Do you guys have 401k plans? Well... you may not have them much longer.

[Guest Verbal Kint]

News Link : HERE

Dems Target Private Retirement Accounts

Democratic leaders in the U.S. House discuss confiscating 401(k)s, IRAs

By Karen McMahan

November 04, 2008

RALEIGH — Democrats in the U.S. House have been conducting hearings on proposals to confiscate workers’ personal retirement accounts — including 401(k)s and IRAs — and convert them to accounts managed by the Social Security Administration.

Triggered by the financial crisis the past two months, the hearings reportedly were meant to stem losses incurred by many workers and retirees whose 401(k) and IRA balances have been shrinking rapidly.

The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism. Testifying for the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs, and confiscate workers’ retirement plan accounts and convert them to universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration.

Rep. George Miller, D-Calif., chairman of the House Committee on Education and Labor, in prepared remarks for the hearing on “The Impact of the Financial Crisis on Workers’ Retirement Security,†blamed Wall Street for the financial crisis and said his committee will “strengthen and protect Americans’ 401(k)s, pensions, and other retirement plans†and the “Democratic Congress will continue to conduct this much-needed oversight on behalf of the American people.â€

Currently, 401(k) plans allow Americans to invest pretax money and their employers match up to a defined percentage, which not only increases workers’ retirement savings but also reduces their annual income tax. The balances are fully inheritable, subject to income tax, meaning workers pass on their wealth to their heirs, unlike Social Security. Even when they leave an employer and go to one that doesn’t offer a 401(k) or pension, workers can transfer their balances to a qualified IRA.

Mandating Equality

Ghilarducci’s plan first appeared in a paper for the Economic Policy Institute: Agenda for Shared Prosperity on Nov. 20, 2007, in which she said GRAs will rescue the flawed American retirement income system (www.sharedprosperity.org/bp204/bp204.pdf).

The current retirement system, Ghilarducci said, “exacerbates income and wealth inequalities†because tax breaks for voluntary retirement accounts are “skewed to the wealthy because it is easier for them to save, and because they receive bigger tax breaks when they do.â€

Lauding GRAs as a way to effectively increase retirement savings, Ghilarducci wrote that savings incentives are unequal for rich and poor families because tax deferrals “provide a much larger ‘carrot’ to wealthy families than to middle-class families — and none whatsoever for families too poor to owe taxes.â€

GRAs would guarantee a fixed 3 percent annual rate of return, although later in her article Ghilarducci explained that participants would not “earn a 3% real return in perpetuity.†In place of tax breaks workers now receive for contributions and thus a lower tax rate, workers would receive $600 annually from the government, inflation-adjusted. For low-income workers whose annual contributions are less than $600, the government would deposit whatever amount it would take to equal the minimum $600 for all participants.

In a radio interview with Kirby Wilbur in Seattle on Oct. 27, 2008, Ghilarducci explained that her proposal doesn’t eliminate the tax breaks, rather, “I’m just rearranging the tax breaks that are available now for 401(k)s and spreading — spreading the wealth.â€

All workers would have 5 percent of their annual pay deducted from their paychecks and deposited to the GRA. They would still be paying Social Security and Medicare taxes, as would the employers. The GRA contribution would be shared equally by the worker and the employee. Employers no longer would be able to write off their contributions. Any capital gains would be taxable year-on-year.

Analysts point to another disturbing part of the plan. With a GRA, workers could bequeath only half of their account balances to their heirs, unlike full balances from existing 401(k) and IRA accounts. For workers who die after retiring, they could bequeath just their own contributions plus the interest but minus any benefits received and minus the employer contributions.

Another justification for Ghilarducci’s plan is to eliminate investment risk. In her testimony, Ghilarducci said, “humans often lack the foresight, discipline, and investing skills required to sustain a savings plan.†She cited the 2004 HSBC global survey on the Future of Retirement, in which she claimed that “a third of Americans wanted the government to force them to save more for retirement.â€

What the survey actually reported was that 33 percent of Americans wanted the government to “enforce additional private savings,†a vastly different meaning than mandatory government-run savings. Of the four potential sources of retirement support, which were government, employer, family, and self, the majority of Americans said “self†was the most important contributor, followed by “government.†When broken out by family income, low-income U.S. households said the “government†was the most important retirement support, whereas high-income families ranked “government†last and “self†first (www.hsbc.com/retirement).

On Oct. 22, The Wall Street Journal reported that the Argentinean government had seized all private pension and retirement accounts to fund government programs and to address a ballooning deficit. Fearing an economic collapse, foreign investors quickly pulled out, forcing the Argentinean stock market to shut down several times. More than 10 years ago, nationalization of private savings sent Argentina’s economy into a long-term downward spiral.

Income and Wealth Redistribution

The majority of witness testimony during recent hearings before the House Committee on Education and Labor showed that congressional Democrats intend to address income and wealth inequality through redistribution.

