Hearing on 401(k) plan grows to urban legend (MSM preparing people for government seizure of 401K!)

MSNBC ^ | Nov. 7, 2008 | John W. Schoen

[FocusNexus]

There is no proposal in Congress to take away your 401(k) savings account. In any case, the stock market has already done a pretty good job of wiping out several trillion dollars worth of 401(k) savings without any help from Congress.

At that hearing, one of the witnesses, Teresa Ghilarducci, an economics professor at The New School for Social Research, made an interesting observation. By her calculations, the government spends as much as $80 billion a year in tax breaks to subsidize 401(k) savings plans. In her opinion, that money could be better spent offering a tax credit for a revised retirement plan that would guarantee a minimum income stream to people who saved for retirement. You'd give up some of your tax savings in return for a guaranteed return for life.

But there's a lot wrong with the 401(k) program. For starters, these retirement accounts have dramatically shifted two huge risks from employers to individuals.

Individually managed 401(k) plans also come with a much bigger investment risk.

We're all now learning - the hard way - that 401(k) accounts are an imperfect program for guaranteeing economic security in retirement. The Social Security system we now rely on was created in the wake of a financial upheaval not unlike what we're now experiencing.

So maybe it's not such a bad idea to start listening to new ideas.

[FocusNexus]

A previous article:

Dems Target Private Retirement Accounts. Democratic leaders in the U.S. House discuss confiscating 401(k)s, IRAs

Teh current MSNBC article basically tells us not to worry, that "There is no proposal in Congress to take away your 401(k) savings account (YET!!!). But they held a hearing, and listened to a new proposal, which recommends literally confiscating people's 401Ks and IRAs.

Then goes on and says that the "government SPENDS!!! $80B in tax breaks to subsidize 401Ks" -- It's NOT the government's money, it's OUR money, I guess they consider that when the government "allows" us to keep some of our own hard earned money, it's "government spending", but when they hand out money to those who did't earn it, it's an "investment".

Note how the author is explaining to the masses that 401Ks are a bad idea, because people individually own and manage their own money and it's actually much better to let the government take our money, manage it for us, and dole it out to us "according to our needs".

Expect to see more articles telling us what a bad idea it is to have individual assets, we should just hand everything over to the government, eliminate private property, and have to government "take care of us".

Welcome to CHANGE.

[Sacajaweau]

It would be nothing more than SS Part 2...another kitty from them to dip into...and with nothing going to heirs.

[P-Marlowe]

I can't believe the Democrats would be that stupid.

Oh wait, they are Democrats.

Never mind.

[Rummyfan]

But there's a lot wrong with the 401(k) program. For starters, these retirement accounts have dramatically shifted two huge risks from employers to individuals. Individually managed 401(k) plans also come with a much bigger investment risk.

Yes they do but I'll take the risk thank you. The Social Security 'trust fund' has already been plundered and now these commissars want to plunder individual savings accounts. There will be civil war if the Feds try to take away people's 401(k)s.

[mefistofelerevised]

“the government SPENDS as much as $80 billion on tax breaks” Spends?

[a real Sheila]

yes, we REALLY want to turn over our money to the SS fund because we KNOW the govt will put it into a lock box and let it GROW at a whopping 3%!
This dem controlled congress would be all over that money like a bunch of buzzards on a fresh carcas, leaving NOTHING for us.
NOTHING.
I’ll take my chances with my 401K even though it is now TINY. Tiny is better than nothing.

[Red Badger]

I tell my acquaintances that the Dems are doing this and they don’t believe me. These people are blind sheeple..........

[NavVet]

In a few years, if not sooner, the stock market will be back, SS will still suck.

[taildragger]

Urban legend my A$$....

We all know their modus operandi, they are boiling our frog, many of us are refusing to stay in the water....

They are talking optional but we all know they will make it permanent.

[No Socialist]

Well the government has done an excellent job managing the Social Security Accounts. (HA!!) Start squirreling away cash. The scavengers at the bottom that pay no taxes will demand that our life savings are confiscated so they can get an additional $500 check.

