Posted by
Always To The Right on Thursday, October 23, 2008 2:07:45 PM
In 2005, George Bush proposed privatizing a portion of Social
Security contributions to allow workers to control their own funds and
hopefully outperform the woefully inadequate entitlement system. The
partial privatization would eventually have helped postpone or
eliminate the insolvency of Social Security, but Democrats screeched
that the GOP wanted to steal benefits from Grandma and effectively
killed the debate. To this day, they accuse Republican candidates of
supporting Bush’s partial privatization plan as though it were the
equivalent of Teapot Dome.
So why are Democrats now looking to partially nationalize existing 401(k) plans into the exact same kind of private/public pension system?
Powerful House Democrats are eyeing proposals to
overhaul the nation’s $3 trillion 401(k) system, including the
elimination of most of the $80 billion in annual tax breaks that 401(k)
investors receive.
House Education and Labor Committee Chairman George Miller,
D-California, and Rep. Jim McDermott, D-Washington, chairman of the
House Ways and Means Committee’s Subcommittee on Income Security and
Family Support, are looking at redirecting those tax breaks to a new
system of guaranteed retirement accounts to which all workers would be
obliged to contribute.
Hmm …. “a system of guaranteed retirement accounts to which all
workers would be obliged to contribute.” That sounds very, very
familiar, doesn’t it? Don’t we already do this with Social Security?
A plan by Teresa Ghilarducci, professor of
economic-policy analysis at the New School for Social Research in New
York, contains elements that are being considered. She testified last
week before Miller’s Education and Labor Committee on her proposal. …
Under Ghilarducci’s plan, all workers would receive a $600 annual
inflation-adjusted subsidy from the U.S. government but would be
required to invest 5 percent of their pay into a guaranteed retirement
account administered by the Social Security Administration. The money
in turn would be invested in special government bonds that would pay 3
percent a year, adjusted for inflation.
The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
That means your employer can no longer write off their contributions
to your 401(k), and your capital gains would be taxable year-on-year.
In other words, it becomes just another investment or savings account,
with no tax benefit at all, and no employer contribution. Instead,
Uncle Sam would give you your “matching” funds — up to a whopping $600
per year! Whoopee!
As Michelle Obama says, you could buy a pair of earrings every year
… except, of course, you can’t. It’s in The Lockbox, defined by
politicians as Locked Away from You but Accessible to Us. It goes
there along with 5% of your gross earnings, apparently to play with the
7% of your gross earnings that already goes to Social Security. And
what do they do with the money? They give you government bonds as your only investment option.
Maybe you’ll be lucky, and they’ll have Franklin Raines running the agency issuing those bonds.
The Democrats want to end the private retirement system that has
allowed Americans to become a vast investor class and put them back in
thrall of the federal government. This is nothing more than a second
welfare system that would sit on top of the crumbling Social Security
entitlement. It would leave the American working and middle classes
with no retirement option other than a government handout.
If the Democrats control both Congress and the White House, kiss your
401(k)s goodbye, and get into the bread lines first before the crowd
arrives. (via Q&O)
In anticipation of an Obama presidency and full dominance by Democrats in Congress, your 401(K) is now in jeopardy: