[Goober5000]

See?  See?  Socialism.

http://www.carolinajournal.com/articles/display_story.html?id=5081

Dems Target Private Retirement Accounts

Democratic leaders in the U.S. House discuss confiscating 401(k)s, IRAs

By Karen McMahan

November 04, 2008

RALEIGH — Democrats in the U.S. House have been conducting hearings on proposals to confiscate workers’ personal retirement accounts — including 401(k)s and IRAs — and convert them to accounts managed by the Social Security Administration.

Triggered by the financial crisis the past two months, the hearings reportedly were meant to stem losses incurred by many workers and retirees whose 401(k) and IRA balances have been shrinking rapidly.

The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism. Testifying for the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs, and confiscate workers’ retirement plan accounts and convert them to universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration.

Rep. George Miller, D-Calif., chairman of the House Committee on Education and Labor, in prepared remarks for the hearing on “The Impact of the Financial Crisis on Workers’ Retirement Security,” blamed Wall Street for the financial crisis and said his committee will “strengthen and protect Americans’ 401(k)s, pensions, and other retirement plans” and the “Democratic Congress will continue to conduct this much-needed oversight on behalf of the American people.”

Currently, 401(k) plans allow Americans to invest pretax money and their employers match up to a defined percentage, which not only increases workers’ retirement savings but also reduces their annual income tax. The balances are fully inheritable, subject to income tax, meaning workers pass on their wealth to their heirs, unlike Social Security. Even when they leave an employer and go to one that doesn’t offer a 401(k) or pension, workers can transfer their balances to a qualified IRA.

Mandating Equality

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 (www.sharedprosperity.org/bp204/bp204.pdf).

The current retirement system, Ghilarducci said, “exacerbates income and wealth inequalities” because tax breaks for voluntary retirement accounts are “skewed to the wealthy because it is easier for them to save, and because they receive bigger tax breaks when they do.”

Lauding GRAs as a way to effectively increase retirement savings, Ghilarducci wrote that savings incentives are unequal for rich and poor families because tax deferrals “provide a much larger ‘carrot’ to wealthy families than to middle-class families — and none whatsoever for families too poor to owe taxes.”

GRAs would guarantee a fixed 3 percent annual rate of return, although later in her article Ghilarducci explained that participants would not “earn a 3% real return in perpetuity.” In place of tax breaks workers now receive for contributions and thus a lower tax rate, workers would receive $600 annually from the government, inflation-adjusted. For low-income workers whose annual contributions are less than $600, the government would deposit whatever amount it would take to equal the minimum $600 for all participants.

In a radio interview with Kirby Wilbur in Seattle on Oct. 27, 2008, Ghilarducci explained that her proposal doesn’t eliminate the tax breaks, rather, “I’m just rearranging the tax breaks that are available now for 401(k)s and spreading — spreading the wealth.”

All workers would have 5 percent of their annual pay deducted from their paychecks and deposited to the GRA. They would still be paying Social Security and Medicare taxes, as would the employers. The GRA contribution would be shared equally by the worker and the employee. Employers no longer would be able to write off their contributions. Any capital gains would be taxable year-on-year.

Analysts point to another disturbing part of the plan. With a GRA, workers could bequeath only half of their account balances to their heirs, unlike full balances from existing 401(k) and IRA accounts. For workers who die after retiring, they could bequeath just their own contributions plus the interest but minus any benefits received and minus the employer contributions.

Another justification for Ghilarducci’s plan is to eliminate investment risk. In her testimony, Ghilarducci said, “humans often lack the foresight, discipline, and investing skills required to sustain a savings plan.” She cited the 2004 HSBC global survey on the Future of Retirement, in which she claimed that “a third of Americans wanted the government to force them to save more for retirement.”

What the survey actually reported was that 33 percent of Americans wanted the government to “enforce additional private savings,” a vastly different meaning than mandatory government-run savings. Of the four potential sources of retirement support, which were government, employer, family, and self, the majority of Americans said “self” was the most important contributor, followed by “government.” When broken out by family income, low-income U.S. households said the “government” was the most important retirement support, whereas high-income families ranked “government” last and “self” first (www.hsbc.com/retirement).