[listenhillary]

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.

http://www.carolinajournal.com/exclusives/display_exclusive.html?id=5081

[Red Badger]

I’ll take my chances with my 401K even though it is now TINY. Tiny is better than nothing.

Me too. Even though it's down right now about 35-40% from it was about 6 months ago, WE STILL OWN THE SHARES. They will go up again. If you sell now you will NEVER RECOVER the loss. If the GOV takes my 401(k) I'm not responsible for my actions any longer.............

[nralife]

House Democrats Contemplate Abolishing 401(k) Tax Breaks

Workforce Management
October 16, 2008

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.

At that hearing, the director of the Congressional Budget Office, Peter Orszag, testified that some $2 trillion in retirement savings has been lost over the past 15 months.

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.

Read the rest here:

http://www.workforce.com/section/00/article/25/83/58.php

[originalbuckeye]

I have fretted over this info for a couple of weeks. Yesterday, listening to Rush, I realized that they would not only be confiscating our 401Ks.......all that money would be pulled out of the stock market and put into the bottomless pit of Government control. George Soros said, 10 years ago, he would bring America to it's knees. 0bama is owned by Soros. Our economy is in real jeopardy with these people in control. Too late.

[denydenydeny]

In any case, the stock market has already done a pretty good job of wiping out several trillion dollars worth of 401(k) savings without any help from Congress.

And yet, the author won't admit that the concept of "spreading wealth around" is even more of an urban legend.

Wealth is much, much easier to destroy than to "spread around."

[an amused spectator]

We're all now learning - the hard way - that 401(k) accounts are an imperfect program for guaranteeing economic security in retirement.

When 401K plans were designed and implemented, the planners didn't take into account that one political party might use the stock market as a tool to gain the Presidency.

And BTW - since the former Main Stream Media is now the Obama New Government Media, don't look for any further real information about ANY of this in newspapers or on the networks.

[Red in Blue PA]

Re: Individually managed 401(k) plans also come with a much bigger investment risk.

I know of no small individual investor who was able to leverage his account 30 times and bring the entire economy down.

Amazing how the individual investors are being painted as inept, when they had absolutely nothing to do with this debacle.

[DustyMoment]

There is no proposal in Congress to take away your 401(k) savings account.

Notice how cleverly this jerk spins this. It is true that there is no proposal currently in Congress to take away the 401(k), but that doesn't mean that it hasn't been discused and planned.

Going back to Clinton, he was planning on taxing 401(k)'s at 15% when he lost control of Congress and got swept up in the Monica, Gennifer, Juanita, et al, scandal. But, Dems have NEVER lost sight of the plan. After all, they think it's THEIR money, NOT yours!!

If we go back to the origins of one of the greatest political swindles ever perpetrated, we can look at FDR's Social Security program. When you read the original bill, you discover that it was nothing more than a money grab by a cash-strapped government that was "sold" to the people as a government retirement plan. The interest rate they were allegedly going to pay on the money they confiscated for Social Security was a whopping 1%. In 1938, that was probably pretty good return but, by today's standards, it's little more than chump change.

Nonetheless, that's a moot argument, anyway. Social Security has been bankrupted by the very Congress that was supposed to safeguard it and there is no way they can put all of the misappropriated money back. Many people who have (unwillingly) paid into Social Security in the belief that they would see something back when they retire now know that they will work right up to the day they die.

So, tell me again why I should believe ANYTHING a politician says??

[prplhze2000]

Idiot doesn’t know the difference between tax break and tax DEFERRED. We DO pay taxes on 401k plans, when we withdraw the funds: The government gets its money.

Congressmen Miller and McDermott both said they liked Dr. G’s plan and both called the tax deferment for said plans a tax subsidy. They’ve made their intentions pretty clear.

[Reagan69]

I kept YELLING at MAc to go postal about the plan the Dems had to take 401ks. Even if it weren’t true, it would have force BO to state on the record that he would NOT do this.

It would probably won the election for MAC.