Republicans Sound Alarm on Administration Plan to Seize 401(k)s

In February, the White House released its “Annual Report on the Middle Class” containing new regulations favored by Big Labor including a bailout of critically underfunded union pension plans through “retirement security” options.

The radical solution most favored by Big Labor is the seizure of private 401(k) plans for government disbursement -- which lets them off the hook for their collapsing retirement scheme. And, of course, the Obama administration is eager to accommodate their buddies.

Vice President Joe Biden floated the idea, called “Guaranteed Retirement Accounts” (GRAs), in the February “Middle Class” report.

In conjunction with the report’s release, the Obama administration jointly issued through the Departments of Labor and Treasury a “Request for Information” regarding the “annuitization” of 401(k) plans through “Lifetime Income Options” in the form of a notice to the public of proposed issuance of rules and regulations. (pdf)

House Republican Leader John Boehner (Ohio) and a group of House Republicans are mounting an effort to fight back.

The American people have become painfully aware over the past year that elections sometimes have calamitous consequences. Republicans lack the votes (for now) to reign in the Obama administration’s myriad nationalization plans for everything from health care to the automobile industry.

Now the backdoor bulls-eye is on your 401(k) plan and the trillions of dollars the government would control through seizure, regulation and federal disbursement of mandatory retirement accounts.

Boehner and the group are sounding the alarm, warning bureaucrats to keep their hands off of America’s private retirement plans.

Just when you thought it was safe to come up for air after the government takeover of health care.

The entirety of the House GOP Savings Recovery Group letter outling the issue that was sent last night to the Labor and Treasury secretaries:

The Honorable Hilda L. Solis Secretary U.S. Department of Labor 200 Constitution Avenue, NW Washington, DC 20210

The Honorable Timothy Geithner Secretary U.S. Department of the Treasury 1500 Pennsylvania Avenue, NW Washington, DC 20210

As members of the Republican Savings Solutions Group, we write today to express our strong opposition to any proposal to eliminate or federalize private-sector defined contribution pension plans, such as 401(k)s, or impose burdensome new requirements upon the businesses, large and small, who choose to offer these plans to their employees.

In the Annual Report of the White House Task Force on the Middle Class, Vice President Biden discussed at length the creation of so-called “Guaranteed Retirement Accounts, (GRAs)” which would provide for protection from “inflation and market risk” and potentially “guarantee a specified real return above the rate of inflation” -- presumably at taxpayer expense. In the Report, the Vice President recommended “further study of these issues.”

The Vice President’s comments are troubling, insofar as they come on the heels of testimony before Congress from supporters of GRAs proposing to eliminate the favorable tax treatment currently afforded to 401(k) plans, and instead use those dollars to fund government-invested GRAs into which all employees would be required to contribute a portion of their salary -- again, with a government subsidy. These advocates would, essentially, dismantle the present private-sector 401(k) system, replacing it instead with a government-run investment plan, the size and scope of which remain to be seen. This despite data showing that 90 percent of households have a favorable opinion of the existing 401(k)/IRA system.

In light of these facts, we write today to express our opposition in the strongest terms to any effort to “nationalize” the private 401(k) system, or any proposal that would dismantle or disfavor the private 401(k) system in favor of a government-run retirement security regime.

Similarly, and more recently, the Departments of Labor and Treasury have jointly issued a “Request for Information” regarding the “annuitization” of 401(k) plans through “Lifetime Income Options.” While we appreciate the Departments’ seeking guidance and information from all parties and stakeholders in advance of regulatory activity, we strongly urge that the Departments not proceed with any regulation in this area before they have carefully and thoroughly considered all of the information received.

More specifically, we urge that the Departments take no action to mandate that plan sponsors -- often, small businesses -- include a “lifetime income” or “annuitization” option if they choose to offer a 401(k) plan to their employees, or that beneficiaries take some or all of their retirement savings in such an option. Data shows that 70 percent of Americans oppose the concept of a mandated annuity or government payout of their 401(k) plan. On a more fundamental level, Congress should not be in the business of choosing “winners” and “losers” among retirement security stakeholders. Instead, we urge the Departments to make it easier for employers to include retirement income solutions in their savings plans and to help workers learn more about the value of their retirement savings as a source of retirement income. Finally, to the extent new mandates and bureaucratic red tape from Washington push small employers out of the business of offering these plans to their employees, we would submit such an effort weakens, rather than strengthens retirement security.

We appreciate your consideration of our views in these important matters and stand ready to work with you and the Administration to promote secure and adequate retirement savings for all Americans.

House Republican Leader John Boehner (R-OH) Rep. John Kline (R-MN) Rep. Dave Camp (R-MI) Rep. Sam Johnson (R-TX) Rep. Dean Heller (R-NV) Rep. Brett Guthrie (R-KY) Rep. Michele Bachmann (R-MN) Rep. Pat Tiberi (R-OH) Rep. Bob Latta (R-OH) Rep. Erik Paulsen (R-MN) Rep. Lynn Jenkins (R-KS) Rep. Ed Royce (R-CA) Rep. Buck McKeon (R-CA)

How Tom Daschle Might Kill Conservatism [Obamacare: make us dependent, then how to shrink gov’t?]
US News & World Report ^ | November 21, 2008 | James Pethokoukis
http://www.usnews.com/blogs/capital-commerce/2008/11/21/how-tom-daschle-might-kill-conservatism.html

Posted on Friday, November 21, 2008 7:15:41 PM by Mike Fieschko
http://www.freerepublic.com/focus/f-news/2136238/posts

