[L]ast Thursday, a Senate Health, Education, Labor and Pensions Committee held a hearing on retirement savings and security... The point of the meeting was to figure out ways in which private 401(k) plans could be more "fairly" distributed as taxpayer-funded pensions. Senator Tom Harkin, Chairman of the Committee, hand-picked the witnesses for the meeting. Who did he chose? People advocating "Guaranteed Retirement Accounts"...It is a plan created by Theresa Guilarducci and it would seize private retirement accounts, set up an additional 5% mandatory payroll tax, and then use the money from the tax and seizure to distribute it "fairly" to Americans."
Read more here.
One quick note---consider the fact that if the government could not devalue our money, saving for retirement would be much easier. Fiat money and legal tender laws give government the power to erode the value of the dollars we earn so that simply putting them in a bank is an inadequate strategy to save for the future. In order to just stay even, one has to invest.
Here's a chart of the increase in the monatary base (i.e. creating money out of thin air) since 1910:
Now look at the purchasing power of those dollars:
Key dates to remember:
1913: The Federal Reserve was created .
1944 Bretton Woods and the creation of the International Monetary Fund.
1971: Nixon defaulted on the gold standard, ending convertibility of the dollar to gold.
Looking at the purchasing power chart, it is glaringly obvious that each of these government manipulations of our money was followed by a severe plummet in the value of our dollars.
A dollar earned in 1910 would only be worth $.04 in 2009.
A dollar earned in 1950 would only be worth $0.11 in 2009.
This is out right theft by the government---which then uses the fact that people have a hard time saving for their retirement to justify the "need" for programs like Medicare and Social Security.
These acts should be considered crimes!!
And now, the covert theft of our savings is inadequate to fund the bloated beast of government spending, and they want to confiscate our retirement funds outright.
Where is the outrage?
The details of the proposal are as follows:
1) Eliminate the tax-deductibility of 401(k) style plans.
2) Create a new type of account that is mandatory (all working people have to contribute at least 5%), has a tax-credit, is run by the government who then gives it to money-managers, where the government guarantees a minimum 3.5% p.a. return if the managers do less but the account gets the money if the managers do better.
There is more than enough to criticize in all that!
However, I do not see any proposal to move the current 401(k) balances into the new accounts. Even if such a proposal is wrapped in, from the rest it sounds like the money would remain held for the individual. So, on paper, it will be like moving one's money to a worse-performing account, not complete expropriation.
The 800-pound gorilla is the control the government will get in the economy, if it is choosing money managers for a huge chunk of the country's savings, and the control it will thus have on the economy.
Thank you for the clarification.
However, if the government requires you to put your money somewhere, and then tells the managers of the account how to manage it--do you still own your money?
This is similar to compulsory school attendance laws, which lead to government-funded schools with government-defined curriculum, and compulsory insurance laws which lead to government-defined and subsidized insurance. So now its government mandated retirement-fund, which means the government will have to define what counts as an adequate investment.
Government schools have crowded out private education so that 80% of K-12 schools are the government schools. Since the advent of Medicare in 1965, there is essentially no affordable market for private health insurance if you are over 65 years old. With ObamaCare, it is only a matter of time before we see a similar demise in private health insurance for those under 65.
Social Security will soon have outflows greater than inflows---so now they want to control 5% our income and mandate a "supplementary" retirement savings.
If someone normally saves 10% of their income for retirement, this is an effective take-over of 50% of their savings!
Very dangerous stuff.
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