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The Government is Looking to Raid Your Retirement

Back in October, 2008, I wrote a post about how House Democrats were trying to find a way to nationalize the American people's retirement accounts by requiring that all Americans "invest" 5% of their income into guarranteed retirement account that would be run by the Social Security Administration instead of private 401(k) accounts and IRAs.

It seems the federal government is taking action to do just that. Here are the details from Investor's Business Daily:

BusinessWeek reports that the Treasury and Labor departments are asking for public comment on "the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams."

In plain English, the idea is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years.

They will tell you that you are "investing" your money in U.S. Treasury bonds. But they will use your money immediately to pay for their unprecedented trillion-dollar budget deficits, leaving nothing to back up their political promises, just as they have raided the Social Security trust funds.

This "conversion" may start out as an optional choice, though you are already free to buy Treasury bonds whenever you want. But as Karl Denninger of the Market Ticker Web site reports: "'Choices' have a funny way of turning into mandates, and this looks to me like a raw admission that Treasury knows it will not be able to sell its debt in the open market -- so they will effectively tax you by forcing your 'retirement' money to buy them."

Moreover, benefits based on Treasury bond interest rates may be woefully inadequate compensation for your years of savings. As Denninger adds, "What's even worse is that the government has intentionally suppressed Treasury yields during this crisis (and will keep doing so by various means, including manipulating the CPI inflation index) so as to guarantee that you lose over time compared to actual purchasing power."

This proposal follows hearings held last fall by House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., of the Ways and Means Committee focusing on "redirecting (IRA and 401k) tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute," as reported by InvestmentNews.com.

The hearings examined a proposal from professor Teresa Ghilarducci of the New School for Social Research in New York to give all workers "a $600 annual inflation-adjusted subsidy from the U.S. government" in return for requiring workers "to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration."

So far we have had a government take over of two automobile companies, bank bailouts, and the nationalization of the student loan program. Today we learned that the Democrats are not focused on jobs as they and the president said they were, but used the discussion of jobs as a ruse to distract in order to push through a government take over of the health care industry through reconciliation. And now we are seeing signs that the Democrats are working on a government take over of private retirement accounts.

Ever since Barack Obama was elected, we've seen larger and larger chunks of American life being gobbled up by government. Today's Democrats are nothing more than thug socialists who can't stand that there are still large swaths of the American people still living independently from government largesse and control. Now they are using what remaining power they have in Congress to change that. If the government takes over health care, college student loans, and retirement savings then no one, no matter how wealthy, can escape the thumb of big government.

John at Power Line thinks that the attempt to nationalize retirement accounts will receive a lot of pushback from a politically powerful Democratic constituency: lawyers. John argues that there are many attorneys in America who have saved a great deal of wealth in their private retirement accounts and will not take kindly to having the government confiscate it in the name of "protecting" it.

Nonetheless, John tells us that he knows someone on Wall Street who has anticipated that the Obama administration might try to take over retirement accounts and has planned accordingly:

Earlier today I learned that a relative on Wall Street has stopped accumulating funds in his retirement accounts precisely because he thinks they may be confiscated by the Obama administration. Instead, he is acquiring untraceable, tangible assets--gold and silver--that the government won't be able to steal without a physical search of his property.

That's not good for the economy, of course. When citizens who have the ability to invest in our economy don't dare do so, for fear that their savings will be stolen by the government, we are reverting to an earlier and far poorer economic era. But that, apparently, is what the Obama administration wants.

Each new Obama policy initiative seems to bear that out.


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Comments (34)

The Government can get scre... (Below threshold)
914:

The Government can get screwed! Especially YOU Barry!!

There really are no limits ... (Below threshold)
klrtz1:

There really are no limits anymore to what Democrats will do.

Oh, save us Party of NO!

There is no hope with chang... (Below threshold)
poptoy:

There is no hope with change like this.

No doubt the Democrats woul... (Below threshold)

No doubt the Democrats would love to do this, but I think that this would be going too far for any of their supporters except the most rabid socialists and union thugs. If they try this people will be marching on Washington with pitchforks and torches.

evil otto. Dont pu... (Below threshold)
retired military:

evil otto.

Dont put anything past them. Especially after Nov. Look for Congress to be in session after Nov elections to pass as much junk as possible using reconciliation as they can. After all the 70 or so dems who are going to get bounced have nothing to lose and the ones who didnt get bounced are either safe for another 2 years or in districts where they dont have to worry about reelection that much.

