Dem leaders in the U.S. House discuss confiscating 401k, IRA

[Martrae]

http://www.carolinajournal.com/articles ... ml?id=5081

[kaharthemad]

For those who are link impaired:

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.”

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 (http://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.”

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.”

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.”

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.”

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 (http://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.”

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.”

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.”

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.

Communism at its finest. Bet you all are proud.

So how many of you have a 401k? Feeling a bit concerned?

[Arlos]

Care to provide a corroborating link to a site anyone has actually heard of, and that isn't a radical right wing supposed "news" site? 30 seconds of digging at the site found out their mission and who runs the place.

-Arlos

[Tossica]

The question should be "How many of you have anything LEFT in your 401K after the Wall Street cash grab?"

[Drem]

Nice. bout time we re-evaluated those systems

I didn't want to assume what Martrae was posting it for, but I assumed since she didn't bring up the counterpoint and she put "Dem" in the title that it was some hilarious type of socialist post or something

Hey guys, was Robin Hood a communist? hahahaha. This country is finally headed in the right direction again, like Clinton started. And you guys are so afraid of change that it's almost adorable. It's time now to break off this fucked-up American way of thinking that's anti-everything-sensible and 100% selfish and MONEY MONEY MONEY WHAT ABOUT MY MONEY

[kaharthemad]

Care to provide a corroborating link to a site anyone has actually heard of, and that isn't a radical right wing supposed "news" site? 30 seconds of digging at the site found out their mission and who runs the place.

-Arlos

first off, this comes from USNEWS:
http://www.usnews.com/blogs/capital-com ... -2009.html

for those of you that dont know who James Pethokoukis is.

James Pethokoukis is the money and politics blogger for U.S. News & World Report , where he writes the monthly Capital Commerce magazine column. Pethokoukis is also the assistant managing editor of the magazine's Money & Business section. He has written for many publications including the New York Times, the American, USA Today, Investor's Business Daily, and TCS Daily. Pethokoukis is also an official CNBC contributor and appears frequently on that network's Kudlow & Company, Power Lunch, and The Call shows. In addition, he has appeared numerous times on MSNBC, Fox News Channel, Fox Business Network, CNN, and Nightly Business Report on PBS. A 1989 graduate of Northwestern University where he double majored in Soviet politics and American history and a 1991 graduate of the Medill School of Journalism, Pethokoukis is a 2002 Jeopardy! champion.

I do find it odd that the college bums are the only ones who dont see anything wrong with stealing what someone earned.


http://www.worldnetdaily.com/index.php? ... geId=79168
http://www.investmentnews.com/apps/pbcs ... /810079894

[Tikker]

I just love how you guys associate socialism with evil

it's just laughable

you're all for capitalism until it's not exactly in your favour anymore, then whine bitch and moan for something different (think about the way people hate on companies that were so successful they created themselves a monopoly, or virtual monopoly)

[kaharthemad]

there were times Tikker, when Capitalism was not in my favor and I still supported it. Hell if you knew me at all you would know this. It is what this country was founded on. Not on Socialistic views.

All men are created equal. What you do after birth is your own decision.

Dont hand me crap about 'under privileged' and 'too poor' cause that is a bunch of horse squeeze. Every person can pick themselves up and make something of themselves. I am not the richest person on this board, nor am I the poorest however growing up my family was not well to do. I made do with hand me downs and a few nights I recall eating ham and beans because money was tight. But I busted my ass so my kids would not have to go through the same shit I did growing up. What I have saved from my own pockets is mine.

I can only assume you do not have a 401k? How about you Drem? and you Arlos?

So because I have planned for my retirement and you were too incompetent or stupid to plan for yours I have to support your dead ass? Keep dreaming.

[Arlos]

ARGH. Socialism didn't EXIST when the country was created. So saying "the country wasn't founded on socialism" is an utterly meaningless statement. The country wasn't founded based on the idea of the internet either. THAT'S BECAUSE IT WASN'T INVENTED YET YOU GODDAMN RETARDS.

