Friday, October 24, 2008
Democrats in the House are thinking over killing 401K's and replacing it with a government system.
James Pethokoukis at US News and World Report writes:
House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created "guaranteed retirement accounts" for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, said that since "the savings rate isn't going up for the investment of $80 billion [in 401(k) tax breaks], 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."
So instead of allowing people to choose how their Social Security dollars are invested, the Democratic left wants to take our private investments and nationalize them.
Where does it end?
Labels: democrats, eliminate 401Ks, liberals, socialism
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1 comments:
I find it incredible that McDermott, Chairman of the House Ways and Means Committee, views letting 401(k) contributors temporarily keep $80B dollars that belongs to us as an investment by the Government. The viewpoint is perversely reversed. These are our funds.....not something the Government is giving us as a gift.
Let's also remember that 401(k) contributions are tax deferred NOT tax free. Does anyone still believe, if they ever did believe, that they will be in a lower tax bracket when they retire......a rhetorical question.
Seems we have a conundrum developing where some in Government are working on getting the populace to save more while others such as Messrs. Bernanke and Paulson are trying to get us to spend more freely. As I mentioned last night, when many millions of boomers can't afford to retire, the bailout will be in tera-dollars not the pocket change giga-dollars that have been authorized to date for the banking system bailout.
BTW, a number of countries have such pension systems as mentioned in the original post. Singapore has their Provident Fund, Canada has similar.
Ken
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