Posted on 11/07/2008 5:33:43 AM PST by 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.
(Excerpt) Read more at msnbc.msn.com ...
“This MSNBC writer is a hack for the Dems. First he says there’s no plan to take away 401(k)s, then he praises the idea.”
BINGO! You summed it up well.
MSNBC is nothing more than the Dems propaganda outlet.
Do the idiots who managed to trash the economy of the entire country really think we are so stupid as to willingly let them manage our retirement. I have faith that the stockmarket would do a pretty fair job of recovering on it’s own it the government would keep it’s nose out of things. The bailouts, so called, seem to be making matters much worse.
The Ant and the Grasshopper
CLASSIC VERSION:
The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter. The grasshopper thinks he’s a fool and laughs and dances and plays the summer away.
Come winter, the ant is warm and well fed. The grasshopper didn’t save any food, didn’t build any shelter,
so he starves to death out in the cold.
MODERN VERSION:
The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter. The grasshopper thinks he’s a fool and laughs and dances and plays the summer away.
Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while others are cold and starving.
CBS, NBC and ABC show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food.
America is stunned by the sharp contrast. How can it be that, in a country of such wealth, this poor grasshopper is allowed to suffer so?
Then a representative of the NAGB (National Association of Green Bugs) shows up on Nightline and charges the ant with “green bias”, and makes the case that the grasshopper is the victim of 30 million years of greenism.
Kermit the Frog appears on Oprah with the grasshopper, and everybody cries when he sings “It’s Not Easy Being Green.” Barack and Michelle Obama make a special guest appearance on the CBS Evening News and promise that they will do everything they can for the grasshopper who has been denied the prosperity he deserves by those who benefited unfairly during the Bush summers, or as Barack refers to it, the “Global Warming” catastrophy of the Bush administration.
Nancy Pelosi exclaims in an interview with ABC News that the ant has gotten rich off the back of the grasshopper, and calls for an immediate tax hike on the ant to make him pay his “fair share”.
Finally, the EEOC drafts the “Economic Equity and Anti-Greenism Act”, retroactive to the beginning of the summer. The ant is fined for failing to hire a proportionate number of green bugs and, having nothing
left to pay his retroactive taxes, his home is confiscated by the government.
Hillary gets her old law firm to represent the grasshopper in a defamation suit against the ant, and the case is tried before a panel of federal judges that Obama appointed from a list of single-parent welfare moms who can only hear cases on Thursdays between 1:30 and 3:00 PM when there are no talk shows scheduled.
The ant loses the case. The story ends as we see the grasshopper finishing up the last bits of the ant’s food while the government house he’s in, which just happens to be the ant’s old house, crumbles around him since he doesn’t know how to maintain it. The ant has disappeared in the snow. And on the TV, which the grasshopper bought by selling most of the ant’s food, they are showing Barack Obama standing before a wildly applauding group of Democrats announcing that a new era of “fairness” has dawned in America.
ExcellANT! Did you write that? It’s stupendous!.............
In late October, I posted a thread warning about this.
http://www.freerepublic.com/focus/f-news/2114880/posts?
Would Obama, Dems Kill 401(k) Plans?
US NEWS ^ | 10/23/2008 | James Pethokoukis
Posted on Saturday, October 25, 2008 5:57:14 AM by Grampa Dave
Would Obama, Dems Kill 401(k) Plans? October 23, 2008 10:47 AM ET | James Pethokoukis |
I hate to use the “S” word, but the American government would never do something as, well, socialist as seize private pension funds, right? This is exactly what cash-strapped Argentina just did in the name of protecting workers’ retirement accounts (Efharisto, Fausta’s Blog). Now, even Uncle Sam isn’t that stupid, but some Democrats might try something almost as loopy: kill 401(k) plans.
House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created “guaranteed retirement accounts” for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, said that since “the savings rate isn’t going up for the investment of $80 billion [in 401(k) tax breaks], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should.”
A few respectful observations:
1) McDermott is right when he says the savings rate isn’t going up. But the savings rate doesn’t include gains to money you invest in the stock market. It ignores the buildup of net worth. (If you bought a share of XYZ Corp. in January at $100, for instance, and its value doubled by December, the savings rate measure would still value that investment at $100. In short, the savings rate is a phony number.)
2) So based partly on the above faulty logic, the $4.5 trillion, as of the start of the year, invested in 401(k) plans doesn’t count as savings.
3) Ghilarducci would have workers abandon the stock market right at the bottom of the market. A stupid idea, according to Warren Buffett: “I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: ‘Put your mouth where your money was.’ Today my money and my mouth both say equities.”
4) Ghilarducci would offer a lousy 3 percent return. The long-run return of the stock market, adjusted for inflation, is more like 7 percent. Look at it this way: Ten thousand dollars growing at 3 percent a year for 40 years leaves you with roughly $22,000. But $10,000 growing at 7 percent a year for 40 years leaves you with $150,000. That is a high price to pay for what Ghilarducci describes as the removal of “a source of financial anxiety and...fruitless discussions with brokers and financial sales agents, who are also desperate for more fees and are often wrong about markets.” Please, I’ll take a bit of worry for an additional $128,000.
