Posted on 10/16/2008 8:32:17 PM PDT by Keyes2000mt
Powerful House Democrats are eyeing proposals to overhaul the nation's $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.
House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.
A plan by Teresa Ghilarducci, professor of economic-policy analysis at The New School for Social Research in New York, contains elements that are being considered. She testified last week before Mr. Miller's Education and Labor Committee on her proposal.
House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.
A plan by Teresa Ghilarducci, professor of economic-policy analysis at The New School for Social Research in New York, contains elements that are being considered. She testified last week before Mr. Miller's Education and Labor Committee on her proposal.
"The savings rate isn't going up for the investment of $80 billion," he said. "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."
"From where I sit that's just crazy," said John Belluardo, president of Stewardship Financial Services Inc. in Tarrytown, N.Y. "A lot of people contribute to their 401(k)s because of the match of the em-ployer," he said. Mr. Belluardo's firm does not manage assets directly.
Higher-income employers provide matching funds to employee plans so that they can qualify for tax benefits for their own defined contribution plans, he said.
"If the tax deferral goes away, the employers have no reason to do the matches, which primarily help people in the lower income brackets," Mr. Belluardo said.
"This is a battle between liberalism and conservatism," said Christopher Van Slyke, a partner in the La Jolla, Calif., advisory firm Trovena LLC, which manages $400 million. "People are afraid because their accounts are seeing some volatility, so Democrats will seize on the opportunity to attack a program where investors control their own destiny," he said.
The Profit Sharing/ 401(k) Council of America in Chicago, which represents employers that sponsor defined contribution plans, is "staunchly committed to keeping the employee benefit system in American voluntary," said Ed Ferrigno, vice president in the Washington office.
"Some of the tenor [of the hearing last week] that the entire system should be based on the activities of the markets in the last 90 days is not the way to judge the system," he said.
No legislative proposals have been introduced and Congress is out of session until next year.
However, most political observers believe that Democrats are poised to gain seats in both the House and the Senate, so comments made by the mostly Democratic members who attended the hearing could be a harbinger of things to come.
ADVICE AT ISSUE
In addition to tax breaks for 401(k)s, the issue of allowing investment advisers to provide advice for 401(k) plans was also addressed at the hearing. Rep. Robert Andrews, D-N.J., was critical of Department of Labor proposals made in August that would allow advisers to give individual advice if the advice was generated using a computer model.
Mr. Andrews characterized the proposals as "loopholes" and said that investment advice should not be given by advisers who have a direct interest in the sale of financial products.
The Pension Protection Act of 2006 contains provisions making it easier for investment advisers to give individualized counseling to 401(k) holders.
"In retrospect that doesn't seem like such a good idea to me," Mr. Andrews said. "This is an issue I think we have to revisit. I frankly think that the compromise we struck in 2006 is not terribly workable or wise," he said.
Last Thursday, the Department of Labor hastily scheduled a public hearing on the issue in Washington for Oct. 21.
The agency does not frequently hold public hearings on its proposals.
Problem for a lot of us is with the nice little plan to make us put 5% of our money into their guaranteed government investment + payroll taxes +income taxes +expenses of life, there's not money to take on a 401(k) loan.
Absolutely true. The out of control, amazingly destructive democrats could cause an economic depression, not just the recession these malicious fools have already caused..
TEA PARTY TIME!
Exactly...sharpen the pitchforks and get the torches ready
These accounts would guarantee a plush retirement for George Miller and Jim McDermott.
Miller is the guy who wants your 401k money. What else do we know about him? Well, here are a few of his earmarks:
On his own website he boasts about diverting $9 million from budgeted projects to his own pet projects. Assuming they get the same deal as the war profiteers in the Securimetrics example, someone's crossed his greasy palms with $90k.
Oh yeah, one more thing... here's George III's earmarks for FY 2008. You'll see another kiss to the generous donors at Securimetrics in there, one that doesn't show up on the previous listed earmarks. George Miller hearts campaign donors. You can't tell from this how much of this is what he pays some K street leeches to keep his son on payroll, but you can be sure it's in there.
