Demand that Congress Pass the "Keep Your Hands Off My 401(k) Act of 2010" → Washingtons Blog
Demand that Congress Pass the "Keep Your Hands Off My 401(k) Act of 2010" - Washingtons Blog

Thursday, March 4, 2010

Demand that Congress Pass the "Keep Your Hands Off My 401(k) Act of 2010"


As I wrote in January:

Last May, I wrote about the rumor that the Obama administration might seize funds from American's 401k and IRA accounts.

Last week, Bloomberg pointed out:

The Obama administration is weighing how the government can encourage workers to turn their savings into guaranteed income streams following a collapse in retiree accounts when the stock market plunged.

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort...

There is “a tremendous amount of interest in the White House” in retirement-security initiatives, Borzi, who heads the Labor Department’s Employee Benefits Security Administration, said in an interview.

In addition to annuities, the inquiry will cover other approaches to guaranteeing income, including longevity insurance that would provide an income stream for retirees living beyond a certain age, she said.

“There’s been a fair amount of discussion in the literature taking the view that perhaps there ought to be more lifetime income,” Iwry, a senior adviser to Treasury Secretary Timothy Geithner, said in an interview...

One proposal raised by Iwry as co-author of a paper while at the Retirement Security Project, before joining the administration, has reached Congress. A bill requiring employers to report 401(k) savings both as an account balance and as a stream of income based on an annuity was introduced on Dec. 3 by Senators Jeff Bingaman, a New Mexico Democrat, Johnny Isakson, a Georgia Republican, and Herb Kohl, a Wisconsin Democrat.

I quoted Karl Denninger's warning that a government "option" for investing retirement funds in treasuries could soon become mandatory.

A couple of weeks ago, Newt Gingrich (yes, that Newt Gingrich) wrote:

Washington is developing plans for your retirement savings.

BusinessWeek reports that the Treasury and Labor departments are asking for public comment on "the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams."

In plain English, the idea is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years.

They will tell you that you are "investing" your money in U.S. Treasury bonds. But they will use your money immediately to pay for their unprecedented trillion-dollar budget deficits, leaving nothing to back up their political promises, just as they have raided the Social Security trust funds.

This "conversion" may start out as an optional choice, though you are already free to buy Treasury bonds whenever you want. But as Karl Denninger of the Market Ticker Web site reports: " "Choices' have a funny way of turning into mandates, and this looks to me like a raw admission that Treasury knows it will not be able to sell its debt in the open market--so they will effectively tax you by forcing your "retirement' money to buy them."

Moreover, benefits based on Treasury bond interest rates may be woefully inadequate compensation for your years of savings. As Denninger adds, "What's even worse is that the government has intentionally suppressed Treasury yields during this crisis (and will keep doing so by various means, including manipulating the CPI inflation index) so as to guarantee that you lose over time compared to actual purchasing power."

This proposal follows hearings held last fall by House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., of the Ways and Means Committee focusing on "redirecting (IRA and 401 k) tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute," as reported by InvestmentNews.com.

The hearings examined a proposal from professor Teresa Ghilarducci of the New School for Social Research in New York to give all workers "a $600 annual inflation-adjusted subsidy from the U.S. government" in return for requiring workers "to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration."

Argentina provided a precedent in 2008, taking over that country's private retirement accounts for forced investment in government bonds to cover spiraling deficits. Ambrose Evans-Pritchard editorialized at the time in Britain's Daily Telegraph that this may be "a foretaste of what may happen across the world as governments discover . . . that the bond markets are unwilling to plug the (deficit) gap. . . . My fear is that governments in the U.S., Britain and Europe will display similar reflexes."...

Congressional Republicans should introduce legislation to block the government from ever proceeding with anything like this. Call it the "Keep Your Hands Off My 401(k) Act of 2010."

Gingrich's article - like Gingrich himself - is highly partisan. He has helped create a false partisan divide-and-conquer strategy in this country, distracting people from realizing that we are all Americans. And instead of admitting that both the Republican and Democratic parties are just two branches of the fat cat party (and that both promote socialism for the rich), Gingrich pretends that only the Democrats are socialists.

So is this just partisan fearmongering, or is Gingrich raising authentic concerns about retirement savings?

I don't know. But it doesn't matter.

Specifically, there is no harm - and tremendous benefit - to outlawing extremely dangerous acts, even if no one is positive they will be committed. If no one is going to carry out such acts, then no harm no foul. If they are, it will help to clarify that such acts are illegal and will be harshly punished.

If government agents don't carry out false flag attacks, then they shouldn't hesitate to sign a pledge that they won't carry out false flag attacks, right?

Similarly, if some in government aren't really considering seizing retirement savings, then they shouldn't oppose the "Keep Your Hands Off My 401(k) Act of 2010". Right?