“...and the Obamacrats certainly have the momentum: a near-landslide presidential election victory, at least 58 Democratic votes in the Senate, and a nasty recession that will make many Americans yearn for economic security. Already the health insurance companies seem set back on their heels. The industry’s trade organization now says it would accept new rules requiring them to cover pre-existing conditions as long as there was a universal mandate for all Americans to have health insurance. On top of all that, Obama clearly wants to make healthcare reform a priority in his first term, as evidenced by the selection of a heavy hitter like Daschle. And even if he wasn’t interested, Congress sure is, with Max Baucus and Ted Kennedy readying a plan in the Senate. A few observations:
1) Passage would be a political gamechanger. Recently, I stumbled across this analysis of how nationalized healthcare in Great Britain affected the political environment there. As Norman Markowitz in Political Affairs, a journal of “Marxist thought,” puts it: “After the Labor Party established the National Health Service after World War II, supposedly conservative workers and low-income people under religious and other influences who tended to support the Conservatives were much more likely to vote for the Labor Party when health care, social welfare, education and pro-working class policies were enacted by labor-supported governments.”

Passing Obamacare would be like performing exactly the opposite function of turning people into investors. Whereas the Investor Class is more conservative than the rest of America, creating the Obamacare Class would pull America to the left. Michael Cannon of the Cato Institute, who first found that wonderful Markowitz quote, puts it succinctly in a recent blog post: “Blocking Obama’s health plan is key to the GOP’s survival.”

2) Shrinking government would get exponentially tougher. Republicans would face the same problem with healthcare that they currently do with Social Security, persuading people to trade one in the hand (the current system) for two in the bush (a reformed system). And we see how well that has worked out.

Combine Obamacare with plans to take away the tax-advantaged status of 401(k) plans and IRAs and you would end up with government responsible for both healthcare and retirement. The big-government constituency would grow and deepen. And remember that fewer and fewer people are paying the incomes taxes that would help pay for increased government services.

That breakage of the linkage between taxes and government “benefits” creates toxic incentives for more of both — and an economy more shackled than ever by taxes, debt, and regulation.

3) Republicans better learn to competently talk healthcare. John McCain’s healthcare plan was perhaps the most provocative policy proposal of the entire 2008 campaign. Too bad he could neither fully explain how it worked nor persuasively argue why it was better than Barack Obama’s plan.

Also too bad since his plan would have smartly reduced healthcare costs by getting companies out of the healthcare benefits business and empowering individuals to buy insurance on their own.

This would have helped fix what economist Arnold Kling calls the insurance vs. insulation problem: :Insulation relieves the patient of the stress of making decisions about treatment. The patient also does not have to worry about shopping around for the best price. The problem with insulation is that it is not a sustainable form of healthcare finance.”

Another interesting healthcare reform option is highlighted by Ross Douthat and Reihan Salam in the book Grand New Party. Uncle Sam would require individuals and families to put 15 percent of their income into health savings accounts. If you run out of money before year-end, the government steps in. If you don’t, you get the money back or it rolls over into a retirement account. Of course, any conservative alternative would be easier to implement if it doesn’t first have to kill an existing nationalized health plan. But thanks to Tom Daschle, that is just what might have to happen.

People voted for this.

No, they didn't. Oboma did have a very liberal agenda, but that part of his campaign was not reported by the press. They only reported his conservative message. Oboma said he was going to lower taxes, and any one below $250, 000 would never see their taxes raised by one dime. He also said he was going to reduce the size of government by eliminating the social programs that didn't work.
A lot of voters voted for this Conservative message.

To prove my point, look how the media reacted to Joe the Plumber. NO liberalism was allowed to be exposed until AFTER the election.
Another thing was his middle name. You'd be surprised how many people were shocked when they found out his middle name was Hussein. The Oboma voters actually accused other people of lying. They claimed no one would have voted for him if he was a Muslim. Until they looked it up themselves, there was no way to convince them it was true.

Again...before the 2008 election:

Excerpt:

“Curiously, one of Obama’s ideas for “change” — taxing 401k’s — tracks rather neatly with radical redistributionist Phather Phleger’s call for white people giving up their 401ks in the interest of racial justice.”

Obama: Let’s Pursue Reparations Through Legislation Rather Than the Courts
Ace of Spades HQ ^ | October 27, 2008 | Ace http://minx.cc/?post=276650

Posted on Monday, October 27, 2008 3:46:23 PM by Free ThinkerNY
http://www.freerepublic.com/focus/f-bloggers/2116734/posts

Yup:

A caller, “Karen,” asked if it’s “too late for that kind of reparative work economically?” And she asked if that work should be done through the courts or through legislation.
“Maybe I’m showing my bias here as a legislator as well as a law professor,” Obama said. “I’m not optimistic about bringing about major redistributive change through the courts. The institution just isn’t structured that way.”

“Reparative work.” Seems like the caller understood what Obama was saying, and Obama agreed.

It’s only now that they are furiously spinning that they meant something else.

While Obama isn’t “optimistic” about getting this “reparative work” done through the courts, he hasn’t entirely given up on them:

You can craft theoretical justification for it legally, and any three of us sitting here could come up with a rationale for bringing about economic change through the courts.

Obama’s Redistributionist Obsession: Racially-tinged economic justice.

This is astounding stuff from a man who is one election away from the presidency. In politer tones, he is saying things that would make his mentors Jeremiah Wright, Michael Pfleger, and William Ayers, not necessarily in that order proud as peacocks. Fidel Castro and Hugo Chavez are probably beaming too.
....
I suggest henceforth that every time readers hear the word “change” from Team Obama, they insert the work “redistributive” in front of it.

Curiously, one of Obama’s ideas for “change” — taxing 401k’s — tracks rather neatly with radical redistributionist Phather Phleger’s call for white people giving up their 401ks in the interest of racial justice.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.