Republicans Sound Alarm on Administration Plan to Seize 401(k)s

Human Events ^ | May 4, 2010 | Connie Hair

[ConjunctionJunction]

In February, the White House released its “Annual Report on the Middle Class” containing new regulations favored by Big Labor including a bailout of critically underfunded union pension plans through “retirement security” options.

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.

Vice President Joe Biden floated the idea, called “Guaranteed Retirement Accounts” (GRAs), in the February “Middle Class” report.

In conjunction with the report’s release, the Obama administration jointly issued through the Departments of Labor and Treasury a “Request for Information” regarding the “annuitization” of 401(k) plans through “Lifetime Income Options” in the form of a notice to the public of proposed issuance of rules and regulations. (pdf)

House Republican Leader John Boehner (Ohio) and a group of House Republicans are mounting an effort to fight back.

The American people have become painfully aware over the past year that elections sometimes have calamitous consequences. Republicans lack the votes (for now) to reign in the Obama administration’s myriad nationalization plans for everything from health care to the automobile industry.

Now the backdoor bulls-eye is on your 401(k) plan and the trillions of dollars the government would control through seizure, regulation and federal disbursement of mandatory retirement accounts.

Boehner and the group are sounding the alarm, warning bureaucrats to keep their hands off of America’s private retirement plans.

Just when you thought it was safe to come up for air after the government takeover of health care.

The entirety of the House GOP Savings Recovery Group letter outling the issue that was sent last night to the Labor and Treasury secretaries:

The Honorable Hilda L. Solis Secretary U.S. Department of Labor 200 Constitution Avenue, NW Washington, DC 20210

The Honorable Timothy Geithner Secretary U.S. Department of the Treasury 1500 Pennsylvania Avenue, NW Washington, DC 20210

Dear Secretaries Solis and Geithner:

As members of the Republican Savings Solutions Group, we write today to express our strong opposition to any proposal to eliminate or federalize private-sector defined contribution pension plans, such as 401(k)s, or impose burdensome new requirements upon the businesses, large and small, who choose to offer these plans to their employees.

In the Annual Report of the White House Task Force on the Middle Class, Vice President Biden discussed at length the creation of so-called “Guaranteed Retirement Accounts, (GRAs)” which would provide for protection from “inflation and market risk” and potentially “guarantee a specified real return above the rate of inflation” -- presumably at taxpayer expense. In the Report, the Vice President recommended “further study of these issues.”

The Vice President’s comments are troubling, insofar as they come on the heels of testimony before Congress from supporters of GRAs proposing to eliminate the favorable tax treatment currently afforded to 401(k) plans, and instead use those dollars to fund government-invested GRAs into which all employees would be required to contribute a portion of their salary -- again, with a government subsidy. These advocates would, essentially, dismantle the present private-sector 401(k) system, replacing it instead with a government-run investment plan, the size and scope of which remain to be seen. This despite data showing that 90 percent of households have a favorable opinion of the existing 401(k)/IRA system.

In light of these facts, we write today to express our opposition in the strongest terms to any effort to “nationalize” the private 401(k) system, or any proposal that would dismantle or disfavor the private 401(k) system in favor of a government-run retirement security regime.

Similarly, and more recently, the Departments of Labor and Treasury have jointly issued a “Request for Information” regarding the “annuitization” of 401(k) plans through “Lifetime Income Options.” While we appreciate the Departments’ seeking guidance and information from all parties and stakeholders in advance of regulatory activity, we strongly urge that the Departments not proceed with any regulation in this area before they have carefully and thoroughly considered all of the information received.

More specifically, we urge that the Departments take no action to mandate that plan sponsors -- often, small businesses -- include a “lifetime income” or “annuitization” option if they choose to offer a 401(k) plan to their employees, or that beneficiaries take some or all of their retirement savings in such an option. Data shows that 70 percent of Americans oppose the concept of a mandated annuity or government payout of their 401(k) plan. On a more fundamental level, Congress should not be in the business of choosing “winners” and “losers” among retirement security stakeholders. Instead, we urge the Departments to make it easier for employers to include retirement income solutions in their savings plans and to help workers learn more about the value of their retirement savings as a source of retirement income. Finally, to the extent new mandates and bureaucratic red tape from Washington push small employers out of the business of offering these plans to their employees, we would submit such an effort weakens, rather than strengthens retirement security.

We appreciate your consideration of our views in these important matters and stand ready to work with you and the Administration to promote secure and adequate retirement savings for all Americans.

