Communism Ahead

Does Government Want To Drain Americans' 401(k) Plan?

Posted 11/28/2012 06:39 PM ET

War On Wealth: As Washington debates what to do about the fiscal cliff that it foolishly created, many potential sources of new revenue will be thrown on the table. One of them is likely to be 401(k) plans.

Retirement is an American's reasonable expectation. We put money into investment plans so that our work today funds our hard-earned leisure of tomorrow.

But many in Washington see our investment accounts not as the expressions of well-planned, disciplined decisions but as untapped reservoirs of wealth they can drain to fix the problems that they caused.

The tax protection that 401(k)s have now can be wiped out by grasping politicians who refuse to do what's right, which is to severely cut spending.

The war on retirement, particularly 401(k)s, is quiet now. But that's because it's a cold war.And like the postwar tensions between the East and West, it could erupt at any time into a hot war.One group of retirement plan professionals is warning that the hostilities might be closer than many of us think. The American Society of Pension Professionals and Actuaries launched on Monday, according to Reuters, "a media campaign intended to educate U.S. employers and workers that the federal government might consider changing the tax benefits of retirement savings accounts."

A website set up by the ASPPA advises account holders to tell lawmakers to "keep their hands off your retirement savings" and explains that "Congress needs to reduce the deficit, and part of deficit reduction will most likely be 'tax reform' that increases tax revenue" — the strong suggestion being that Washington is coming after Americans' 401(k)s.

If the ASPPA were alone in issuing its warnings, it could be written off as the hyperbole of an isolated group. But Washington's lust for Americans' retirement investments is well documented.President Obama's National Commission on Fiscal Responsibility and Reform, for instance, proposed lowering the cap on the amount workers could place in their 401(k)s without incurring taxes.

And nearly three years ago, Newt Gingrich and Peter Ferrara wrote on these pages about the Treasury and Labor departments "asking for public comment on 'the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams.'"

"In plain English," said Gingrich and Ferrara, "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."

More than 60 million American workers have a 401(k) or similar — 403(b) or 457(b) — plan. But taxing these accounts or lowering the amount that can be contributed to them tax-free would do little to close the deficit and cut the debt.

Total assets in 401(k)s are roughly $3 trillion. So even if they were seized in their entirety, they would merely retire less than 19% of Washington's $16.3 trillion debt.

Taxed at 50%, 401(k)s would narrowly cover the $1.3 trillion deficit that Washington rang up in 2012.

Already a large chunk of America's retirement is held in the federal government's hands. Between 1937 and 2009, Social Security took in nearly $14 trillion in payroll tax revenue.

In all but 11 of those years, the government collected more than it spent on benefits. Yet despite all the surpluses, the Social Security program is in financial trouble and Congress needs more revenue to fix it, just as it is looking for more of other people's money to avoid the fiscal cliff plunge.

Don't think for a minute that 401(k)s aren't on the table as a part of the solution. And when they are served up in front of hungry politicians, they can be quickly devoured. All that will be left for the account holders will be a few crumbs.

Read More At IBD: http://news.investors.com/ibd-editorials/112812-634984-401k-on-the-table-for-fiscal-cliff.htm#ixzz2Dbv3P1Z5

2 pieces from 2010 when this issue came up in 2010.

Federal Mutual Fund Posted 05/11/2010 06:32 PM ET

Government Retirement: Democrats have obliquely admitted they covet Americans' pensions. Last week, congressional Republicans told them to stay away. The shame is that they had to do anything at all.

The first rumblings were heard in the 1990s, when Democrats were said to be coming after our retirement accounts. Back then, the warnings were easy to pass off as hyperbole or a cranky conspiracy theory. Today, they pass as prescient.

In January, Bloomberg reported the "U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and individual retirement accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry."Alarms went off.

In February, former House Speaker New Gingrich and policy analyst Peter Ferrara warned in our "On The Right" column that "Washington is developing plans for your retirement savings.""The idea," they said, "is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years."They will tell you that you are 'investing' your money. ... 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."

Last week, Connie Hair wrote the following in Human Events about the Annual Report of the White House Task Force on the Middle Class released in February:"The radical solution most favored by Big Labor is the seizure of private 401(k) plans for government disbursement — which lets them off the hook for their collapsing retirement scheme. And, of course, the Obama administration is eager to accommodate their buddies."Hair says a "backdoor bull's-eye is on your 401(k) plan and trillions of dollars the government would control through seizure, regulation and federal disbursement of mandatory retirement accounts.