On July 31, 2008, Robert Greenstein, executive director of the Center on Budget and Policy Priorities, testified before the subcommittee on workforce protections that “from the standpoint of equal treatment of people with different incomes, there is a fundamental flaw†in tax code incentives because they are “provided in the form of deductions, exemptions, and exclusions rather than in the form of refundable tax credits.â€

Even people who don’t pay taxes should get money from the government, paid for by higher-income Americans, he said. “There is no obvious reason why lower-income taxpayers or people who do not file income taxes should get smaller incentives (or no tax incentives at all),†Greenstein said.

“Moving to refundable tax credits for promoting socially worthwhile activities would be an important step toward enhancing progressivity in the tax code in a way that would improve economic efficiency and performance at the same time,†Greenstein said, and “reducing barriers to labor organizing, preserving the real value of the minimum wage, and the other workforce security concerns . . . would contribute to an economy with less glaring and sharply widening inequality.â€

When asked whether committee members seriously were considering Ghilarducci’s proposal for GSAs, Aaron Albright, press secretary for the Committee on Education and Labor, said Miller and other members were listening to all ideas.

Miller’s biggest priority has been on legislation aimed at greater transparency in 401(k)s and other retirement plan administration, specifically regarding fees, Albright said, and he sent a link to a Fox News interview of Miller on Oct. 24, 2008, to show that the congressman had not made a decision.

After repeated questions asked by Neil Cavuto of Fox News, Miller said he would not be in favor of “killing the 401(k)†or of “killing the tax advantages for 401(k)s.â€

Arguing against liberal prescriptions, William Beach, director of the Center for Data Analysis at the Heritage Foundation, testified on Oct. 24 that the “roots of the current crisis are firmly planted in public policy mistakes†by the Federal Reserve and Congress. He cautioned Congress against raising taxes, increasing burdensome regulations, or withdrawing from international product or capital markets. “Congress can ill afford to repeat the awesome errors of its predecessor in the early days of the Great Depression,†Beach said.

Instead, Beach said, Congress could best address the financial crisis by making the tax reductions of 2001 and 2003 permanent, stopping dependence on demand-side stimulus, lowering the corporate profits tax, and reducing or eliminating taxes on capital gains and dividends.

Testifying before the same committee in early October, Jerry Bramlett, president and CEO of BenefitStreet, Inc., an independent 401(k) plan administrator, said one of the best ways to ensure retirement security would be to have the U.S. Department of Labor develop educational materials for workers so they could make better investment decisions, not exchange equity investments in retirement accounts for Treasury bills, as proposed in the GSAs.

Should Sen. Barack Obama win the presidency, congressional Democrats might have stronger support for their “spreading the wealth†agenda. On Oct. 27, the American Thinker posted a video of an interview with Obama on public radio station WBEZ-FM from 2001.

In the interview, Obama said, “The Supreme Court never ventured into the issues of redistribution of wealth, and of more basic issues such as political and economic justice in society.†The Constitution says only what “the states can’t do to you. Says what the Federal government can’t do to you,†and Obama added that the Warren Court wasn’t that radical.

Although in 2001 Obama said he was not “optimistic about bringing major redistributive change through the courts,†as president, he would likely have the opportunity to appoint one or more Supreme Court justices.

“The real tragedy of the civil rights movement was, um, because the civil rights movement became so court focused that I think there was a tendency to lose track of the political and community organizing and activities on the ground that are able to put together the actual coalition of powers through which you bring about redistributive change,†Obama said.

Karen McMahan is a contributing editor of Carolina Journal.

All hail the U.S.S.A.!

[Mike]

W T F.

[towerclimber37]

Isn't it about time we start killing these people in the polls instead of listening to them? they are thieves. they're stealing not only our freedom but they're taking the food from out mouths.

Edited November 7, 2008 by towerclimber37

[TGO David]

Isn't it about time we start killing these people instead of listening to them? they are thieves. they're stealing not only our freedom but they're taking the food from out mouths.

I'd be careful making comments like that. The proper avenue of attack is to oust them at the polls.

[Guest bang-flash]

Another sickening news article.

Why could information like this not been shared openly to the masses before election day?

I can only hope that these programs of wealth redistribution never come to be.

[Guest SUNTZU]

Did I wake up in Argentina?

[towerclimber37]

Edited so as not to rile the feathers of big brother.

still, what is there to do?

vote? we did that. wait for the rest of the country to go down by the head?

I can do that..I guess I'll have to get creative in hiding my gold.

[creeky]

Did I wake up in Argentina?

Hey guys... This is quoted so it wouldn't be missed.

You hit it "Suntzu". That small little typed sentence speaks volumes my friend.

[Guest Valkyrie]

Good job brain-washed Obama supporters. Nope, the country couldn't get any worse, right? Oh wait... I think it's about to do just that. Way to screw us all into the ground.

[Mike.357]

Why could information like this not been shared openly to the masses before election day?

I had heard of it for a couple of weeks before the election. Neal Bortz and the egotist Limbaugh were both talking about it.

