Well, this notion of the government taking over 401K’s was brought up in the Fall of 2008 and is rearing its ugly head again.
The Obama administration is weighing how the government can encourage workers to turn their savings into guaranteed income streams following a collapse in retiree accounts when the stock market plunged.
Yet another way to not let a “crisis” go to waste, I suppose.
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.”
What the heck does that all mean? Plain English you say?
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.
Even simpler from Powerline blog and an explanation for why it will most certainly be mandatory:
In other words, the government will allow you the “opportunity” to give Washington your savings, in return for which the government will give you unmarketable T-bills or other unreliable promises to pay some minimal rate of return. The program likely will be “voluntary” to begin with, but that makes no sense–you can buy T-bills in your retirement account any time you want. So the only possible point is to make the exchange mandatory. The government steals your savings in exchange for an IOU.
Sounds simple enough, huh? You know kind of like the Social Security plan that many of us will never see in retirement….
They’ll try to make it sound oh so nice…but Obama and the Democrats now want to take over your 401K retirements savings, therefore eliminating tax deductions on them, and offer you an inflation-adjusted return every year of $600. And it would be mandatory that you put 5% of your pay into the plan annually.
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…
In other words, if you have been responsible and maxed out (or not) your 401K contributions complete with company matching, the government is moving to “control” it all for you. Essentially this policy removes individual savings for retirement and places your retirement income largely into the hands of the government to dole out as they see fit…..and that is assuming the money will even be there when you retire (ie. think Social Security).
This is just the latest chapter in what is developing into a war by the left on America’s seniors. All that class-war rhetoric about “the rich” ends up targeting seniors, who tend to have accumulated the most in savings and investment on average because they have been around the longest…..
…….All of this reflects a fundamental problem underlying socialist economic policies. If the government keeps punishing responsibility and rewarding failure, society ends up with a lot less responsibility and a lot more failure, destroying prosperity in the process.
I’ve believe we’ve hit on something there. Obama and the Democrats are out to destroy prosperity and individualism. This is just another kick in the teeth to responsible, freedom-loving Americans everywhere.
What is interesting is that government sees the trillions of dollars of money saved through these 401K’s as fresh money to supposedly pay debt and control more money in the government.
……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.“
And NO ONE with an existing 401K will overlook the fact that what the government offers in such a “conversion” plan is woefully anemic compared to the potential returns that American realize on their 401K’s over time.
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.”
But Karl Denninger of The Market Ticker took a deeper look and found an even scarier outcome. Denninger believes this is really a scheme to prop up the market for Treasury bonds by forcing citizens to “invest” in them.As Denninger points out, “Forcing people into Treasuries as an ‘annuity’ is exactly what Social Security allegedly is. Except that Treasury stole the money that was collected in FICA taxes and spent it!”
And he’s right. The fictitious “Social Security trust fund” is just a pile of Treasury notes. If we’re all forced to buy trillions more of them — because the government has over-borrowed so dramatically that nobody else will — all we’re going to get in return are more IOUs with nothing backing them up but the promises of politicians.
Those politicians will be retired themselves — on rich taxpayer-funded pensions that you and I aren’t eligible for — long before the IOUs come due. But they’ll have taken your money to pay for their games, and if you think you’ll be getting it back, I have some oceanfront property in Atlanta that you might be interested in.
But will it happen? From Powerline:
Will it happen? Clearly the Obama administration, inspired by Argentina, is exploring the option. Today, we have the first administration in American history that aspires to be a banana republic. But can they get away with confiscating millions of Americans’ savings? I doubt it. Because first on the list of those who have accumulated wealth in reliance on the laws governing private savings accounts are lawyers…
…..Still, others disagree. Earlier today I learned that a relative on Wall Street has stopped accumulating funds in his retirement accounts precisely because he thinks they may be confiscated by the Obama administration. Instead, he is acquiring untraceable, tangible assets–gold and silver–that the government won’t be able to steal without a physical search of his property.
That’s not good for the economy, of course. When citizens who have the ability to invest in our economy don’t dare do so, for fear that their savings will be stolen by the government, we are reverting to an earlier and far poorer economic era. But that, apparently, is what the Obama administration wants. Here, as in so many other ways, we are sailing in uncharted waters.
Good lord that is depressing…..look how far down these arrogant SOB’s have taken us. Fear of the government taking your retirement? Did you ever believe in your lifetime that you would have such a REAL fear as that in this country?
Kim Priestap at Wizbang blog has this to say about this arrogant encroachment upon individual property:
Ever since Barack Obama was elected, we’ve seen larger and larger chunks of American life being gobbled up by government. Today’s Democrats are nothing more than thug socialists who can’t stand that there are still large swaths of the American people still living independently from government largesse and control. Now they are using what remaining power they have in Congress to change that. If the government takes over health care, college student loans, and retirement savings then no one, no matter how wealthy, can escape the thumb of big government.
If a person is no longer an independent individual, how can one muster the courage to fight* back? Indeed, the “narrative” promoted on the Left in support of Nannystatism is that there really is no such thing as “individual success” — individuals are “taking advantage” of the State’s gifts (education, economy, laws) so all success is really the State’s success. Individuals “owe” the State. Meritocracy is a myth, they cry. It is all a matter of redistribution of wealth and privilege, so SHUT UP and FEED ME! For all the eight years of blather that GW and admin was “shredding the Constitution”, it pales to what the Left has been trying to get done this first year of The Won’s presidency.
Amen to that one….projection at its finest from Democrats and their whiney supporters.
As former British Prime Minister Margaret Thatcher said, “The trouble with socialism is you run out of other people’s money to spend.” And now they want to spend our retirement savings.
So if Obama and the Statists in power takeover our 401K’s we will be indebted to a government whose incoming gravy train will become less and less as we all wallow in a socialist cesspool of government control created by such policies. Everyone loses.
Pitchforks may be in order if this monstrosity ever sees the light of day.
(H/T: Protein Wisdom)
Filed under: 401K, Barack HUSSEIN Obama, Collectivism, Economy, Liberalism, Nutroots, Obama corruption, Politics, Progressives Ain't, Socialism, Taxes | Tagged: 401K, banana republic, Barack Obama, big government, government control, government takeover, national debt, of 401K, Pelosi, pitchforks, retirment savings, Ried, Social Security, Socialism, T-Bills, Treasury bills |