So now you know why George Miller (or should I say Georges Millers, III and IV?) needs/need your 401k money.
d.o.l.
Criminal Number 18F
The problem is, of course, that half of Americans don't pay any taxes at all. If you are paying federal taxes (as opposed to getting back more than you put in) you are a member of a minority group.
A particularly abused minority group = the actual taxpayers. Obama's plan will raise taxes on them, in order to make cash payments to the non-taxpayers. Obama calls this new form of welfare a "tax cut", but how can you cut the taxes of someone whose tax is zero?
The lotteries, keno machines, liquor stores, and tobacco vendors will all be grateful. So, for that matter, will the criminals in the underground economy. Your "middle class tax cut" will turn in to a tax hike, but you can be sure that money taken from you will be given to someone who'll buy crack or crystal meth.
That's Change You Can Believe In™.
d.o.l.
Criminal Number 18F
well, isn’t this something McCain needs to inject into his campaign?
Better dump those 401ks as soon as possible if the RATS get in...
Old news.
A veteran communist and a veteran nut. That sums up the Democratic Party today.
The Republicans aren’t much better, just sneakier.
Imagine the UN having total control over the worlds money, therefore every countries economy. Tow the line and implement the idiologies of unelected elitist and Islamic nut job run NGO's or else!!!
I wonder what they will call the new dollar, a Marx? Or the Mohammad? ,br> Buy shares in prayer mat making companies, it won't be long before a world Caliphate is established using the UN for the throne. Probably Lord Obama sitting in it.
I think you've got something there. Actually, I think he should say he's going to give everyone a 200% tax cut. 0bama will say "You can't do that." McCain: "Neither can you!"
The Senator from Illinois votes "Present."
Has the McCain Campaign seen this? It should have been brought up last night.
If people are struggling now to pay their mortgages, getting hit with a $10,000 or more property tax bill will sink them for sure.
No matter how hard they try, there is no way the government is going to be able to prevent housing prices from sliding back to their realistic and affordable values. With a rapidly deflating economy, housing HAS to reset back to values reflecting the average earnings of American households.
That's why all these bail outs just won't work. All they can do is soften/ slow the landing of a crashing world economy.
Screwing with people’s 401(k)s is about the fastest way I know of to start a revolt the likes of which this nation has never seen.
Congress is already held in almost universal contempt. Now it’s Democrat leaders want to start playing games with people’s retirement. Not good.
If the plan was to make it better, more lucrative, fine. This idea that the tax exemption be removed would make just about everyone furious.
I’ve been saying for five years now that the Dems will figure out that they’re utterly broke and can’t raise taxes any more just about the time I retire. They’ll loudly proclaim that I took advantage of the tax system and then take my money in the name of “fairness”. I’m sure everyone who heard me thinks I’m a nut case. I feel vindicated, just earlier than I anticipated. I’ve been rubbing everyone’s noses in this story.
Yu are not a nutcase. This is what they want to do. Take our 401’s, voluntary at first but mandatory later, and give us a “fair” pension based on their idea of fair. A huge money grab and one that will cause a massive revolt.
The Dims want to create another Social Security.
They want to force us to contribute, then spend all the money we contribute, let the next generation pay for our retirement, then when there isn’t enough money, claim the new system was never intended to pay for all of our retir3ement, it’s just a supplement.
Under Ms. Ghilarducci's plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3% a year, adjusted for inflation.
Current employer + employee "contributions" are 14.65%. So an additional 5% of pay would result in a 33% increase in EVERYBODY'S tax rate. A 33% increase in taxes. I thought Barry was going to cut everybody's tax.
Folks, they’re going to pitch this as “pension reform” and people will lap it up because amidst all the 401(k) stuff is a lot of grumbling that pensions are a thing of the past. “You know, we used to have pensions but they keep taking things away from us to help the fat cats on Wall Street.” You haven’t seen any class warfare like what’s coming. This is just the beginning.
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