These are not the type of acts concerning which expensive regulation would minimize a small harm. False flag attacks have huge negative costs, as would the government seizing our retirement savings. And the cost of saying Keep Your Hands Off My 401(k) would not be expensive, because it would not involve monitoring against a large number of small infractions, but simply making one big bad act illegal.

Gingrich might be a partisan hack who is writing about this for strictly partisan reasons. But his idea is such a good one, that both Democrats and Republicans should jump on board.

Note: 99% of the Democrats in Congress and the White House are political hacks as well. I am not trying to cheer-lead for the Dems. Both parties have sold their souls to the powers-that-be.



25 comments:

  1. It's unfortunate your hatred, distaste and vitriol for political hacks does not extend to the largest of all, President Barrack Huessain Obama. Fair and balanced...yeah, right.

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  2. The right is the lesser evel. Don't try to lump both groups together. I consider myself Independent but clearly see the left is attempting a ginormous power and money grab. Both parties have serious issues with the public but on a scale of 1-10 the republicans are at a 7 on the evil scale and Democrats pushing 10+.

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  3. I am glad to see that someone else is watching this government plan to steal my IRA. I have written my Representative and am in the process of writing my two Senators, urging them to draft a bill to stop this idea in its beginning.

    I urge every American citizen who has an IRA or a 409K to protest long and loud.

    I am an 88 year old single woman. If what is left of my IRA is taken from me, I will have a very poor future indeed.

    I already have an annuity invested in government bonds ... it is called 'Social Security'. And we all know what a mess that is.

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  4. They will never pass the "keep your hands off my 401(k)" act because they aren't even considering taking any of that money, and doing so would run into eminent domain issues.

    The Bloomburg article has nothing to do with the government seizing 401ks, it's about soliciting feedback on proposals of how to encourage people to convert their 401ks into annuities. What is important here is the conversion is a completely voluntary act, and it has nothing to do with government getting the money: annuities are purchased from investment firms. Maybe it is possible that those annuities buy treasuries, but maybe not. Specifically, they are probably looking for a way people can convert from a 401k and IRA without it being considered a disbursement and are looking for feedback on what the law should be (the annuity starts at age 65, the income on the backside is taxed or not, etc).

    The second part is the same thing, but it's Newt Gingrich scaremongering to score political points.

    Honestly, it's not a bad thing. Being able to convert to an annuity at any point does remove some of the risk of retirement. There are many ways they can fuck this up (like requiring only treasury backed annuities), but that is why feedback should be given.

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  5. James the WandererMarch 4, 2010 at 3:20 PM

    "Anonymous said...

    They will never pass the "keep your hands off my 401(k)" act because they aren't even considering taking any of that money, and doing so would run into eminent domain issues."

    The government has no problems seizing anything they want whenever they can. Innocent people have had their cash seized when they travel, because they couldn't PROVE they didn't get it from drug-running. Read "The Taking", a book on how (and how often) the ordinary people have lost money, property and real estate when corrupt pols wanted it bad enough. Ever heard of "Kelo vs. New London"?

    "Anonymous said...
    The Bloomburg article has nothing to do with the government seizing 401ks, it's about soliciting feedback on proposals of how to encourage people to convert their 401ks into annuities. What is important here is the conversion is a completely voluntary act, and it has nothing to do with government getting the money: annuities are purchased from investment firms. Maybe it is possible that those annuities buy treasuries, but maybe not. Specifically, they are probably looking for a way people can convert from a 401k and IRA without it being considered a disbursement and are looking for feedback on what the law should be (the annuity starts at age 65, the income on the backside is taxed or not, etc)."

    READ THE PROPOSALS. These annuities are NOT privately issued, they are government scrip. They want to "protect" people from losses in the market late in life.

    What they will do is "protect" people from financial security. THIS is why we originally had a government of limited powers, and why we must RETURN to one as soon as possible - or lose all we have built up over our lifetimes.

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  6. The democrats are socialists and the republicans are socialists lite. The reason that this happens is because there are only two major political parties so the American people accept the lessor of two evils. In 2010 when you walk into the voting booth don't vote for any republican or democrat. Only vote for the Libertarian or Constitution Party candidates. And when only an R or D is running in a race then put in as a write in ballot NOTA meaning none of the above.

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  7. Kelo v New London is immaterial. The law of eminent domain is that they must give you a market price. It was a screwed up thing to do, but Kelo was still paid for their property (probably underpaid though).

    But the value of cash is cash. The government generally cannot seize your cash unless they give you the same amount of cash in return , RICO forfeit laws not-withstanding. Drug seizures are just a different can of worms altogether; you are comparing taking money from some drug dealers and a few innocent people to nationwide systemic involuntary robbery of retirement savings. A congress that is scared of approving a public option for medical insurance is NEVER going to authorize that.