On Oct. 22, The Wall Street Journal reported that the Argentinean government had seized all private pension and retirement accounts to fund government programs and to address a ballooning deficit. Fearing an economic collapse, foreign investors quickly pulled out, forcing the Argentinean stock market to shut down several times. More than 10 years ago, nationalization of private savings sent Argentina’s economy into a long-term downward spiral.

Income and Wealth Redistribution

The majority of witness testimony during recent hearings before the House Committee on Education and Labor showed that congressional Democrats intend to address income and wealth inequality through redistribution.

On July 31, 2008, Robert Greenstein, executive director of the Center on Budget and Policy Priorities, testified before the subcommittee on workforce protections that “from the standpoint of equal treatment of people with different incomes, there is a fundamental flaw” in tax code incentives because they are “provided in the form of deductions, exemptions, and exclusions rather than in the form of refundable tax credits.”

Even people who don’t pay taxes should get money from the government, paid for by higher-income Americans, he said. “There is no obvious reason why lower-income taxpayers or people who do not file income taxes should get smaller incentives (or no tax incentives at all),” Greenstein said.

“Moving to refundable tax credits for promoting socially worthwhile activities would be an important step toward enhancing progressivity in the tax code in a way that would improve economic efficiency and performance at the same time,” Greenstein said, and “reducing barriers to labor organizing, preserving the real value of the minimum wage, and the other workforce security concerns . . . would contribute to an economy with less glaring and sharply widening inequality.”

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.

Miller’s biggest priority has been on legislation aimed at greater transparency in 401(k)s and other retirement plan administration, specifically regarding fees, Albright said, and he sent a link to a Fox News interview of Miller on Oct. 24, 2008, to show that the congressman had not made a decision.

After repeated questions asked by Neil Cavuto of Fox News, Miller said he would not be in favor of “killing the 401(k)” or of “killing the tax advantages for 401(k)s.”

Arguing against liberal prescriptions, William Beach, director of the Center for Data Analysis at the Heritage Foundation, testified on Oct. 24 that the “roots of the current crisis are firmly planted in public policy mistakes” by the Federal Reserve and Congress. He cautioned Congress against raising taxes, increasing burdensome regulations, or withdrawing from international product or capital markets. “Congress can ill afford to repeat the awesome errors of its predecessor in the early days of the Great Depression,” Beach said.

Instead, Beach said, Congress could best address the financial crisis by making the tax reductions of 2001 and 2003 permanent, stopping dependence on demand-side stimulus, lowering the corporate profits tax, and reducing or eliminating taxes on capital gains and dividends.

Testifying before the same committee in early October, Jerry Bramlett, president and CEO of BenefitStreet, Inc., an independent 401(k) plan administrator, said one of the best ways to ensure retirement security would be to have the U.S. Department of Labor develop educational materials for workers so they could make better investment decisions, not exchange equity investments in retirement accounts for Treasury bills, as proposed in the GSAs.

Should Sen. Barack Obama win the presidency, congressional Democrats might have stronger support for their “spreading the wealth” agenda. On Oct. 27, the American Thinker posted a video of an interview with Obama on public radio station WBEZ-FM from 2001.

In the interview, Obama said, “The Supreme Court never ventured into the issues of redistribution of wealth, and of more basic issues such as political and economic justice in society.” The Constitution says only what “the states can’t do to you. Says what the Federal government can’t do to you,” and Obama added that the Warren Court wasn’t that radical.

Although in 2001 Obama said he was not “optimistic about bringing major redistributive change through the courts,” as president, he would likely have the opportunity to appoint one or more Supreme Court justices.

“The real tragedy of the civil rights movement was, um, because the civil rights movement became so court focused that I think there was a tendency to lose track of the political and community organizing and activities on the ground that are able to put together the actual coalition of powers through which you bring about redistributive change,” Obama said.

Karen McMahan is a contributing editor of Carolina Journal.

[Herra Tohtori]

That's pretty much how we do it. Except that that's the state's part of pensions; private retirement funds are used too.


