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.
Will they go after my 1.888% savings account interest too?
Don't we already have a system like that in a lock box somewhere? The congress is emboldened because they know they can get away with a trillion dollar heist of taxpayer money anytime they want. How much are the citizens of this country going to take before they rebel?
Hmmmmm....mark your calendars folks....
Same here. I didn’t save much toward retirement in my 20’s, but I’ve been MAX’d out on by contributions to my 401K since then and makes me sleep better at night knowing it will be there in the golden years. It is a wonderful way to save for your retirement.
What I think the dems want to do is remove the 401K system and socialize it distribute your earnings even more.
This is insanity to the nth power we are seeing .........WTF Over ?
http://creepingsharia.files.wordpress.com/2008/05/obama_post_america.jpg
http://fareedzakaria.com/books/index.html
Yes, that's why I spent it all at the existing tax rate.
Why pay more, later, while losing principal to inflation and/or confiscation?
While they are at it, why not abolish the home mortgage interest deduction? More money the government is “investing” that is not paying off?
These people Pee me off................Leave my darn money alone it is mine........................
this is a good reason not to vote Dem or Obama
In the words of KSFO ....WASS We are so screwed
I am sure they want to take our 401k and give it to people who never bothered saving a $1.00 per week which I am sorry everyone is able to do!
It’s not that they want to punish you for your 401k. They just think it would be more fair to spread your money around to people that aren’t so lucky as you.
Let me get this straight, they want to tax me when I put money in the 401k. Then they want to tax the “wealthy corporations” (as Obama calls them) that my 401k invests in.
I guess this is their plan to get the economy going. It will be so costly to invest in our retirement that the only wise place to put our money is at the shopping mall.
>> You mean like Bush’s “privatized” SS plan?
Neither the partial privatization of SS dollars nor the overtures warning about Freddie and Fannie were given serious consideration. Both are still legitimate issues.
“This could make a devastating commercial for McCain.”
It should be on the air tomorrow.
“I actually posted this very article about a week ago, and sent an email to Limbaugh about it.”
The article is dated today (16th).
Pray for a miracle.
In the absence of one, we are looking at the total decimation of our economy and ultimately of our great country.
I have been saying for a long time:
Roth IRA people mark my words- you will be paying taxes on that investment twice. You are a fool to pay the taxes on an investment up front.
These criminals will simply change the rules!
Just take a look at the header.
L
Awsop’s Favle told and retold.....
OLD VERSION:
The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.
The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.
Come winter, the ant is warm and well fed. The grasshopper has no food or shelter, so he dies out in the cold.
MORAL OF THE STORY: Be responsible for yourself!
= = =
MODERN VERSION:
The ant works hard in the withering heat all summer long, building his house and laying up supplies for the winter.
The grasshopper thinks the ant is a fool and laughs and dances and plays the summer away.
Come winter, the shivering grasshopper calls a press conference and demands to know why the ant should be allowed to be warm and well fed while others are cold and starving. CBS, NBC, PBS, CNN, and ABC show up to provide pictures of the shivering grasshopper next to a video of the ant in his comfortable home with a table filled with food. America is stunned by the sharp contrast.
How can this be, that in a country of such wealth, this poor grasshopper is allowed to suffer so?
Kermit the Frog appears on Oprah with the grasshopper, and everybody cries when they sing, “It’s Not Easy Being Green.”
Jesse Jackson stages a demonstration in front of the ant’s house where the news stations film the group singing, “We shall overcome.” Jesse then has the group kneel down to pray to God for the grasshopper’s sake. Nancy Pelosi & John Kerry exclaim in an interview with Larry King that the ant has gotten rich off the back of the grasshopper, and both call for an immediate tax hike on the ant to make him pay his fair share.
Finally, the EEOC drafts the Economic Equity & Anti-Grasshopper Act retroactive to the beginning of the summer.
The ant is fined for failing to hire a proportionate number of green bugs and, having nothing left to pay his retroactive taxes, his home is confiscated by the government. Hillary gets her former employer, the Rose Law Firm, to represent the grasshopper in a defamation suit against the ant, and the case is tried before a jury comprised of single-parent welfare recipients. The ant loses the case.
The story ends as we see the grasshopper finishing up the last bits of the ant’s food while the government house he is in, which just happens to be the ant’s old house, crumbles around him because he doesn’t maintain it.
The ant has disappeared in the snow. The grasshopper is found dead in a drug related incident and the house, now abandoned, is taken over by a gang of spiders who terrorize the once peaceful neighborhood.
MORAL OF THE STORY: Be careful how you vote.
Remember when Jesse Jackson used to go around proposing that significant portions of the nation’s pension funds be invested (required) in low income housing? Wouldn’t that have been great.
Now we have another Dem. proposal to seize the nation’s retirement savings and use them for idiotic Dem. purposes, ultimately to be invested in government bonds that would yield 3%. This is insane, and would, faster than a Dem. can tell a lie, we’d see retirement funds go the way of SS funds, into the general fund to be spent on whatever, and then all the retirement fund would have would be government bonds.
These little Stalins cannot stand the thought that some people are saving and investing and building funds that they can’t grab hold of and use for their Dem. purposes.
Forget the tea, its time for some good old fashioned hot tar and feathering.
It’s time to grab the pitchforks and torches and storm the Bastille.
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