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Congress mulls major 401(k) changes (The Obama Retirement Ripoff of 2009)
Investment News ^ | 100708 | Sara Hansard

Posted on 10/09/2008 11:25:48 PM PDT by Fred

A wide range of sweeping changes to the 401(k) system were proposed Tuesday at a hearing on how the market crisis has devastated retirement savings plans.

Chief among them was eliminating $80 billion in tax savings for higher-income people enrolled in 401(k) retirement savings plans.

This was suggested by the chairman of the House Committee on Education and Labor.

“With respect to the 401(k), it appears to be a plan that is not really well-devised for the changes in the market,” Rep. George Miller, D-Calif., said.

“We’ve invested $80 billion into subsidizing this activity,” he said, referring to tax breaks allowed for 401(k) contributions and savings.

With savings rates going down, “what do we have to start to think about in Congress of whether or not we want to continue and invest that $80 billion for a policy that is not generating what we … say it should?” Mr. Miller said.

Congress should let workers trade their 401(k) assets for guaranteed retirement accounts made up of government bonds, suggested Teresa Ghilarducci, an economics professor at The New School for Social Research in New York.

When workers collected Social Security, the guaranteed retirement account would pay an inflation-adjusted annuity under her plan.

“The way the government now encourages 401(k) plans is to spend $80 billion in tax breaks,” which goes to the highest-income earners, Ms. Ghilarducci said.

That simply results in transferring money from taxed savings accounts to untaxed accounts, she said.

“If we implement automatic [individual retirement accounts] or if we expand the 401(k) system, all we’re doing is adding to this inefficiency,” Ms. Ghilarducci said.

Rep. Robert Andrews, D-N.J., raised the issue of which investment advisers are allowed to offer workers investment advice.

The Department of Labor is considering “loopholes” that would allow advisers to offer “conflicted investment advice if the advisers work for subsidiaries of financial services companies that sell the investments,” he said.

With American workers facing $2 trillion in losses from retirement plans over the past year and Democrats expected to gain seats in the House and the Senate, actions being contemplated by the committee are an important harbinger of what could come out of Congress next year.


TOPICS: Politics/Elections
KEYWORDS: 110th; 401k; financialcrisis; ira; mccain; obama; retirement; retirementsavings; rothira; wallstreet
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Fellow freepers, can someone get this to the McCain dudes. If Obozo wins, we are going to lose our 401k's. They will be taxed away and or used to shore-up social security. These thieves will say it is the 'fair' thing to do...
1 posted on 10/09/2008 11:25:49 PM PDT by Fred
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To: Fred

I feel like I’ve entered the Bizarro World. So many avenues of attack against Obama and yet none of them seem to gain traction.


2 posted on 10/09/2008 11:29:01 PM PDT by Azzurri
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To: Fred

Marxism plain and simple


3 posted on 10/09/2008 11:30:21 PM PDT by valkyry1 (McCain/Palin 2008)
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To: Fred

I honeslty don’t know at this point where McCain’s position would be on this. No Clue.

Social Security votes Vs. 401k votes.


4 posted on 10/09/2008 11:36:12 PM PDT by BGHater (The GOP, the new DNC.)
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To: Fred
for higher-income people

A portion of the American voting public are about to admit to us through their votes that, after years of liberal-controlled schooling, they don't give a crap about all that "justice" and "what this country was founded for" junk and just want the government to redistribute wealth.

I usually brush a lot of this stuff off, but this time it's scary.

5 posted on 10/09/2008 11:36:28 PM PDT by Darkwolf377 (:()
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To: Fred

It would make more sense to take away the tax break going into the 401ks. They can’t seize the money that is already there and exchange it for gov’t bonds. They just can’t do that. It’s not their money and it would be very difficult to tax it at the rate that it would have been going into the 401 k. My husband has been paying into his for as long as they have been in existence and before that, it was an ESOP plan, which was after taxes. How are they going to tell the difference?


6 posted on 10/09/2008 11:37:50 PM PDT by Eva (CHANGE- the post modern euphemism for Marxist revolution.)
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To: All

So, effectively, they want to move everyone to compulsorily fund government by buying the bonds and ensure noone gets a fair market return, but a pittance of 3-4% barely breaking inflation ?

If they do this I’m moving whatever little I have offshore. At that point it’ll be cost effective.


