott plan, this is just a Gingrich echo of that Businessweek article of a couple weeks back, there's no news in this 'un.

And Frank, while I agree that my current Rep is better than the clutch of alcoholic time-serving hacks that the Democrats might offer in my district, it's still a good idea to scare 'im a bit every two years by making "throw the bums out!" noises. He's no Duncan Hunter, and he could use a little constituent pressure to keep him on the straight and narrow.
Posted by: Mitch H.   2010-02-19 10:21  

#15  Bambi's people can always back-date the point of seizure, find your cash in the Caymans, take it all from you Ample precedent for something like this can be found in FDR's outlawing of possession of gold by commoners, inadequate compensation for the seizure of the gold, the nullification of gold clauses in contracts, and the US Supreme Court's approval of same.
Another option is the negative interest rate, wherein the money you have in banks is docked every month by a set amount, which is then confiscated by the government. Also note there is no time deadline for the FDIC to make good on its deposit insurance program when a bank fails. Customarily FDIC support has been immediate, but it's not required. Since US currency is merely a US government promise, there are endless other possibilities to be indulged in.
Posted by: Anguper Hupomosing9418   2010-02-19 10:11  

#14  CF, Bambi's people can always back-date the point of seizure, find your cash in the Caymans, take it all from you, and then assess a penalty on top of everything. They're the government, after all.

Frank: point taken. As the old joke goes, it's the 95% of rotten apples in Congress that make the rest look bad.
Posted by: Steve White   2010-02-19 09:40  

#13  CF, that's what I've been thinking. This crowd thinks they have the right to everything else you own, why would this be any different?
Posted by: Cornsilk Blondie   2010-02-19 09:08  

#12  Caymans...Channel Isles.....
Posted by: 3dc   2010-02-19 08:53  

#11  And do you think they will hold back from 'redistribution' of your 401K and IRA to those who didn't save?

That would, in their eyes, buy a lot of votes.

I'd rather withdraw my 401K, take the 10% hit off the top (better than the 50% the government will take for 'fees and redistrubution') and manage it myself. There are a lot more reliable investments then then US Government out there.
Posted by: CrazyFool   2010-02-19 08:35  

#10  @#7 Soon, real soon. I have concluded there is a 50/50 chance we get to November before the shooting starts.
Posted by: Don Vito Uleash   2010-02-19 08:34  

#9  by the way - I'm not singling out Gorb, there's been a lot of "throw em all out" here. If your Rep doesn't meet your standards, by all means, work to do so. There's also nothing against contributing in other district's races to get your agenda forward. I recommend you do so
Posted by: Frank G   2010-02-19 08:33  

#8  you may want to throw each and every incumbent out, but my rep is Duncan D. Hunter, son of Duncan Hunter and a fine man, Marine artillery LT (later Capt.) with two tours in Iraq (including Fallujah) and one in Afghanistan. He's solid on all the issues. So if you want a grab-bag "throw em all out" you can count me f*cking OUT.

/I'm getting tired of silly slogans - you won't find a better Rep, and tantrums don't fix anything
Posted by: Frank G   2010-02-19 08:23  

#7  And you think I'm crazy when I keep wondering when the shootin's gonna start????
Posted by: armyguy   2010-02-19 07:29  

#6  If you're working on "the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams." then try and work away from the windows, or if you do watch out for light planes.
Posted by: Bright Pebbles   2010-02-19 06:25  

#5  these people really want another revolution don't they? Whichever pol brought this up and actually thinks it's a plausible idea needs to do the mussolini swing...
Posted by: Broadhead6   2010-02-19 05:52  

#4  The mere discussion of such concepts is a big win for the liberal tax and spend pols. The fear of such a scheme will drive investors to cash out of their 401k's and IRA's and immediately incur the tax liability.
Posted by: Besoeker   2010-02-19 03:28  

#3  They have been talking about this in Congress for over a year. There is more here.

There won't be enough tar, feathers, pitchforks, and lanterns to go around if they do this.

And to make matters worse, since they will blow the money to finance the debt they are running up, they will likely have to euthanize us and take 50% of that nest egg via the death tax and then only have to pay out 50 cents on the dollar.

Bastards, each and every one of them.
Posted by: crosspatch   2010-02-19 02:46  

#2  This is why we need to throw the bums out. This starts with your congressman, not everyone else's.
Posted by: gorb   2010-02-19 02:39  

#1  It won't be just barricades in the streets, either. Just try it, you bastards. I understand there's PLENTY of lampposts in DC.
Posted by: Ricky bin Ricardo (Abu Babaloo)   2010-02-19 01:27  

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