I still expect dingy harry to try to add 2 more seats to the supreme court especially after he loses his seat.0

BTW I expect that ... (Below threshold)
retired military:

BTW

I expect that a 6 month or so experiment with doing away with the filibuster will be conducted soon.

After 6 months (and the dems lose congress) it will be declared a failure (but hey dems got their agenda through) and it will revert back to 60 votes needed for cloture just in time for the republicans to become the majority.

Never never underestimate the depths to which they will sink.

retired military,<... (Below threshold)

retired military,

Dont put anything past them. Especially after Nov. Look for Congress to be in session after Nov elections to pass as much junk as possible using reconciliation as they can.

Oh, I wouldn't put it past them to do that... I meant there may well be actual physical violence if they try, whether it be now or after their defeat in November. This is simply too big, too brazen, and affects too many people, even their own supporters.

TO do away with the filibus... (Below threshold)
Ryan:

TO do away with the filibuster they need 67 votes. Where are they going to get 67 votes?

Ryan: "TO do away with t... (Below threshold)
Justrand:

Ryan: "TO do away with the filibuster they need 67 votes. Where are they going to get 67 votes?"

Ryan, you are living in the past! Yes, those are the Senate "rules"...but the Dems view those "rules" more as "guidelines", or speed-bumps if you prefer.

The Dems will do what they please, and assume (rightly) that the media will spin it for them to make it palatable.

Lincoln's "government OF the people" is fast becoming "government AGAINST the people".

As Thomas Paine said: "If there must be trouble let it come in my time, so that my child may have peace"

So Obama wants to make ever... (Below threshold)
jim m:

So Obama wants to make every man, woman and child entirely dependent upon the federal government for their subsistence.

This is not news. Obama will continue to make various attempts to destroy the freedom of Americans and force them to wait beggar-like upon the largess of the government.

When you can control who gets to eat and who gets health-care you eliminate all meaningful opposition.

SOYLENT GREEN IS PEOPLE!!</... (Below threshold)
bobdog:

SOYLENT GREEN IS PEOPLE!!

What could possibly go wron... (Below threshold)
JLawson:

What could possibly go wrong with the government taking 5%?

Well, take a look at the Treasury Direct rates and terms for I-series savings bonds.

You won't lose money in the long run, but you're looking at a fixed rate that can go down to 0%, and an inflation rate (the total is the inflation rate plus fixed rate) that's been as low as -2.78%. Effectively the combined rate would be 0% in that case.

Right now the composite rate is 3.36%, which is better than any bank will give you on a savings account, but you can find mutual funds that'll give you 10% or better over the last 5 years.

Frankly, after Cash 4 Clunkers and the other Washington follies, I'm not terribly trusting of their money management skills. I'll keep my 401k intact, thank you very much!

I stopped investing in stoc... (Below threshold)
Gmac:

I stopped investing in stocks and bonds 7 years ago after watching real money evaporate. I did start investing in tangible assets that I can manage on my own.

If the current administration proposes and then moves forward with an asinine idea like this some of my tangible assets will serve me in good stead as I help correct the attitude that we are served and not governed by government.

Evil Otto: One would think... (Below threshold)
KJB:

Evil Otto: One would think it ".....would be going too far for any of their supporters....", but Barry will just exempt those groups (or states)from participation in this program.

One thing that the governme... (Below threshold)
_Mike_:

One thing that the government could dois allow people to convert their tax-deferred retirement accounts into tax-exempt accounts which would result in a one time taxable event; thus providing a short-term bump in tax receipts - Oh wait, they already did that to create the 'surplus' in the late 90's.

Why is this a suprise? The... (Below threshold)
Matt:

Why is this a suprise? The government, regardless of who is in charge needs more and more money. The corporate interests that have the most influence on the overnment want more and more money.

I have long expect the federal government to raid any money held in electronic banking systems. A one time tax of even a small percentage of everyone's checking and savings would reap huge dividends.

I think this will be floated as a trial balloon and after the squawking has died down they'll back off and quietly require the investment companies to buy a certain percentage of treasury bonds, not the individuals.

It will also go down as a class warfare issue. A significant portion of the voters don't have 401's or IRA's etc. They will be more than happy to stick it to the "rich" people that do in order to save their welfare/social secuity/medicare benefits.