7 posted on 10/09/2008 11:45:25 PM PDT by farlander (Try not to wear milk bone underwear - it's a dog eat dog financial world)
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To: Fred

“We’ve invested $80 billion into subsidizing this activity,” he said, referring to tax breaks allowed for 401(k) contributions and savings.”

You see, when you get a “tax break” then that was really money that belonged to Congress and Congress should have gotten that money for its wealth and income redistribution schemes. So, all you 401K cheaters of Congress rightful revenue, you WILL give it back!!! /sarc


8 posted on 10/09/2008 11:49:16 PM PDT by Wuli
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To: farlander

I think I heard that Rangel had gotten a bill through saying that you can’t take your money offshore - you have to leave 50 per cent of it behind.


9 posted on 10/09/2008 11:53:15 PM PDT by Anima Mundi
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To: Fred

Frickin Marxist Democrats are sending this country down the tubes.


10 posted on 10/09/2008 11:54:29 PM PDT by Jim Robinson
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To: Wuli

It is madness.


11 posted on 10/09/2008 11:54:36 PM PDT by Fred (The Democrat Party is the Nadir of Nihilism)
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To: Anima Mundi

Whatever. I’ll stick it my underwear if I have to.

Tho that is not true. I can wire however much I wanna wire anywhere I want to.


12 posted on 10/09/2008 11:55:53 PM PDT by farlander (Try not to wear milk bone underwear - it's a dog eat dog financial world)
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To: farlander

And they’ll tax that too.


13 posted on 10/09/2008 11:58:54 PM PDT by L,TOWM (Mcwhatshisname/PALIN, '08!!!)
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To: Jim Robinson
"Frickin Marxist Democrats"

Fascists is the word you were looking for.

14 posted on 10/09/2008 11:59:54 PM PDT by Jet Jaguar (Who would the terrorists vote for?)
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To: Fred

“Congress should let workers trade their 401(k) assets for guaranteed retirement accounts made up of government bonds, suggested Teresa Ghilarducci, an economics professor at The New School for Social Research in New York.”

Hahahhahaa...these people are insane! Yeah, just what I want to do, trade my investments for the toxic US junk they just bought up from wall street. I so trust US gov’t bonds now...unbelievable the depths these criminals will go to to steal from us now. If the rats win and they come after all we have left, sounds like we need another Boston Tea Party to get things rolling.


15 posted on 10/09/2008 11:59:54 PM PDT by Wolfhound77
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To: Darkwolf377

At the moment, it sure looks like you’re right.

I have long held what my grandfather taught me, ‘Bravery is the ability to control ones fears.’ Gramps was right, but it is becoming much more difficult to keep those fears in check.

Perhaps it’s because most everything is failing, we are all being attacked on so many fronts and the enemy is from within. With our leadership so corrupted and protected, it’s going to be tough times for a long time, I’m afraid.

As with anything, there is a breaking point. I wonder if those that are tearing our country apart have considered that when justice comes for them, it will give no quarter.


16 posted on 10/10/2008 12:00:09 AM PDT by Gator113 ("Noli nothis permittere te terere.")
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To: Fred
Congress should let workers trade their 401(k) assets for guaranteed retirement accounts made up of government bonds, suggested Teresa Ghilarducci, an economics professor at The New School for Social Research in New York.

Do I really want to look up this school? I can almost tell from the name that they probably invest more in 5-year plans than stocks.

17 posted on 10/10/2008 12:00:26 AM PDT by VeniVidiVici (Amazing how Obama, Rangel, Biden and Dodd all got killer mortgage rates and below cost property.)
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To: Eva
That simply results in transferring money from taxed savings accounts to untaxed accounts, she said.

The stupidity is absolutely shocking, all a 401k does is DELAY when one pays taxes on the income, the taxes do not go away.... The hope is that when one starts making the withdrawals one will be in a lower tax bracket..

Eva - what you refer to is a Roth. With a Roth one pays the taxes the same year as the deposit, then, there are no taxes owed when one withdraws the money at a later date.
18 posted on 10/10/2008 12:01:42 AM PDT by Fred (The Democrat Party is the Nadir of Nihilism)
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To: L,TOWM

Not if they don’t know about it. See my previous ‘underwear’ post.

