As I wrote yesterday, the closer the election, the more the Democrats are coming out of their liberal shells. Barnie Frank, again filled with the gift to gab, gave us another inside look at the Democrats' agenda. How will they pay for the almost $1 trillion in new spending that they propose? The first way is to cut military spending by 25%. Does anyone else have concerns about cutting our military as Russia enters our waters to the south and Iran inches closer to nuclear weapons? I digress..that's a whole different post.
What's another way they could raise some money to fill up their social program coffers? How does seizing your 401k plans sound to you? Think it's far-fetched. Think again. Think Democrats aren't dumb enough to try it....we can only hope.
The Democrats are considering just this option should they take super majorities in both the House and Senate. Democrats have stated in recent months that they don't like tax-free deposits to 401k accounts. This is tax money that they could be using for other programs. According to US News & World Reports :
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."
Do you have a 401k? Do you make less than $250k a year? Well apparently, if they chose this option, Obama's promise not to raise taxes on those making less than that will go out the window. Your company will no longer have incentive to participate in matching funds. Instead of the potential to receive thousands from your employer matching fund, the government will be happy to give you a measly $600 per year. Whoo Hoo.....start celebrating.
Your taxable income will go up because your retirement savings deposits will no longer be tax deferred. So yes, not only will you be paying more income tax, but state tax, local tax.....should I continue? If workers through their 401k accounts are no longer investing in the stock market, exactly what will that do to our stock market? What will that do to our economy?
The government has done such a great job with social security. Do you really want them controlling the one retirement plan that you currently control?
UPDATE: I was originally going to add this tidbit to the post above, but left it out. Argentina recently did this exact same thing. They took control of all retirement plans, they have a different name for them. Guess what happened to their stock market right after it happened? IT LOST 26% IN ONE WEEK!