I guess if they cannot stop the bankruptacy of social security, the only way is to put everyone in the same state..





Would Obama, Dems Kill 401(k) Plans? - Capital Commerce (usnews.com)

Would Obama, Dems Kill 401(k) Plans?
October 23, 2008 10:47 AM ET | James Pethokoukis | Permanent Link | Print
I hate to use the "S" word, but the American government would never do something as, well, socialist as seize private pension funds, right? This is exactly what cash-strapped Argentina just did in the name of protecting workers' retirement accounts (Efharisto, Fausta's Blog). Now, even Uncle Sam isn't that stupid, but some Democrats might try something almost as loopy: kill 401(k) plans.

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."

A few respectful observations:

1) McDermott is right when he says the savings rate isn't going up. But the savings rate doesn't include gains to money you invest in the stock market. It ignores the buildup of net worth. (If you bought a share of XYZ Corp. in January at $100, for instance, and its value doubled by December, the savings rate measure would still value that investment at $100. In short, the savings rate is a phony number.)

2) So based partly on the above faulty logic, the $4.5 trillion, as of the start of the year, invested in 401(k) plans doesn't count as savings.

3) Ghilarducci would have workers abandon the stock market right at the bottom of the market. A stupid idea, according to Warren Buffett: "I don't like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I'll follow the lead of a restaurant that opened in an empty bank building and then advertised: 'Put your mouth where your money was.' Today my money and my mouth both say equities."

4) Ghilarducci would offer a lousy 3 percent return. The long-run return of the stock market, adjusted for inflation, is more like 7 percent. Look at it this way: Ten thousand dollars growing at 3 percent a year for 40 years leaves you with roughly $22,000. But $10,000 growing at 7 percent a year for 40 years leaves you with $150,000. That is a high price to pay for what Ghilarducci describes as the removal of "a source of financial anxiety and...fruitless discussions with brokers and financial sales agents, who are also desperate for more fees and are often wrong about markets." Please, I'll take a bit of worry for an additional $128,000.

5) What effect would this plan have on an already battered stock market? Well, I would imagine it would send it even lower, sticking a shiv into the portfolios of everyone who didn't jump aboard. But I am sure the Chinese would love to jump in and buy all our cheap stocks to fund the retirement of their citizens.

My bottom line: If you believe in the long-run dynamism of the American economy, then you have to believe in the stock market. Listen to superinvestor Buffett, not the prof from the New School.

The people advocating 401K retirement accounts the most are the billionaire corporations like Halliburton because they are most likely to get 401K investment. Our recent experience shows how risky they are. Then you have to think about all of those Bush Republicans advocating privatising social security and have individuals chosing plan A, B, C, D, etc... for investing their SS account. Where would they be now if that had happened.

The 401K accounts should have never been vulnerable in the high risk mortgages and they were. Which means the companies managing the 401k accounts need strong regulation or the option for 401K accounts eliminated.

FDIC insured self managed accounts setting up CD's to come due according to a rotating schedule right now seems to be the best option for private retirement funds.

__________________
National Debt =

Hmmmmm....my wife has a 401K at it is performing fine. Of course we performed due diligence prior to making the selection of plans and it is well balanced. CD's underperform. Taking into account inflation, you might as well stuff money into a mattress.

__________________
The law perverted! And the police powers of the state perverted along with it! The law, I say, not only turned from its proper purpose but made to follow an entirely contrary purpose! The law become the weapon of every kind of greed! Instead of checking crime, the law itself guilty of the evils it is supposed to punish! - Frederick Bastiat

Just think, we can break down Bush's policies into two groups. Those we took and it killed us and those we didn't which would have killed us. Hmmmm, come to think about it, that's only one group, the group of clusterf**k.

__________________
I'm Proud I never Voted For Bush!



PAT PAULSEN FOR PRESIDENT

Whose money is it? Are there property rights in the US or does the Government own everything?

FDIC only covers $ 100,000.

Sorry. this is a cover up by the Democrats to hide their mismanagement of Social Security.

Republicans tried to reform the bankrupt program.. but Democrats want to use it as an excuse to grab more money and power.

Bush is not stealing 401 K's .. Democrats are.

NEWSFLASH.. BUSH will not be president in January. Who will you have to blame for the incompetence of leftist Marxists that you voted for? HUH?

There seems to be a lot of mouth pieces on this forum.

__________________
No party holds the privilege of dictating to me how I shall vote. If loyalty to party is a form of patriotism, I am no patriot. If there is any valuable difference between a monarchist and an American, it lies in the theory that the American can decide for himself what is patriotic and what isn't. I claim that difference. I am the only person in the sixty millions that is privileged to dictate my patriotism.
- Mark Twain, a Biography

Yes, this broke a few weeks ago. It is very alarming, but I don't know that this will be able to pass. Millions of people in this country have 401ks and I don't think most will take too kindly to this idea of the government taking ownership of them, particularly considering how they have botched Social Security. It is something to keep an eye on, though.

__________________
Carolina Politics Online

Sam

Millions in this country were also against the Iraq war, the bailout, and the Patriot Acts, but those passing the legislation didn't care. I don't see how it would be any different if they decide to seize 401k plans or change the rules governing them.

__________________


"When the people fear their government, there is tyranny. When the government fears the people, there is liberty." Thomas Jefferson

Walter Mondale: "George Bush doesn't have the manhood to apologize." George Bush: "Well, on the manhood thing, I'll put mine up against his any time."

FDIC insures accounts at $100,000 per person per bank. So sign up for the accounts with a spouse and you are insured to $200,000. Or you sign up for multiple accounts, all at $100,000. Or you sign up for one account per FDIC insured bank at $100,000.

Botching Social Security? Guess where we would be right now if everyone had bought into the Bush privatization plan a couple of years ago. SS is at the point of impasse with the situation changing to less people paying into SS than people drawing from it. That situation still needs to be resolved.

__________________
National Debt =