Our democracy was doomed when the people realized they could vote themselves money from the public treasury.

Everything the feds touch t... (Below threshold)
Wildman:

Everything the feds touch turns to S**t. With a budget at 3 trillion a year, that works out to be 10K annually for every man, woman and child in america. And for all that money, we get nothing but a bunch of petty officials telling us how to run our lives. All for our benefit of course.

It is clear to me now that ... (Below threshold)
BOstinks2:

It is clear to me now that the politics presently in the D.C is totally following a communist agenda. this retirement proposal will go the way of social security... BANKRUPT.
this communist Congress will squander these deposits as they have done to give back to their coconspirators and unions under the guise as to promote "the social community good and justice." Its just another effort to steal american taxpayers money for no benefit or return to taxpayers.

Oh Steve Green, et al, wher... (Below threshold)
epador:

Oh Steve Green, et al, where are you to spin this dreadful story into unicorns and rainbows for us all?

How many 401K's have been c... (Below threshold)
TexBob:

How many 401K's have been cashed out early to use pay mortgages and survive unemployment? Loads of them.

CONgrASS has stolen all of the social security surplus and now they are after private savings.

Epador beat me to it. I've... (Below threshold)
GarandFan:

Epador beat me to it. I've been waiting for Stevie, SAUD (where'd he go?), bryanD, et all to wade in with their Obamanomics theories about how this theft would be good for the country and the people. After all, the government did such a swell job managing Social Security and Medicare. What could possibly go wrong?

The Democrat... (Below threshold)
The Democrats Are Looking to Raid Your Retirement
FTFY.

And even then, this was a news flash 30 years ago -- if not longer.

Will it ever end. Why can'... (Below threshold)
Don:

Will it ever end. Why can't they just sit down and do the right thing for all of us.

If this should happen, just... (Below threshold)
OLDPUPPYMAX:

If this should happen, just depend on the exclusion of lawyers and union members from the confiscation parade. Is everybody stocked up on "powder and ball?"

I am sure that with nothing... (Below threshold)
retired military:

I am sure that with nothing to lose Harry Reid will try to circumvent whatever "rules" there are to bring about the liberal agenda.

Barry's Hero FDR tried to change the size of the supreme court. I wont put it past Barry to do the same.

In addition, as for changing the rules of the senate I am sure that most things can be gotten around by using the nuclear option like they are trying to do with the health care bill.

Immigration reform? Hey it is a budgetary item so therefore 51 votes are needed. Barry gives all illegal immigrants a full pardon and Harry Reid gets to make them citizens via budgetary concerns.

Number of supreme court justices. hey they have to be paid for out of budgetary concerns and plus it would add more diviserity to the court. (look for Hillary to get the next open nomination - if she doesnt take it count on her to run in 2012).

And if Stupid Snowe or Clueless Collins get heat from the tea party folks look for them to get snooty and side with dems.

Steve G and his liberal tro... (Below threshold)
jim m:

Steve G and his liberal troll friends would tell us that the average American is an imbecile and cannot be trusted with his own savings, therefore the wise and beneficent government must step in to manage his retirement savings. Only then will the average American be able to realize the American dream.

Of course for the most of us the dream is working hard and being a success, not living out our lives in government owned cinder-block apartment buildings, eating our government ration of bread and watching government run TV, while we wait the requisite 15 years to get a government manufactured automobile.

I can't wait for our East German Paradise to arrive here.

"Oh Steve Green, et al, ... (Below threshold)
JLawson:

"Oh Steve Green, et al, where are you to spin this dreadful story into unicorns and rainbows for us all?"

He's probably waiting for the latest talking points to hit his email, Epador.

You know, it's funny - when Bush suggested putting 1 to 2 percent of a person's Social Security into the stock market, the left quickly went ballistic. Now the left suggests mandating 5% into government-backed securities - why am I expecting a cricket-filled silence?

And the Ponzi scheme grows.... (Below threshold)
tfhr:

And the Ponzi scheme grows....

Didn't Bernie Madoff go to jail when he made off with the seed money for all those promised returns that could never be realized?

A bit of a <a href="http:/... (Below threshold)
Mac Lorry:

A bit of a history lesson for those who want to buy gold.