In other news, turns out all the banks have been using the South Park business principles :

1. Collect Underpants
2. ?
3. Profit


19 posted on 10/10/2008 12:02:46 AM PDT by farlander (Try not to wear milk bone underwear - it's a dog eat dog financial world)
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To: Fred
“The way the government now encourages 401(k) plans is to spend $80 billion in tax breaks,” which goes to the highest-income earners, Ms. Ghilarducci said.

So anyone contributing to a 401K is one of the "highest-income earners"?

20 posted on 10/10/2008 12:02:47 AM PDT by Cementjungle
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To: VeniVidiVici

Another FOO..Friend of Obama.


21 posted on 10/10/2008 12:03:48 AM PDT by Fred (The Democrat Party is the Nadir of Nihilism)
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To: Gator113

Sic Semper Tyrannis.


22 posted on 10/10/2008 12:05:49 AM PDT by farlander (Try not to wear milk bone underwear - it's a dog eat dog financial world)
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To: Fred

truly evil


23 posted on 10/10/2008 12:06:08 AM PDT by ari-freedom (Betcha they're good. Why shouldn't they be? Their one mistake was giving up me!)
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To: Fred

If these clowns get elected - in two years it will be a 70% Republican congress. Trust me. All my freinds, business owners, and myself are pretty much going to fire all employees we can telling people who stay ‘do three jobs or you’re gone too’ it’s real simple - it’s not worth even doing business under this type of environment. Better to do all work myself or just keep powder dry until things open up again and become profitable again (read: republican tax and business policy)

No way will even the media stand for 25% unemployment as thier messiah wrecks the economy.


24 posted on 10/10/2008 12:11:56 AM PDT by TDT
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To: Fred

No, you are probably too young to remember the ESOP program which predated the 401 k. It wasn’t around all that long, but I remember it, because we were not allowed to roll over dividends under the ESOP and when it became a 401K, we were not permitted to roll the dividends, either, because they couldn’t separate the ESOP dividends from the 401K dividends.


25 posted on 10/10/2008 12:12:07 AM PDT by Eva (CHANGE- the post modern euphemism for Marxist revolution.)
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To: Eva

“They can’t seize the money that is already there and exchange it for gov’t bonds. They just can’t do that.”

Watch.


26 posted on 10/10/2008 12:12:23 AM PDT by 21twelve (Ever Vigilant, Never Fearful)
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To: Cementjungle
Teresa Ghilarducci is a retard. Period.

This blog sums up this Tard plan really well.

Folks, any suggestions, McCain has got to bring this up in the debate.
27 posted on 10/10/2008 12:13:07 AM PDT by Fred (The Democrat Party is the Nadir of Nihilism)
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To: 21twelve

That would be like seizing your bank account. What they might do, though, is deduct the amount of SS payment from your 401K.
So, essentially, you get no SS until your 401K is used up.


28 posted on 10/10/2008 12:14:45 AM PDT by Eva (CHANGE- the post modern euphemism for Marxist revolution.)
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To: farlander
If they do this I’m moving whatever little I have offshore. At that point it’ll be cost effective.

Sorry, you'll be classified as a money laundering financial terrorist.

29 posted on 10/10/2008 12:16:08 AM PDT by glorgau
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To: glorgau

I think you would have to give up American citizenship, perhaps Kenya will be doing far better then the USA. Could chose that country...


30 posted on 10/10/2008 12:18:16 AM PDT by Fred (The Democrat Party is the Nadir of Nihilism)
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To: Wolfhound77
...sounds like we need another Boston Tea Party to get things rolling.

With employers withholding your pay, it's tough.

I have my own company and can just refuse to withhold and send $$$ to the State (as in Communist "state").

Then wait for the government to put me in jail.

If a few million small companies like mine did this there might be an impact.

Other folks could just claim 19 deductions on their W-4, and on April 15, send zero dollars.

Bottom line... we could put the government out of business (oxymoron).

31 posted on 10/10/2008 12:24:48 AM PDT by Cobra64 (www.BulletBras.net; all)
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To: Fred

Heaven help me! This will gut me.


32 posted on 10/10/2008 12:25:30 AM PDT by Drango (A liberal's compassion is limited only by the size of someone else's wallet.)
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To: Fred
“The way the government now encourages 401(k) plans is to spend $80 billion in tax breaks,” which goes to the highest-income earners, Ms. Ghilarducci said.