If it happens I will be happy I cashed mine in to buy a house, if it does not happen I am no worse off than I am now.

[Guest Aksess]

In short They want to take our money and give it to Lazy good for nothing Dope heads, And people that can, and are able to work. that don't and draw disability. Makes my blood boil. Get a job slackers

Every day I look at people asking myself "What good are these lazy asses doing for society"?

[ioerror001]

If this passes I'll be paying the taxes and cashing mine out the day I hear it's so. Hopefully they laugh at this nut and it's just another article that comes and goes.

[Guest Aksess]

Yea cash them out and buy more guns! I may even be able to afford a machinegun.

[Guest nofearracer]

By the results of the election, Im starting to think that the number of good for nothings is greater than the number of the rest of us that actually work to get ahead in life.

[Guest Aksess]

By the results of the election, Im starting to think that the number of good for nothings is greater than the number of the rest of us that actually work to get ahead in life.

Amen.

[Mike.357]

Im starting to think that the number of good for nothings is greater than the number of the rest of us that actually work to get ahead in life.

I just can't buy into that. I wonder what the numbers were on welfare takers who cast ballots. I am not thinking they are all that motivated to get out and vote.

Suprisingly enough I suspect many contributing members of society voted Democratic.

Obama followed the tried and true method to reaching office. Which is to promise everything and anything to those you are trying to get to support you. Once you win the lack of following through on the promises does not matter so much. I am not so much a fan of his but I am all for supporting the president until he lets the country down.

If Obama follows through on all he promised he will more than likely be re-elected. If not he will be out on his ear with a slew of other Dem's.

Might not be a perfect system but it is our system.

[Volzfan]

W T F.

Yeah!!!

WTF?

[Oh Shoot]

...

Suprisingly enough I suspect many contributing members of society voted Democratic. ...

Yeah, the various voting stats are bemusing...was NOT a record turnout as predicted. Blacks only voted about 2% more than usual (and blacks are still only about 13% of US population). Biggest % block of voters for Obama were new voters of all ages and races; also, even with Barack being pro choice, evangelicals split.

Biggest surprise: less than normal turnout of Republicans.

- OS

[Mike.357]

Yeah!!!

WTF?

my sig line had nothing to do with politics or the election

[Volzfan]

I just can't buy into that. I wonder what the numbers were on welfare takers who cast ballots. I am not thinking they are all that motivated to get out and vote.

Suprisingly enough I suspect many contributing members of society voted Democratic.

Obama followed the tried and true method to reaching office. Which is to promise everything and anything to those you are trying to get to support you. Once you win the lack of following through on the promises does not matter so much. I am not so much a fan of his but I am all for supporting the president until he lets the country down.

If Obama follows through on all he promised he will more than likely be re-elected. If not he will be out on his ear with a slew of other Dem's.

Might not be a perfect system but it is our system.

I, too, would like to know how many lazy welfare recipients actually voted but I am sure that we will never know for sure. My guess is that there were many more than other elections. Thanks Acorn!

I do think that there were many "contributing members of society" who voted for BO. I saw a lot of high $ vehicles driving around with BO bumper stickers on them. I contribute that to them blaming Bush for all of the country's problems from the war to the economy. Their hatred for W. is what I believe caused them to shun the Republican party. They refused to look at the many things about BO that scares the hell out of me. They didn't want to give themselves a reason to not vote for him so because of their hatred for W. they spent the campaign with their heads in the sand. The other thing in my mind is the weak candidate that the Republicans put on the ticket.

All of this is now water under the bridge and we must make the best of what looks like a very bad situation.

[Oh Shoot]

...

I do think that there were many "contributing members of society" who voted for BO. I saw a lot of high $ vehicles driving around with BO bumper stickers on them.....

Last week or so, been tooling around Sequoyah Hills area on some of my walks...(that's one of Knoxville's richest areas, lots of old money and some new money too)...

Very few McCain signs, LOTS of Obama/Biden.

"It's the economy, stupid."

- OS

[Guest canynracer]

my sig line had nothing to do with politics or the election

not your sig line...wrong mike, see post #2

W T F.

Yeah!!!

WTF?

I will add my own "WTF" to the scenario in question...

I would ASSume that if this was actually going to be tried or done, that there would be the 2nd civil war...I cant IMAGINE all of the conservatives, and republicans, and most of the hard working dems that have the 401ks letting this happen...

[ukerduker]

Yea cash them out and buy more guns! I may even be able to afford a machinegun.

That might be a great investment, until they come knocking.

[Guest Mugster]

Hmmm.

Methinks everyone with half a brain would cash out.

[Mike.357]

Methinks everyone with half a brain would cash out.

if that did happen the gov't would recieve a tremendous windfall in tax moneys. Cashing out the 401k results in paying a penalty.

I would have never closed mine out if it was not for reinvesting in my home. The trade off of paying a penalty versus buying a house was worth it to me.