Democrats drooling over your 401(k)

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"When you spread the wealth around, it's good for everybody." - Barack Obama

Congressional Democrats agree:

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.

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.

So, while the Republicans proposed allowing workers to invest a portion of their Social Security contributions in the market, with the potential of higher returns on investment over the long haul, the Democrats want to force workers to invest a portion of their 401(k)s into government accounts with no potential for higher returns.

I found this via James Taranto's Best of the Web. (Taranto was on the Pat Campbell Show this morning).

Ghilarducci outlined her plan last year in a paper for the left-liberal Economic Policy Institute, in which she acknowledges that her plan would amount to a tax increase on workers making more than $75,000--considerably less than the $250,000 Barack Obama has said would be his tax-hike cutoff. In addition, workers would be able to pass on only half of their account balances to their heirs; presumably the government would seize the remaining half. (Under current law, 401(k) balances are fully heritable, although they are subject to the income tax.)

Do you really want to turn this sort of thinking loose on Washington with no check, no balance?

RELATED: A friend sends along a "friend of a friend" anecdote:

Today on my way to lunch I passed a homeless guy with a sign that read "Vote Obama, I need the money." I laughed.

Once in the restaurant my server had on a "Obama 08" tie, again I laughed as he had given away his political preference--just imagine the coincidence.

When the bill came I decided not to tip the server and explained to him that I was exploring the Obama redistribution of wealth concept. He stood there in disbelief while I told him that I was going to redistribute his tip to someone who I deemed more in need--the homeless guy outside. The server angrily stormed from my sight.

I went outside, gave the homeless guy $10 and told him to thank the server inside as I've decided he could use the money more. The homeless guy was grateful.

At the end of my rather unscientific redistribution experiment I realized the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave away the money he did earn even though the actual recipient needed money more.

I guess redistribution of wealth is an easier thing to swallow in concept than in practical application.

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Paul said:

Changing the current voluntary 401(k) system into an involuntary low return scheme is a horrible idea.

(Good restaurant story, BTW)

Jeff Shaw Author Profile Page said:

One of Obama's plans is to let people withdraw as much as 15 percent of their retirement savings --- up to a maximum of $10,000 --- without facing a tax penalty this year or next...

I can think of few things more irresponsible than pulling down your retirement savings - government sanctioned no less. Especially since if you withdraw, you locked in your recessionary losses, instead of letting it come back.

Jeff Shaw Author Profile Page said:

You know what Micheal, it really bugs the heck out of me when I hear politicians even thinking of taking THE MONEY that I'VE EARNED, and start tinkering with it.

They have already re-distributed 700 billion dollars of our wealth to the criminals who should be out on the streets by now.

I CANNOT IMAGINE that I would want ANY of my money being administered by the SoSo Security Administration. OMG!

Brent Taylor Author Profile Page said:

GUFFAW! I'll laugh the rest of the evening thinking about the new tipping doctrine we all need to implement.

Heck, I might even start that procedure for any legal bills I incur from the Obama attorney types.

"Hey, thanks for helping me with the IRS audit. I see you're an Obama supporter Mr. MB. Congratulations on your win! When your bill comes, should I send the check to the Salvation Army, Make a Wish Foundation or the United Way? Do you know if my expense is tax deductible under the new Obama Share the Wealth Plan?"

About this Entry

This page contains a single entry by Michael Bates published on October 24, 2008 8:43 AM.

National Preservation Conference: Get yourself downtown! was the previous entry in this blog.

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