 "Republican lawmakers are taking the threat seriously. They have expressed to the administration through a letter their "strong opposition to any proposal to eliminate or federalize private-sector defined contribution pension plans." These congressmen know that among their Beltway brethren there exists an eagerness to "essentially dismantle the present private-sector 401(k) system, replacing it instead with a government-run investment plan.

"This isn't the first time Democrats have eyed Americans' retirements. In 1993 the Washington Post reported that the Clinton administration considered an "unprecedented effort by the federal government to deal with its budget woes by turning to the more than $4 trillion in cash, stocks and other investments held by pension funds.

"They made another pass in 2008, when Teresa Ghilarducci, a professor at the New School of Social Research who was invited by Democrats to testify, brought the idea of government "guaranteed retirement accounts" to the House subcommittee on income security and family support. Such accounts would be administered by the Social Security Administration. "Contributions" would be required and the payout would be a lean 3%.Ghilarducci didn't suggest that 401(k)s be eliminated, but she didn't have to.

She supports removing the favorable tax treatment they receive, which would virtually destroy their reason to exist. To close the loop, we refer back to the White House's middle-class task force report. It mentions guaranteed retirement accounts as a way to "give workers a simple way to invest a portion of their retirement savings in an account that was free of inflation and market risk and, in some versions under discussion, would guarantee a specified real return above the rate of inflation."Or, as Gingrich and Ferrara say, the government would treat ostensibly private retirement savings the same negligent way it's treated Social Security. Let's not forget: The courts have ruled that Washington isn't obligated to pay back a dime it's seized from paychecks to fund Social Security.

Don't think Washington would never wreck private pensions in the name of the collective good. It happened in Argentina, and if the same group that's determined to take over the U.S. health care system stays in power long enough, it could happen here.

Read More At IBD: http://news.investors.com/ibd-editorials/051110-533718-federal-mutual-fund.htm#ixzz2Dbwp4eLs

It Takes A Pillage

Posted 07/01/2010 07:01 PM ET Retirement: Argentina nationalized private pension funds in 2008 under the guise of shielding them from the economic meltdown. But the funds have been used by lawmakers. That couldn't happen here, could it?

Socialist President Cristina Fernandez de Kirchner said the state was protecting private retirement from "policies of plunder." By moving tens of billions from the private sector and placing it in the public fisc, she claimed to be providing "an example" for others to follow as the global financial crisis heated up.

The Argentine Congress, making a promise it didn't intend to keep, said it would make sure the money would be used for pensions. Instead, it was used for government spending. Nearly $30 billion was stolen from the citizens of Argentina by the government that was supposed to protect them from thieves.

Democrats have been casting a similar greedy eye on Americans' pensions since at least the 1990s, though they typically kept their ambitions quiet. But in January, the lid on envy began to boil over.

• Bloomberg reported that the Treasury and Labor departments were inviting public comment on ways to promote the conversion of 401(k) and individual retirement accounts into annuities or other steady payment streams.

• A month later, former House Speaker Newt Gingrich and policy analyst Peter Ferrara, reacting to the appeal for public comment, warned in our On The Right column that "Washington is developing plans for your retirement savings."

• Then in May, based on what she had read in the Annual Report of the White House Task Force on the Middle Class, Connie Hair wrote in Human Events that "the radical solution most favored by Big Labor is the seizure of private 401(k) plans for government disbursement."

The selling point for these plans would be much like the fiction that was peddled in Argentina: The funds would go into a pot that the government would protect from economic decline before they are distributed to retirees.

That sounds a lot like the mythical Social Security lockbox, in which Washington seizes a portion of Americans' private income, then uses what it doesn't pay out in Social Security benefits to finance the general budget. So it not only can happen here, it does happen here. It just hasn't yet spread to the private retirement accounts that Americans put their money in after Washington has taken a significant chunk of their paychecks to fund the crashing Social Security program. But it will, if we keep electing the same class of candidates that have created the problems plaguing us today.

Read More At IBD: http://news.investors.com/ibd-editorials/070110-539181-it-takes-a-pillage.htm#ixzz2DbxZkdgd

Read More At IBD: http://news.investors.com/ibd-editorials/070110-539181-it-takes-a-pillage.htm#ixzz2DbxTGoft

Comments:

We already know that money printing inflation has resulted in 12% inflation, not 2%.  Federal government spending on UN Agenda 21 implementation, to prevent global warming (hoax) accounts for the extra $1 trillion a year Obama is spending.  As the dollar looses value, we buy gold and silver. Now we have some incentive to empty all of our retirement accounts and head for the hills.  Perfect.

Norb Leahy, Dunwoody GA Tea Party Leader