At any rate, the American Capitalism 2.0 seems to be made of the following:

1. Privatize profits
2. Nationalize losses
3. ???
4. PROFIT!

An oversimplified and crude description, but close enough it seems. I don't get how the people there seemingly have so much trust in the power of free market to fix itself - yet when the banks start to fail based on their own idiocy the state is needed to intervene (the success of the intervention remains to be seen)...

There's nothing wrong with a bit of socialism here and there...

[Scuddie]

o noze soshulism1111

[Kazan]

1) Post an unbiased article from a reputable news agency
2) Government should shore up those accounts - retirement accounts tied to the stock market were fraud from moment 1, it just took a a major market crash to bring the whole system down
3) You, and all your conservative friends, need to learn the definition of socialism before EVER using the term again
4) Nationalizing risk is OK with you when it's big corporations, (ie bailing out major corporations and other rich people - a wealth redistribution from the poor to the rich), but nationalizing the risk of the little guys (401(k)s, etc) which are hurt much worse is not?
5) Wealth Redistribution is ANY transfer of funds from one social class to another - republicans are FAAAR more guilty of wealth redistribution than democrats could ever be.  Except republicans redistribute from the poor to the rich ($8bn tax cuts for oil corporations for example) - whereas the democrats prefer giving the money to the people who will benefit more from it.

oh btw - the rich have an extremely high (>99%) marginal propensity to save, the poor have an extremely high marginal propensity to spend (>99%).  Guess which group helps the economy more when money gets put into their hands?

HINT: THE POOR.


let me help you out

Dictionary.com Unabridged (v 1.1) - Cite This Source - Share This
so⋅cial⋅ism
   /ˈsoʊʃəˌlɪzəm/ Show Spelled Pronunciation [soh-shuh-liz-uhm] Show IPA Pronunciation
–noun
1.    a theory or system of social organization that advocates the vesting of the ownership and control of the means of production and distribution, of capital, land, etc., in the community as a whole.
2.    procedure or practice in accordance with this theory.
3.    (in Marxist theory) the stage following capitalism in the transition of a society to communism, characterized

[edit]
Furthermore screaming "SOCIALISM" when you don't even know the definition of the term is a vestige of MCCARTHYISM.   It's just get another conservative boogheyman. 

Grow the **** up, this idealogy of "scare the **** out of people until they believe you" is simply and completely antidemocratic.  You should be ashamed of yourself. 

[DragonClaw]

Does that basically say they're trying to rescue the Social Security system again by seizing funds from the people that were actually smart enough to invest in non-taxable retirement funds? We've all seen how well Social Security has worked in the past -- and I'm already paying money into the damn system which I'll never see again -- , why can't the government just let me choose how to save my own money. Democrats are really starting to infuriate me.

[FUBAR-BDHR]

Wonder where that leaves us people that don't have social security.  Ohio has it's own retirement plan so I never paid into social security. 

[Kazan]

Does that basically say they're trying to rescue the Social Security system again by seizing funds from the people that were actually smart enough to invest in non-taxable retirement funds? We've all seen how well Social Security has worked in the past -- and I'm already paying money into the damn system which I'll never see again -- , why can't the government just let me choose how to save my own money. Democrats are really starting to infuriate me.

Explain to me how putting your retirement funds in THIS was a good idea?

[DragonClaw]

Does that basically say they're trying to rescue the Social Security system again by seizing funds from the people that were actually smart enough to invest in non-taxable retirement funds? We've all seen how well Social Security has worked in the past -- and I'm already paying money into the damn system which I'll never see again -- , why can't the government just let me choose how to save my own money. Democrats are really starting to infuriate me.

Explain to me how putting your retirement funds in THIS was a good idea?

Not all IRAs and 401ks invest in the stock market, incase you didn't know. Besides, in the long term the stock market will go up, and anyone who put ALL their money in the stock market is an idiot. Any smart investing advisor will tell you to put most of your money in the stock market at a young age and by the time you're 60 you should have little to none in the market, and in more stable locations.

The stock market doing badly doesn't give the government the right to take what's left of it and manage it like they've managed the god-forsaken Social Security.

[Bob-san]

edit: fixing charts

Overall it's not a BAD idea. It would work better if 90% of manufacturing wasn't done outside of the USA though.

