My question is whether the Dems are planning on using Ghilarducci’s plan, or are they just setting it up as the extreme case in order to push the “more reasonable” case of reducing or eliminating the tax benefits of 401k contributions as the compromise solution. Then when 401k contributions plummet they can get rid of them entirely in a few years.
It will be sold as a protection against market volatility, a whopping $600 per annum match, a guaranteed 3% return on your investment AND Uncle Sam will return the balance of your 401K/IRA to it's balance prior to the stock market fall. And the loss of the tax benefit to a 401K/IRA will enforce this. (We'll take care of your money..don't worry.)
Given the current economic climate, it won't be a seizure,it will be a bloodless coup. A lot of people will fall for this. You don't cook a frog by dropping him in boiling water. You just turn the heat up gradually.