We have absolutely no way of knowing if the founding fathers would or would not have approved or followed a philosophy and economic system that was invented nearly a century AFTER the country was founded. Given how intent they were on the principle of "All people are created equal", and how much of the design of this country rose out of a hatred for the british class system, I rather suspect that many of them (especially people like Jefferson) would have been all for at least certain aspects of it.

You want an equivalent argument to the one you just made, you should argue we should stop using airplanes, because the idea of flying places wasn't part of the founding fathers' vision either.

Gah, sorry, but I finally got sick of this utterly retarded nonsensical claptrap pseudo-"Argument".

-Arlos

[Tikker]

I can only assume you do not have a 401k?

well, I'm Canadian, so no..

I do have my own RRSP's tho, which is kinda what your 401k is based on

we also have universal old age pension (CPP), which is supplemented by your own individual RRSP and/or company pension


I read what you posted, and didn't really come to the omfg government is stealing conclusion


rather than have people's 401ks go to shit because of the market, they'll convert them to essentially a government bond and guarantee a rate of return

also, it's some independent financial dude proposing it, not the government (yet anyway)


don't get me wrong, I have zero issue with someone who works harder than me making more money than me

more power to you if you're self motivated, and want to chase the dollars

I just think it's hilarious the way you guys freak out at government involvment

[Tossica]

I can only assume you do not have a 401k? How about you Drem? and you Arlos?

So because I have planned for my retirement and you were too incompetent or stupid to plan for yours I have to support your dead ass? Keep dreaming.

Have you taken a look at your 401K lately? YOU'VE BEEN ROBBED and you don't even know it. They took your money and RAN with it.

[Drem]

there were times Tikker, when Capitalism was not in my favor and I still supported it. Hell if you knew me at all you would know this. It is what this country was founded on. Not on Socialistic views.

All men are created equal. What you do after birth is your own decision.

Dont hand me crap about 'under privileged' and 'too poor' cause that is a bunch of horse squeeze. Every person can pick themselves up and make something of themselves. I am not the richest person on this board, nor am I the poorest however growing up my family was not well to do. I made do with hand me downs and a few nights I recall eating ham and beans because money was tight. But I busted my ass so my kids would not have to go through the same shit I did growing up. What I have saved from my own pockets is mine.

I can only assume you do not have a 401k? How about you Drem? and you Arlos?

So because I have planned for my retirement and you were too incompetent or stupid to plan for yours I have to support your dead ass? Keep dreaming.

HAHAHAHAHA

Of course I've started my 401k, I've been working since my senior year of high school. College bum? I pay my own bills, work my ass off to make rent while I go to school full time, pay my taxes every year on time, go into thousands of dollars of debt for student loans, and have a very valid say in this issue because it's MY future, too. How pretentious can you be? You're not the bee's knees. You're a fading part of a horrible era of this shameful country that I hope to God we'll all forget about in 50 years. You're a total minority in the way you think in respect to a world view. I'll never take your close-minded, un-educated argument seriously. I mean are you stupid? You just tried to make fun of a Canadian for not having a 401k

And sorry for the tone of this post because really, I hate getting angry at people, but when you ignorantly tell me what I do in my life, and call me a bum, or whatever the fuck you think is happening, I do take offense, because you don't know the first thing about me. People like you that jump to conclusions and then open their big fuckin stupid mouths are everything that's wrong with this country

This is a great idea, and I totally support it. I'm so sick of money being the focal point of this society. And I feel sorry for anyone who thinks it should be

[Diekan]

there were times Tikker, when Capitalism was not in my favor and I still supported it. Hell if you knew me at all you would know this. It is what this country was founded on. Not on Socialistic views.

All men are created equal. What you do after birth is your own decision.

Dont hand me crap about 'under privileged' and 'too poor' cause that is a bunch of horse squeeze. Every person can pick themselves up and make something of themselves. I am not the richest person on this board, nor am I the poorest however growing up my family was not well to do. I made do with hand me downs and a few nights I recall eating ham and beans because money was tight. But I busted my ass so my kids would not have to go through the same shit I did growing up. What I have saved from my own pockets is mine.