And you control where you want the money. As Dragon just said--put money in the stock market when you're young--by the time you're 50-60, it should be almost completely in bonds.

US Oil & Gas Index


US Basic Materials Index


US Industries Index


US Consumer Goods Index


US Health Care Index


US Consumer Services Index


US Telecommunications Index


US Utilities Index


US Financials Index


What this summarizes is different industries DO vary in performance. And you see common rises and drops. Anyways--if you're a 20-something with a stable job and in a decent company, now's a great time to put money in the stock market. Watch and be proud as your stock becomes more and more valuable, and your retirement multiplies.

[Polpolion]

I'd prefer if it were possible for things to work in the other direction, but hey, I'm fine with this if it helps everyone who needs it get by.

EDIT: Why does it seem as though my moderately tolerant viewpoints are killing all of the political threads?

[DeepSpace9er]

3% a year?? That just barely covers inflation. One noes.. the stock market went DOWN.. that is unacceptable.. we need the government to INSURE the money 100%. So apparently they dont want people managing their own retirement accounts because they are too stupid and incompetent, and the market in which they work and depend on their livelyhood is just too risky for people to make money for their retirement. But really.. who does this benefit the most socializing retirement in social security.. which is a pyramid scheme by the way and illegal in the private sector? The government obviously. They get to confiscate more money through no tax breaks on people investing lots into their retirement. This will be sold as a way to 'protect the American people from volatilities in the market and to fix social security by increasing revenue by reducing tax breaks on the wealthy.' I mean, god forbid people actually KEEP the money they earn in this so called 'free society.'

[Kosh]

3% a year?? That just barely covers inflation. One noes.. the stock market went DOWN.. that is unacceptable.. we need the government to INSURE the money 100%. So apparently they dont want people managing their own retirement accounts because they are too stupid and incompetent, and the market in which they work and depend on their livelyhood is just too risky for people to make money for their retirement. But really.. who does this benefit the most socializing retirement in social security.. which is a pyramid scheme by the way and illegal in the private sector? The government obviously. They get to confiscate more money through no tax breaks on people investing lots into their retirement. This will be sold as a way to 'protect the American people from volatilities in the market and to fix social security by increasing revenue by reducing tax breaks on the wealthy.' I mean, god forbid people actually KEEP the money they earn in this so called 'free society.'

As I understand it a great many people's 401ks are getting hammered, since everything is nosediving. The only reason social security is bankrupt is because every president starting with Reagan has been raiding it to cover up for their overspending.

And you see common rises and drops. Anyways--if you're a 20-something with a stable job and in a decent company, now's a great time to put money in the stock market. Watch and be proud as your stock becomes more and more valuable, and your retirement multiplies.

That's what all those financial analysts said 6 months ago.

[Grey Wolf]

3% a year?? That just barely covers inflation. One noes.. the stock market went DOWN.. that is unacceptable.. we need the government to INSURE the money 100%. So apparently they dont want people managing their own retirement accounts because they are too stupid and incompetent, and the market in which they work and depend on their livelyhood is just too risky for people to make money for their retirement. But really.. who does this benefit the most socializing retirement in social security.. which is a pyramid scheme by the way and illegal in the private sector? The government obviously. They get to confiscate more money through no tax breaks on people investing lots into their retirement. This will be sold as a way to 'protect the American people from volatilities in the market and to fix social security by increasing revenue by reducing tax breaks on the wealthy.' I mean, god forbid people actually KEEP the money they earn in this so called 'free society.'

1. Learn to use punctuation and capitalization.
2. While social security has it's issues, it's not a pyramid scheme benefiting the government. It's an underfunded mandate which, while a good idea theoretically, is heading towards financial insolvency. They're going to have to jump through some interesting hoops to continue funding it, which may well lead to more government debt, but certainly not a government windfall.