Shortly after taking office sixteen years later, Franklin Delano Roosevelt signed Executive Order 6102 into law, prohibiting the "hoarding" of gold. Under this executive order, Americans were prohibited from owning more than $100 worth of gold coins, and all "hoarders" (i.e. people who owned more than $100 worth of gold) were forced, by law, to sell their "excess" gold to the government at the prevailing price of $20.67 per ounce.

Then, once the government had all the gold, FDR revalued the dollar relative to gold so that gold was now worth $35 an ounce. By simple decree, the government had thereby robbed millions of American citizens at a rate of $14.33 per ounce of confiscated gold, which is why most historians agree that the Gold Confiscation of 1933 is the single most draconian economic act in the history of the United States.

So some people think they can just hide their gold. From Kim's piece.

Instead, he is acquiring untraceable, tangible assets--gold and silver--that the government won't be able to steal without a physical search of his property.

OK, so now you have this horde of ILLEGAL gold and at some point you need to trade it for other goods or sell it so that you can buy things. The only market is the black market and besides the risk of getting caught you also run the risk of that the very people you deal with will steal your gold. After all they are criminals and they know you can't go to the police either.

There's no physical asset you can buy that the government can't confiscate if the powers that be decide to act. The only logical course is to ban together with others and exercise our combined political power to stop such a government from existing in the first place. We are all in the same boat.

When Obama monetizes the de... (Below threshold)
jim m:

When Obama monetizes the debt he will make FDR look like a piker.

Why would he do such a thing? Because he will have no other choice but to print the money he needs to fund his programs. The Chinese are dumping US bonds and will not likely buy much more when they are selling - so his ability to sell more debt is growing extremely limited. You can't tax more money out of a population that isn't earning anything because they are increasingly unemployed.

Plus, he ultimately would find it convenient to bankrupt every American in order to force them into dependency upon the government. If you can't spread the wealth around you might as well spread the poverty.

Matt : *"A significant port... (Below threshold)
Les Nessman:

Matt : *"A significant portion of the voters don't have 401's or IRA's etc. They will be more than happy to stick it to the "rich" people that do in order to save their welfare/social secuity/medicare benefits."*

Yep. As I said before on other web sites, maybe 5 or 10 years ago:

-'I'm putting as much as I can into my 401k provided through my job. I do this by sacrificing things I want right now.
However, I think that in 40 years, SS will be so eff'ed up that the politicians will look around and say, "Hey, look at how much Les has saved! He's got a pile of retirement money. He has more than 'enough'. Let's reduce or eliminate his SS benefits while continuing to pay people who didn't plan ahead." And so all that money that I paid in for all that time will be wasted. Plus, since I will (hopefully) have a nice nest egg saved up, I think there will be a significant tax increase on us 'rich' retirees.
I will not be surprised for events to unfold this way; in fact I mostly expect it. But, knowing myself, I will still be mightily pissed; possibly to the point of doing something 'unfortunate' in my geezer years.
You have all been warned.'-

Obviously, I was wildly optimistic about them waiting '40 years' to screw us over.

I fear that if this comes to pass, there will be real pitchforks and torches -and worse, much much worse. They had better tread lightly here or there will be Hell to pay.

JLawson: "You know, it's fu... (Below threshold)
Les Nessman:

JLawson: "You know, it's funny - when Bush suggested putting 1 to 2 percent of a person's Social Security into the stock market, the left quickly went ballistic."

And that was VOLUNTARY! Bush merely proposed that only those who wanted to could put 1 or 2 percent in the stock market. If you didn't want to, you didn't have to. Yet the Dems/Lefties still went apeshit over it.

Actually I just changed job... (Below threshold)
retired military:

Actually I just changed jobs. I cashed out my 401k and paid off debts.

yep i will take a tax hit but I balance that against interest I would be paying instead.

Plus I figure that interest rates will rise soon and I dont want to owe anything but fixed rate debt (morgage and car) when it does.

Funny how you know how the ... (Below threshold)
retired military:

Funny how you know how the left thinks.

I said earlier that the dems would try to use reconcilliation for all kinds of things.

I check one of the sites I normally go to and look waht I just found.

http://www.breitbart.tv/sen-sanders-reconciliation-on-healthcare-launches-far-left-legislation-landslide/

Sen. Sanders: Reconciliation on Healthcare Can Launch Far Left Legislation Landslide




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