I call BS. There's a ratio requirement between higher & lower paid employees in a group.

http://www.cpas-401k.com/401k-compliance-testing-rules.html

The only reason the rich guy gets more of a tax break, is because his income puts him at a higher tax rate. When they call a reduction in liability an expenditure (note the highlighted word "spend" in the statement above), they're showing their cards. The government owns everything & they give you a gift when they allow you to keep more of what you've earned.

33 posted on 10/10/2008 12:27:15 AM PDT by GoLightly
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To: glorgau

See my previous “underwear” post.


34 posted on 10/10/2008 12:34:09 AM PDT by farlander (Try not to wear milk bone underwear - it's a dog eat dog financial world)
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To: Darkwolf377

And the “experts” on Fox are predicting the democrats are goign to win a landslide, veto and filibuster proof majority in both houses... if ever there was a year to vote a straight “R” ticket this is it. So many people thought they were teaching some sort of lesson i n2006, but the joke is on those voters... and all of us.


35 posted on 10/10/2008 12:38:27 AM PDT by Arizona Carolyn
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To: Fred
Let's see... The stock market is bleeding terribly and the moron Dem's are proposing making owning stock through a 401k much more expensive which will cause millions to get out of 401k’s and the stocks associated with them...

As if those huge "401k tax breaks for the wealthy" have paid off so well for the "wealthy"... Well if that's what the American people want then damn the torpedoes, full steam ahead to oblivion...

36 posted on 10/10/2008 12:39:34 AM PDT by DB
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To: Fred
Could chose that country...

I sure wish that drunk Kenyan had chosen to keep his seed back in Africa in the 60's.

37 posted on 10/10/2008 1:04:26 AM PDT by beaversmom
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To: Arizona Carolyn

The experts on Fox also were positive that cramnesty would pass. The experts on Fox aren’t.


38 posted on 10/10/2008 1:11:34 AM PDT by HerrBlucher
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To: Cobra64

I have a small business. But I’m no business man. So, I messed up and owe a bunch of end-of-the-year taxes. I made too much money. Seems a waste to work so hard to see so much of it just disapear. It will only get worse if Obama gets in. Why can’t these idiots (and the voters) figure it out that raising the taxes on the “rich” is not a way to help the economy?!. Even my dear old Republican mom just the other day said “well, FDR was a Democrat, and he got us out of the Depression...”. 10 minutes later I’m not sure if I changed her views on FDR, but she won’t be voting for Obama.

Anyway, paying my taxes will really put the crunch on me until some of my clients pay (and I hope they still will/can!). And of course I put more money than I should have into my retirement funds without planning on the bigger tax hit. So that money is locked up and/or dissapeared.

I have half-way thought of not paying them. But, not that gutsey - or dishonest. Anyway, I sure don’t want those poor fund managers at Lehmans to have to do without their penthouse suites. (YES - IT MAKES ME MAD TO SHIP OFF XX,XXX dollars to the STUPID GOVERNMENT). I wouldn’t be so mad if they would spend it on perhaps a 500 lb bomb or something - but on a bailout!!?? (Hey, instead of dropping a bunch of cash on Wall Street they could .... oh, nevermind).

Or - perhaps just wait a few more weeks and maybe the gov’t will bail me out too!!?? (Oh, you need to be an illegal buying a $600,000 house with no money down to get help? Oh well.)


39 posted on 10/10/2008 1:28:44 AM PDT by 21twelve (Ever Vigilant, Never Fearful)
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To: Gator113
At the moment, it sure looks like you’re right. I have long held what my grandfather taught me, ‘Bravery is the ability to control ones fears.’ Gramps was right, but it is becoming much more difficult to keep those fears in check. Perhaps it’s because most everything is failing, we are all being attacked on so many fronts and the enemy is from within. With our leadership so corrupted and protected, it’s going to be tough times for a long time, I’m afraid. As with anything, there is a breaking point. I wonder if those that are tearing our country apart have considered that when justice comes for them, it will give no quarter.

Great post.

I just watched the (decent, but flawed) JOHN ADAMS HBO miniseries, and David McCullough said in the documentary included in the set that Adams wished for an American spirit of excellence, and for people to strive for and foster in their children a sense of desire to achieve.

I work in a school, and I am shocked at some of the crap I hear coming from the mouths of teachers with degrees--the kind of people most Americans just assume are smart.

And they're teaching our kids that the government should be there to take care of everyone.

