I cannot begin to describe how absolutely furious this idea makes me:
...all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
As if being a 33-year old facing the prospect of our current Social Security system wasn't bad enough. Why not trap a huge chunk of America's retirement savings in a mandatory system of incredibly low returns too?!
Unbelievable.
Posted by Eric Earling at October 23, 2008 08:14 AM | Email This3% would not even keep up with inflation! There is not enough money in the federal govt. to do everything for everyone. Not even close. Get conservatives in there, who will stop the forcing of banks to give loans to people who can't afford them and institute common sense. Democrats, from what I'm hearing, aren't even trying to reverse their poisonous policy of forcing banks to make mortgages to people who can't afford them! So how is that helping our current situation to improve? That's right--it's not. Put conservatives in charge now. No more brainless leftist schemes. It's killing the economy right now.
Posted by: Michele on October 23, 2008 08:49 AMAnyway, the specific idea that makes you "absolutely furious" belongs to a professor, not to McDermott. She testified before McDermott's committee. Isn't the purpose of committee hearings to hear from a variety of people?
Now maybe McDermott does want to do this. But I have no idea, and you provide no evidence to support that. You are fabricating McDermott's position and then attacking him for it.
The responsible thing for you to do is to provide some evidence for your headline, or change it.
Posted by: Bruce on October 23, 2008 08:52 AMCuba got change on 1959!
What a sad man that he has no faith in you and me to take care business.
It is just a 5% tax...they will never allow our estate to have the money back on our death and it will be regulated how much will come out.
And at that rate of return your money will double at 1/3 of the speed of the open markets.
Now do we see elections do have consequences.
The Black Market is going to be huge!
Can you imagine this is convicted felon demanding to lock up my money.
The article linked to from the link in the original post above does give some perspective.
http://www.workforce.com/section/00/article/25/83/58.php
an excerpt
The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
"I want to stop the federal subsidy of 401(k)s," Ghilarducci said in an interview. "401(k)s can continue to exist, but they won't have the benefit of the subsidy of the tax break."
Under the current 401(k) system, investors are charged relatively high retail fees, Ghilarducci said.
"I want to spend our nation's dollar for retirement security better. Everybody would now be covered" if the plan were adopted, Ghilarducci said.
She has been in contact with Miller and McDermott about her plan, and they are interested in pursuing it, she said.
"This [plan] certainly is intriguing," said Mike DeCesare, press secretary for McDermott.
"That is part of the discussion," he said.
While Miller stopped short of calling for Ghilarducci's plan at the hearing last week, he was clearly against continuing tax breaks as they currently exist.
Savings rate
"The savings rate isn't going up for the investment of $80 billion," he said. "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."
"From where I sit that's just crazy," said John Belluardo, president of Stewardship Financial Services Inc. in Tarrytown, New York. "A lot of people contribute to their 401(k)s because of the match of the employer," he said. Belluardo's firm does not manage assets directly.
Higher-income employers provide matching funds to employee plans so that they can qualify for tax benefits for their own defined-contribution plans, he said.
"If the tax deferral goes away, the employers have no reason to do the matches, which primarily help people in the lower income brackets," Belluardo said.
Posted by: Stuart Jenner on October 23, 2008 09:03 AMShe has been in contact with Miller and McDermott about her plan, and they are interested in pursuing it, she said.
"This [plan] certainly is intriguing," said Mike DeCesare, press secretary for McDermott.
And this is VASTLY different from Bush's plan. Bush was not eliminating the tax break on 401k's like this proposal does.
Posted by: Palouse on October 23, 2008 09:05 AMTaking away the tax exemptions for 401k's would be a disaster. An even bigger disaster would be to force people into government controlled retirement accounts. How long before the gov't decides to take those away too? Or, how long before the gov't decides it needs to 'borrow' that money to cover their ever burgeoning deficits? The social security trust fund is full of worthless IOU's right now for that very reason.
Remember that a government that can do anything for you can also do anything TO you.
Posted by: Kato on October 23, 2008 09:07 AM(John) your right.. soon as they got this going they would use it, just like S/S.
And we have seen the great job with that one.
Posted by: Army Medic/Vet on October 23, 2008 09:22 AMI can get a 2 year CD from my credit union that pays 4%
Watch them exempt the Federal government's retirement systems from this, because they don't want to lose their own money or p*ss off the bureaucrats...
Posted by: arby on October 23, 2008 09:23 AMThat is a hell of a lot better than investing in the stock market in the Bush economy, which would be a NEGATIVE 4% annual return BEFORE adjusting for inflation, and about a NEGATIVE 6% annual return AFTER adjusting for inflation.
Some of the stock market investments that the Republicans would like for social security have actually had returns of NEGATIVE 100%.
Posted by: Richard Pope on October 23, 2008 10:02 AMAt that hearing, the director of the Congressional Budget Office, Peter Orszag, testified that some $2 trillion in retirement savings has been lost over the past 15 months.
+++++++++++++++++++++++++++++++++++++++++++
Now what party created the melt down of these 401K. Try dem's with the Freddie & Fannie mess.