I can only assume you do not have a 401k? How about you Drem? and you Arlos?

So because I have planned for my retirement and you were too incompetent or stupid to plan for yours I have to support your dead ass? Keep dreaming.

Arguing with Drem is a waste of time... the kid's like 19... he has ZERO life experience. I don't even read his posts anymore. He doesn't have a 401k... hell I doubt he even knows what they are.

As for the rest... I can't see how someone with Arlos' intelligence and background would even consider the confiscation (sp) of our retirements a "good idea." They BANKRUPTED the Social Security program for Christ's sake... how could anyone (beside unemployed or burger flipping college students) think this is a good idea??

:boggle:

[brinstar]

I recall eating ham and beans

you got HAM with your beans???

lucky

and diekan-- he just fucking SAID he has a 401k, you picked the wrong day to quit sniffing glue

[Diekan]

I recall eating ham and beans

you got HAM with your beans???

lucky

and diekan-- he just fucking SAID he has a 401k, you picked the wrong day to quit sniffing glue

Ok... my bad I didn't see that... I stand corrected.

[brinstar]

if you feel like making fun of a poor college kid, make fun of me instead

i don't have a 401k

longest i've gone without a job since high school was a month (and that was a scary month, selling plasma FTL), and now i'm BACK in college full time, and working full time.

i agree there are a lot of lazy jobless morons in college that don't know shit about shit, but don't throw the good (me and drem) out with the bad

[Diekan]

if you feel like making fun of a poor college kid, make fun of me instead

i don't have a 401k

longest i've gone without a job since high school was a month (and that was a scary month, selling plasma FTL), and now i'm BACK in college full time, and working full time.

i agree there are a lot of lazy jobless morons in college that don't know shit about shit, but don't throw the good (me and drem) out with the bad

No man. No one is making fun of college kids. Most of us were there. I remember eating nothing but Ramen and P&J for a year while I was an undergrad. So, trust me no one is *picking on* college kids. The point we're trying to make is that most college kids don't have full time *real* jobs that provide them with 401k's. And, because of that it's very easy for them to think it's perfectly ok for the government to take something that those of us have worked hard for. And, it's not just college kids, there are so-called poor people who don't care or think it's a good idea as well.

The problem is the government DESTROYED the social security program. And, now they want to get their hands on MY retirement that I worked for all these years? So they can spend it? So they can ruin it as well?

No way.

[Drem]

don't throw the good (me and drem) out with the bad

/shrug he just hates me for no reason really. He's bipolar or something anyway

But hey, Diekan, I don't get the point. When I read something like that, when someone makes fun of me for stuff that isn't even true, am I supposed to feel bad? Is it supposed to make me dwell on it and ruin my day and re-evaluate myself as a person? Help me out, Diekan, because so far it just makes me laugh at you. And it makes me glad that every day of my life is so great that I don't have to come here like you and insult other peoples' lives because yours is so empty. And you do that fairly often now...passing judgement etc. I know you want to touch my peen, but keep waiting baby

[Tikker]

/shrug he just hates me for no reason really.

not for no reason

you post like a giant arrogant douche at least 50% of the time

[Drem]

and you don't? and he doesn't? ahahaha

[Tikker]

and you don't? and he doesn't? ahahaha

I didn't say that

you just don't realize how much of a cocksucker you are here sometimes

for a lot of us, it's just intentional here

[Drem]

right, i have no idea. i just think i'm really cool all the time

get over yourselves. i'm not trying to impress anyone. you guys always pick the fights and start insulting first. then you try to analyze me and tell me how stupid i am. way to be old and wise

[Tikker]

way to be young and stupid ?

[Drem]

i'll take that with the same sarcasm i gave you

thanks

[Diekan]

You also have to realize that with total control over YOUR retirement money, they can set limits on when you retire.


Stalin cheers from his grave.