Sincerely,

House Republican Leader John Boehner (R-OH) Rep. John Kline (R-MN) Rep. Dave Camp (R-MI) Rep. Sam Johnson (R-TX) Rep. Dean Heller (R-NV) Rep. Brett Guthrie (R-KY) Rep. Michele Bachmann (R-MN) Rep. Pat Tiberi (R-OH) Rep. Bob Latta (R-OH) Rep. Erik Paulsen (R-MN) Rep. Lynn Jenkins (R-KS) Rep. Ed Royce (R-CA) Rep. Buck McKeon (R-CA)

[mojitojoe]

Once upon a time, I was invited to the White House for a private dinner with the President. I am a respected businessman, with a factory that produces memory chips for computers and portable electronics. There was some talk that my industry was being scrutinized by the administration, but I paid it no mind. I live in a free country. There’s nothing that the government can do to me if I’ve broken no laws. My wealth was earned honestly, and an invitation to dinner with an American President is an honor I checked my coat, was greeted by the Chief of Staff, and joined the President in a yellow dining room.

We sat across from each other at a table draped in white linen. The Great Seal was embossed on the china. Uniformed staff served our dinner. The meal was served, and I was startled when my waiter suddenly reached out, plucked a dinner roll off my plate, and began nibbling it as he walked back to the kitchen. “Sorry about that,” said the President. “Andrew is very hungry.” “I don’t appreciate...” I began, but as I looked into the calm brown eyes across from me, I felt immediately guilty and petty. It was just a dinner roll. “Of course,” I concluded, and reached for my glass. Before I could, however, another waiter reached forward, took the glass away and swallowed the wine in a single gulp. “And his brother Eric is very thirsty.” said the President.

The President is testing my compassion, I thought. I will play along. I don’t want to seem unkind. My plate was whisked away before I had tasted a bite. “Eric’s children are also quite hungry.” With a lurch, I crashed to the floor. My chair had been pulled out from under me. I stood, brushing myself off angrily, and watched as it was carried from the room. “And their grandmother can’t stand for long.” I excused myself, smiling outwardly, but inside feeling like a fool. Obviously I had been invited to the White House to be sport for some game.

I reached for my coat, to find that it had been taken. I turned back to the President.”Their grandfather doesn’t like the cold.” I wanted to shout- that was my coat! But again, I looked at the placid smiling face of my host and decided I was being a poor sport. I spread my hands helplessly and chuckled. Then I felt my hip pocket and realized my wallet was gone. I excused myself and walked to a phone on an elegant side table. I learned shortly that my credit cards had been maxed out, my bank accounts emptied, my retirement and equity portfolios had vanished, and my wife had been thrown out of our home. Apparently, the waiters and their families were moving in.

The President hadn’t moved or spoken as I learned all this, but finally I lowered the phone into its cradle and turned to face him. “Andrew’s whole family has made bad financial decisions. They haven’t planned for retirement, and they need a house. They recently defaulted on a subprime mortgage. I told them they could have your home. They need it more than you do.” My hands were shaking. I felt faint. I stumbled back to the table and knelt on the floor.

The President cheerfully cut his meat, ate his steak and drank his wine. I lowered my eyes and stared at the small grey circles on the tablecloth that were water drops.”By the way,” He added, “I have just signed an Executive Order nationalizing your factories. I’m firing you as head of your business. I’ll be operating the firm now for the benefit of all mankind. There’s a whole bunch of Erics and Andrews out there and they can’t come to you for jobs groveling like beggars.” I looked up. The President dropped his spoon into the empty ramekin which had been his creme brulee. He drained the last drops of his wine. As the table was cleared, he lit a cigarette and leaned back in his chair. He stared at me. I clung to the edge of the table as if were a ledge and I were a man hanging over an abyss.

I thought of the years behind me, of the life I had lived. The life I had earned with a lifetime of work, risk and struggle. Why was I punished? How had I allowed it to be taken? What game had I played and lost? I looked across the table and noticed with some surprise that there was no game board between us. What had I done wrong? As if answering the unspoken thought, the President suddenly cocked his head, locked his empty eyes to mine, and bared a million teeth, chuckling wryly as he folded his hands he said:”You should have stopped me at the dinner roll”

[sickoflibs]

“Another Option: Safe Investment Choices:
...Even for workers who save at recommended rates for their entire lives, the possibility of a market crash always poses a serious risk, as the recent financial crisis has tragically illustrated. All workers, no matter their level of financial sophistication, should have access to well-diversified low-cost investment options. They should also have an easy way to put a portion of their savings in a safe, inflation-protected investment choice. While Treasury Inflation-Protected Securities (TIPS) and I Savings Bonds offer this kind of protection today, many investors are unfamiliar with them or lack an easy way to access these options in their retirement accounts. To address this, some have suggested the creation of Guaranteed Retirement Accounts (GRAs), which would 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. These accounts would allow workers to be sure that the funds invested in them will grow steadily without the risk of a market collapse.
;at : [PDF] ANNUAL REPORT OF THE WHITE HOUSE TASK FORCE ON THE MIDDLE CLASS

Great idea, an investment as solid as the social security trust fund.