5) What effect would this plan have on an already battered stock market? Well, I would imagine it would send it even lower, sticking a shiv into the portfolios of everyone who didn’t jump aboard. But I am sure the Chinese would love to jump in and buy all our cheap stocks to fund the retirement of their citizens.
My bottom line: If you believe in the long-run dynamism of the American economy, then you have to believe in the stock market. Listen to superinvestor Buffett, not the prof from the New School.
http://www.freerepublic.com/focus/f-news/2114880/posts?
But, the stock market is NOT going to recover in the next couple of years, at least not until the Republicans (true conservatives, not RINOs) take back at least the House of Representatives. It is in our interest to tank the economy in order to oust Obamunism.
Has she even looked at Social Security's medium and long term finances? If anyone other than the government ran a program like that they would be accused of running a pyramid game and be tossed in jail for fraud.
I've topped out my 401k for the year, but starting with my January paycheck I'm thinking of cutting contributions to zero, pay the tax up front and invest in tax advantaged mutual funds which try to force as much of the return to be long term capital gains rather than dividends or short term gains. Depending on future tax rates it might even be better just to pay the tax now than pay the much larger tax on the principle in the future like a 401k.
I just updated the “Modern Version”. I think it was written during the Clinton presidency and I just changed the names and a couple of things to make it more appropriate for Obama — I had it saved, because it really is so appropriate.
It’s worth saving, I am afraid will have a chance to use it often during the Obama presidency.
You should POST IT AS AN ARTICLE! IT’S GREAT!!!!!!!!.............
Back in ‘93, after the dem sweep, Dick Gephart (D.-Mo.) wanted to tax IRA and 401k accounts, as he proclaimed, “There are trillions and trillions of untaxed assets there!”
Thanks to the sweep in ‘94 and ol’ smilin’ Dick’s retirement later, the tax went nowhere.
I always thought the dems would bring it back.
Sure enough! Here we go again.
Steal, steal, steal!!! Go Obama!!!
Teresa 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
Note the code words: Shared Prosperity. Does the phrase “Share the Wealth” strike a bell with anyone.
Mark Levin asked her that very question on his radio show about two weeks ago. All she had to say is, that Social Security is backed with the full faith and credit of the United States. Comforting, no?
http://ifawebnews.com/articles/2008/07/01/news/life/doc486a6a752d5eb240381944.txt
From this article looks to be about 10 trillion in IRA and 401k’s - Like bank robbers they are headed for where the money is to finance their agenda.
They are going to trade assets for government debt. DJIA 100 IMHO.
If only off of future contributions Dow 1000? Defintely kill the stock market. So where will you put your money so it’s not ravaged by inflation?
economy is going GD II. Batten down the hatches or leave the country.
http://www.freerepublic.com/focus/f-news/2114595/posts
Posted on Friday, October 24, 2008 5:39:26 PM by Libloather
Eyeing Your Pension Are 401(k)s safe from congressional Democrats?
By JAMES TARANTO OCTOBER 23, 2008
If you have a 401(k) or equivalent retirement plan, you’ve probably been watching nervously the past few weeks as your nest egg has shrunken owing to the current turmoil in the markets.
Well, it could be worse. But don’t take heart, for what we mean is it could get worse. The market turmoil has some politicians on Capitol Hill eyeing the end of the 401(k) as we know it. Workforce Management reports on a hearing of the House Education and Labor Committee earlier this month:
SNIP**
Sounds pretty unappealing, doesn’t it? But in her congressional testimony, Ghilarducci offered a sweetener:
Short-term I propose . . . that the Congress allow workers to swap out their 401(k) assets, perhaps at August levels, for a guaranteed retirement account—just a one-time swap. . . .How would this work? You go back to your districts and meet up with a 55-year-old who had had $50,000 in his account last month and now has $40,000 in the account. He can swap out that $50,000, valued in August, for that guarantee of what would become, if he retires at 62, a $500 a month addition to Social Security.A 55-year-old who lost 20% of his 401(k) because of the recent stock market decline was investing more aggressively than he should have, given his age. Ghilarducci proposes to reward this imprudence in exchange for dramatically limiting everyone’s ability to take risks (and enjoy the corresponding rewards) and for greatly increasing government control of Americans’ retirement funds.
I remember that.
Also, I remember Je$$ie HyJack$on muttering about reparation payments coming from our 401k’s and IRA’s.
From your link in #72:
A retirement system should not exacerbate income and wealth inequality
Certain groups are especially ill-served by the current system, including part-time workers, divorced and widowed women, individuals with long-term care needs and medical expenses, and racial and ethnic minorities....
“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.”
Could you please provide a reference for this? I would like to spread this information, but I want to be sure it’s true.
The stock market didn’t wipe that money out.
The Dems did with their plan to loan money to people who couldn’t pay it back.
And who’s gonna believe PMSNBC after the hatchet job they did in this election.
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