But you won't talk about that will you!
I love it, the gov makes the mess, blames it on someone else and say's hey we can fix the mess. Rightttttttttt!
Posted by: Army Medic/Vet on October 23, 2008 10:06 AMGo back to HA. By they, are they still in biz? Let me guess, that's Bush's fault too.
Posted by: Army Medic/Vet on October 23, 2008 12:10 PMIf what you're referring to was the "voluntary" diversion of a percentage of your SSI contribution into the stock market, then you are flat out lying and or uninformed. At no time did Bush propose a "Requirement" of individuals to take part in this option. It was simply an option they could have exercised to control where THEIR money went.
Best of all why is this not optional?
I think this is great idea for those that lack the responsibility to build a nest egg. Please sign up but leave me alone.
I realize the idea behind this is born of rage and jealousy at others turned outwards from one's own failings and therefore one's misery must be all's rather than asking someone who is successful how you could be as well.
See socialism sounds good but it can only exist with the trappings of an entire police state. All I heard about was your stoooopid library books would be tracked but not a squawk at this? Leftist are all frauds destined to destroy a nation if we let them.
Posted by: Col. Hogan on October 23, 2008 01:30 PM
NO MORE OF THIS NONSENSE>
Posted by: Michele on October 23, 2008 02:11 PMStones and glass houses.
Posted by: westello on October 23, 2008 02:56 PMA NEW WELFARE STATE: BAM'S THREAT TO SOCIAL SECURITY
House Dems Contemplating the Elimination of 401(K) Tax Breaks
Democrats to kill 401(k)s for ... privatized Social Security?
The Democrats want to end the private retirement system that has allowed Americans to become a vast investor class and put them back in thrall of the federal government. This is nothing more than a second welfare system that would sit on top of the crumbling Social Security entitlement. It would leave the American working and middle classes with no retirement option other than a government handout. If the Democrats control both Congress and the White House, kiss your 401(k)s goodbye, and get into the bread lines first before the crowd arrives.Posted by: Ragnar Danneskjold on October 23, 2008 03:25 PM
IF you people elect barry hussein obama and his rat cohorts, expect the same.....money you've worked hard for all your life will be considered a little rainy day fund for the govt....
and what Dirthead is wanting is that our 401 tax break for saving for retirement be taken away, the money placed in an account with a bottomless pit like Ss, and WHOOF...its gone just like SS...
you idiot people ...you silly, idiot people...
but you just keep voting those democrats in....yep, they have done so much for our country...look what barney did for his fannie may gay boyfriend....and fannie turned out so well.....
Posted by: lee on October 23, 2008 04:54 PMhttp://www.usnews.com/blogs/capital-commerce/2008/10/23/would-obama-dems-kill-401k-plans.html
Posted by: G Jiggy on October 23, 2008 04:56 PMSounds like the $40,000 Joe the plumber is going to get his faucet reemed!
Posted by: gs on October 23, 2008 06:18 PMNo more nonsense? This from the party that wanted to privatize Social Security and let people "invest" part of it into...Wall Street. And where would we be now if that had gone into play?
Stones and glass houses.
I'd be up about 18% over the last decade, as opposed to not even breaking even with SSI. And my retirement funds would carry to my estate, unlike SSI.
See, look beyond 2-3 years. Look at 10 years, or 20 years. Ten years ago, the DJIA was lower than it is today. Go back 20 years, the DJIA has quadrupled - even with the big drop from the Slavery Party's FRE/FMC nightmare. That's a 7.2% annualized return.
In fact, since I started working 25 years ago, the DJIA has increased by a factor if 8. That's 3 triplings, and the old "rule of 72" says that's around 8 years per doubling, meaning about a 9% annual return.
You Slavery Party hacks have no vision. The MTV generation come to life. The only thing that matters is the last 6 months, and the next 6 months. Can't look back 20 years, can't look forward 20 years. No vision, no foundation.
I wish I could invest my SSI into the stock market. In fact, I'd be willing to let the last 25 years of SSI deposits go away - completely, the Government can keep them - if I could only self-direct what I do in the future.
For those who you will trot out as "not savvy investors", how about eliminating SSI and giving them a retirement plan like Federal employees, or the Congress?
SSI is a rip-off, will never pay back what I've put into it, and goes away when I die - it's not portable. Sure, let's beef up a plan that's going bankrupt - even Congress acknowledges that it needs considerable rework in funding just to stay solvent - and give people the smallest return they could get.
Yes, 3% is so much better than even the 4.28% you can get on a CD at BECU. Heck, you'd be better off investing in Boeing's Credit Union than SSI!
Posted by: Shanghai Dan on October 23, 2008 06:54 PMA lot of the loss in the market is because of fear of Obama's taxes. Predominantly the capital gains tax.
Yes, the economy is bad - and lots of people are scared - because of That One's plans for taxation and redistribution. Considering that his plans will cut the economy by $320 BILLION, and cost the average family $2,600 per year as compared to McCain's plans, tax-and-spend Obama is ruining the economy.
Posted by: Shanghai Dan on October 23, 2008 09:50 PM