[mojitojoe]

This confiscation will be swallowed...with only a few screaming...and those screams will fade just like in the health care
______________
I sure hate to agree with you, but I do.

[cbkaty]

Fastest way to see me in full armed revolt? Steal my retirement money.

Once they monitor all financial transactions, they will have the ability to simply transfer or freeze our accounts at will.......so....

[Jewbacca]

Sure, there are exceptions.

But I doubt disabled vets make up 1% of the population.

[Tao Yin]

Look for massive cashing out of 401(k) and Roth accounts if this crap actually gains any traction. I’d rather pay a tax penalty than let them steal it,

Ding ding ding. We have a winner. They don't even need to pass this to get a huge tax bump. They just have to threaten. This is called a loose - loose. The perfect con for a government that wants more of your money.

[OldGoatCPO]

I did not say that, 1% of the population is made up of veterans. It is a historical fact that an AVG of 1% or less of our population serve in the military. There have been spikes, like the Civil War and WW II, but 1% is the average percentage serving at any given time. The number of retired vets was 2 million in 2008, which is less than 1%, but that number does not included vets severed for injury and paid disability by the VA vice retirement.

The point remains the same, the number of free riders is far less than the 47% touted as not paying taxes, which implies they are free loaders. Thomas Sowell puts the percentage of free riders well below the 23% I estimated, but I could not find stats to verify his numbers.

[OldGoatCPO]

I would agree if you can show that those who work for the endowment for the arts or NPR pay no taxes on their salaries. Lefties pay taxes and they enjoy doing it. Free riders pay no taxes and offer nothing to society. To many people on this site take the 47% who pay no taxes and accuse them directly or indirectly of being free riders. Some are, there is no deny that, but not all.

[Buckeye Battle Cry]

The single largest block of money on Earth is the $9 trillion invested in private retirement plans in the United States. The temptation is simply too overwhelming for liberals. It’s like trying to throw a porkchop past a coyote. They’ll snatch it right up.

[Cacique]

Btt

[Natural Born 54]

Yes, and one more thing:

“Some people believe that armed citizens don’t stand a chance against an army, especially one as powerful as USA. This is the BS lie all governments around the world want you to believe, but the reality is very different.

If every block in the country, USA for example, has a dozen men with fire arms, the one that doesn’t stand a chance is the military force. It’s the perfect guerrilla setup, and a general’s worst nightmare.

You can’t nuke or level every block. You can’t arrest the entire country. The “fighters” are already armed, fed, spread out, integrated and infiltrated into the military and government branches. It’s impossible to win.”

- SURVIVING THE ECONOMIC COLLAPSE (Fernando Ferfal Aguirre)

[GYPSY286]

Can you take a “loan” out on it? At my co., we are allowed to take a loan up to 1/2 the value of our pension balance but no more than $50K and no less than $1K. you could sock the money somewhere else (mattress, lol) or pay your mortgage down like previous FReeper suggested. Of course you have to start paying your loan back - stretch it out to the longest term possible and the smallest amount possible.

[John O]

It’s just not that easy to pick an appropriate target.

If you know a democrat, you have a target.

If they take everything away from you, and you have no hope of improving your life, and at least in prison you'll be fed, then what's to stop you from going postal on the people who did this to you?

If you know a democrat politician they score extra points.

It's very easy to throw everything you have away in a hopeless act of violence when everything you have has already been taken away.

[Tolerance Sucks Rocks]

It’s not entirely a lose-lose. At least with cashing out, I would get to keep some of my money for myself. With allowing confiscation, the government effectively owns all my money, and can use it to pay down debt, engage in corporate welfare, squander on the poor, women, and minorities (rich in Dem votes), or whatever. Or did you think they would actually keep the money for you eventual retirement???

[Lazamataz]

Miss ya, Connie.

[rustbucket]

I suspect most of the people in NYC who voted for Obama are unhappy because the Health Care “Reform” bill didn’t have single payer.

Perhaps. However, my son's NYC friends who are expressing regret about Obama are mostly college educated thirty somethings. Maybe they are beginning to overcome the endoctrination they got in college and from their families and the group-think that seems prevalent among that class of young New Yorkers.

I don't see the large mass of NY Democratic voters changing their minds yet. Obama still has over 50% approval in Ransmussen's NY poll, but his approval has been trending downward ever since he got in office.

[Matchett-PI]

Thanks for the links, Bob! bttt

[Jewbacca]

“I did not say that, 1% of the population is made up of veterans.”

I did not say you said that.

My point is the opposite, in fact. To rephrase, you are the exception to the rule that the bulk of the 47% are free-riding.

(Keep in mind, I am not a native English speaker. I am sorry if I am confusing.)

[GYPSY286]

Can’t say that I do - but wait - let’s withdrawal our pensions and start a company called “Rope a Dope”. We could be busy for years...........

[Matchett-PI]

BTTT :)