That's the mindset that's on the rise. As Clint Eastwood recently said, a mindset that has voters supporting the candidate who's going to give them something.

What's to become of us if we're all in it to GET something, instead of supporting a government that's there to leave us be--you know, all that freedom and independence stuff?--so WE can do the getting and giving ourselves?

40 posted on 10/10/2008 1:41:12 AM PDT by Darkwolf377 (:()
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To: Fred

Maybe some Kool-Aid drinkers will have second thoughts if they learn about this proposal. The Libs are going to take voter angst as an endorsment of their crackpot economic ideas and end up back in the minority for a long, long time.


41 posted on 10/10/2008 1:44:27 AM PDT by Harry Wurzbach (Rep. Thaddeus McCotter is my hero.)
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To: Arizona Carolyn
And the “experts” on Fox are predicting the democrats are goign to win a landslide, veto and filibuster proof majority in both houses... if ever there was a year to vote a straight “R” ticket this is it. So many people thought they were teaching some sort of lesson i n2006, but the joke is on those voters... and all of us.

I'm so glad you brought that up. Have you noticed there aren't as many of those "Send a message" posters these days? As recently as August I seemed to find a couple each time I came here.

I wish those "send a messagers" from 2006 would start a thread proudly proclaiming they didn't vote in 2006 to send a message. You'd think they'd be so proud of their message they'd wanna crow about it.

42 posted on 10/10/2008 1:44:46 AM PDT by Darkwolf377 (Atheist praying for a miracle :()
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To: Eva

“They just can’t do that” is wishful thinking. They can and they will, if the history of other countries is any guide. Insofar as it would constrain the Federal government on economic issues, the Constitution is a dead letter.


43 posted on 10/10/2008 1:46:45 AM PDT by Buchal ([Future bumper sticker] Don't blame me, I voted for Ron Paul . . .)
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To: Buchal

I guess it’s time to withdraw the money from the 401K and head somewhere off the electric grid.


44 posted on 10/10/2008 1:52:29 AM PDT by Eva (CHANGE- the post modern euphemism for Marxist revolution.)
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To: Fred

Hubby and I are convinced they will find a way to tax our Roths when we get to retirement. There is no way they are going to let us “steal” that money from their wealth redistribution program.


45 posted on 10/10/2008 2:24:13 AM PDT by ToastedHead
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To: Fred

The Democrats have been eyeing this juicy untouchable revenue for decades and are constantly scheming on how get their slimy hands on it.

Imagine what this will further do to the Stock Market? With Obama’s 20% (making it 30%) increased tax on Capital Gains and this in top of it, Wall Street will become a ghost town.

One thing these Socialists also all have in common is, when they plan these raids on the Constitution, they act as though we do not exist or matter. That is, WE, the ones who earn the money that drives this economy and country.

It’s as though every thing we have or earn is their property and they have the right to freely take what they need.


46 posted on 10/10/2008 2:36:21 AM PDT by PSYCHO-FREEP (Sara Palin; The Orca in a bay of Democrat Belugas!)
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To: Fred

Damn. That means they can control us more. I mean that Social Security is paying pretty good. Bastards.


47 posted on 10/10/2008 3:20:04 AM PDT by personalaccts (Is George W going to protect the border?)
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To: Gator113

“I wonder if those that are tearing our country apart have considered that when justice comes for them, it will give no quarter.”

They are in for a rude awakening.


48 posted on 10/10/2008 4:00:33 AM PDT by ought-six ( Multiculturalism is national suicide, and political correctness is the cyanide capsule.)
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To: Fred

my wife and myself have done without the expensive crap, the fancy cars and vacations, the extra nice clothes, and put our money away so we could retire in comfort. We have been doing this for 25 years. Now, some blowhard piece of human excrement wants me to give it to them to manage!!! This will be a call to arms....


49 posted on 10/10/2008 4:10:57 AM PDT by joe fonebone (Proud anti-obama bigot)
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To: Darkwolf377

we are here, in this position, today, because of the “I’m taking my toys and going home” crowd that refused to do THEIR DUTY as a citizen of this country, and did not drag their collective sorry asses to the poll to cast their ballot....i spit upon all of you that “taught me a lesson”


50 posted on 10/10/2008 4:27:51 AM PDT by joe fonebone (Proud anti-obama bigot)
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