[DeepSpace9er]

3% a year?? That just barely covers inflation. One noes.. the stock market went DOWN.. that is unacceptable.. we need the government to INSURE the money 100%. So apparently they dont want people managing their own retirement accounts because they are too stupid and incompetent, and the market in which they work and depend on their livelyhood is just too risky for people to make money for their retirement. But really.. who does this benefit the most socializing retirement in social security.. which is a pyramid scheme by the way and illegal in the private sector? The government obviously. They get to confiscate more money through no tax breaks on people investing lots into their retirement. This will be sold as a way to 'protect the American people from volatilities in the market and to fix social security by increasing revenue by reducing tax breaks on the wealthy.' I mean, god forbid people actually KEEP the money they earn in this so called 'free society.'

1. Learn to use punctuation and capitalization.
2. While social security has it's issues, it's not a pyramid scheme benefiting the government. It's an underfunded mandate which, while a good idea theoretically, is heading towards financial insolvency. They're going to have to jump through some interesting hoops to continue funding it, which may well lead to more government debt, but certainly not a government windfall.

First of all its a bad idea theoretically because it relies on an ever increasing base of workers to support those receiving payments from it, second there is no 'social security lockbox' its basically just another name for a government tax with possible future benefit to the taxpayer, third of all its going broke and quickly as the baby boomers retire and there arent enough workers to cover them. The only way to keep it going the way its working now is to raise social security taxes or import enough workers to pass the problem onto future generations. Seems like the only time the government wants you to have any personal responsibility is with the IRS.

[Colonol Dekker]

ARgghh i need a synopsis of this thread, the first quote is too big to casually read and the graphs are........too graphic 

[Bob-san]

ARgghh i need a synopsis of this thread, the first quote is too big to casually read and the graphs are........too graphic 

Macroeconomics info on my graphs: the economy's taken a uniform hit and is back to levels around 2003/2004. The views are all 5-year histories, so again at worst we're back to 2003/2004 levels. Anyways--depending on how well/poorly you managed your retirement accounts, you could be doing fine or pretty poorly. When you're young--you're fine to be risky. If you're old, be VERY conservative, as government bonds are a much better investment with slow growth that typically matches inflation (when the economy is on alright ground). We're not doing THAT poorly when looking at industry numbers, but some are doing worse than others. The gas & oil industry is of course doing pretty well--their bottom point thusfar is much higher than other industries.

[Colonol Dekker]

ARgghh i need a synopsis of this thread, the first quote is too big to casually read and the graphs are........too graphic 

Macroeconomics etc...

Cheers

My pension,...........it's ok, for now.

[Kazan]

DS9er i would request that you stop posting partisan drivel and actually understand how the social security system is supposed to work before continuing to talk about it.

[BengalTiger]

Does that basically say they're trying to rescue the Social Security system again by seizing funds from the people that were actually smart enough to invest in non-taxable retirement funds? We've all seen how well Social Security has worked in the past -- and I'm already paying money into the damn system which I'll never see again -- , why can't the government just let me choose how to save my own money. Democrats are really starting to infuriate me.

Explain to me how putting your retirement funds in THIS was a good idea?

Here ya go:



Let's say someone begins working for his/her retirement at 25, and ends at 65.
Find any 40 years of DJIA's history where year 1 was lower than year 40.

Plus:

All workers would have 5 percent of their annual pay deducted from their paychecks and deposited to the GRA. They would still be paying Social Security and Medicare taxes, as would the employers. The GRA contribution would be shared equally by the worker and the employee. Employers no longer would be able to write off their contributions. Any capital gains would be taxable year-on-year.

And how much would you really gain from this fund, after tax?

Another justification for Ghilarducci’s plan is to eliminate investment risk. In her testimony, Ghilarducci said, “humans often lack the foresight, discipline, and investing skills required to sustain a savings plan.” She cited the 2004 HSBC global survey on the Future of Retirement, in which she claimed that “a third of Americans wanted the government to force them to save more for retirement.”

That leaves the other 2/3 not satisfied.

[Bob-san]

I'll be managing my own money and putting it in trusts with others as well. I want my money invested how I say--and so long as I'm <30, I'll probably be rather risky investing and hoping to make a few percent a day. If the feds DO go in and privatize these darn accounts, I'll happily invest MY money elsewhere. I'm part of the 2/3 that's willing to take the risk and invest in risky industries and won't be satisfied with the government trying to spoon-feed me.