    And what exact proposals would you like me to read, because _there are none_. Link me to a single proposal, please, and I will read it. But before you do, read the Bloomberg article that is raising everyone's hackles, and see them say "promoting annuities may benefit companies that provide them through employers, including ING Groep NV and Prudential Financial Inc., or sell them directly to individuals, such as American International Group Inc., the insurer that has received $182.3 billion in government aid," and calm down when you realize bankster bailout, but voluntary. If you don't like what they are offering, then don't buy it. Free market: It works! (actual results may vary)

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  8. Most people in this country have no clue how bad things will become as our debt relative to GDP approach banana republic levels. The gov will "help" us with our retirement plans, keep us from sending money to "risky" overseas accounts, etc. etc. SS and Medicare will see cuts that will never be called cuts. And that will just be the start.

    I am not some right-wing loony. I was a financial market professional for 40 years, and I am just plain scared of the incompetence of this government.

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  9. This is a BORZI scheme that will most certainly go IWRY

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  10. Yes, they want our money NOW to SPEND it. It will be just like social security. Social security funds were to have been put in a Trust Account, but NO, instead they have used it for their everyday slush funds and now they say it's GOING BROKE. How can we trust our government now with it's TAX & SPEND ways.

    Where does all the money come that they so freely give away? I think they need some good housewives up there to show how to budget. A family would be in bankruptcy if they handled their funds the way our government does. SHAME ON THEM!

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  11. Desperate times, desperate measures.

    I read recently how a large body of people under a structure of government where officials are elected by popular vote will eventually evolve into a system where votes are begat by favors and handouts- bread and circuses. In that sense, both main parties have catered (and caved) to such.

    That having been said, my curiousity in confiscation begins with seeing how much extra money the Federal Gov't gets from IRA conversions over the next two years and how much of an impact it will make. Granted, the bond market pulls much larger levers affecting the Federal Gov't finances, but I imagine that conversions will make some kind of impact, even if it is just a bump. If things get really tight, the push to play Argentina will build- unless enough people from that large body of the electorate says "hecks no!"

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  12. I've read this article and sent it on to other financially struggeling friends. Professor Teresa Ghilarducci's recommendation is rediculous. Why whould we want to give another 5% of our income to the SSA. I already know that I won't see any of that money.

    Of course if the Senators & Congress people would turn over their private retirement fund to the SSA and have to live off of what we will have to survive on, not the full pay for life retirement that they get, perhaps the financial situation would change.

    3-5-10 - Anonymous from California

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  13. Attention DC idiots: you better keep your grubby paws off of my retirement account or
    that will be your LAST MISTAKE! ZERO TOLERANCE!

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  14. I would like to take this opportunity to spread my thoughts on how to help reduce some of the mortgage problem we are facing along with shoring up some of the banking institutions. This may not be a cure all but may still help some and takes no bailout money from the tax payers.
    Allow those who have 401(k)'s, 403(b)’s, SEP's and IRA's to make a onetime withdrawal/transfer of funds from their account with no penalties or taxation.
    This would go straight to a lending institution to either reduce or pay off a mortgage debt or allow those who need to make up a loss in housing price, refinance their home to a fixed mortgage.

    Please make any thoughts on this available to anyone you would like.

    Thank You,

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  15. OK.. To the ignorant among us, both parties (Dems and Repubs) are controlled by the same Oligarchy of Evil. Stop being so stupid by thinking otherwise. Truth can be hard to swallow but denial will surely take you under.

    Please do some homework... A great place to start is the blogspot "Smoking Mirrors". Read all back issues.

    Then google "Rothchild Banking Dynasty"..

    Also watch "Ring of Power" on Youtube..

    Then come back and give your opinion. Shine the light on your mental darkness..

    God Bless.....

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  16. The only demand I have for any of the parasites in Washington is pack your bags and yuck your tail. I am sick of them. I will not call them or write it is a huge exercise in futility.

    We asked for change and baby we got it where the sun never shines because we did not do it ourselves. It is our job to change not outsource it to the district of corruption.

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  17. Did you even read this article? For starters, it is a "request for public comment". Maybe you shouldn't go insane at people for having an idea.

    Secondly, the most extreme form of the plan would be requiring some portion of 401(k)s or IRAs be held in annuities. Annuities are currently sold by PRIVATE insurers, the government doesn't sell them (except of course for Social Security). So the federal government wouldn't get any additional money here.

    The less extreme case, and more likely to happen, would be to provide tax incentives for converting to an annuity. OH NO! A MILD TAX BREAK ON A LONG TERM INVESTMENT VEHICLE!

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  18. Read "The Obama Timeline by Don Fredrick, to learn more about what is behind today's agenda.

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  19. Some of you guys here get it and some of you don't. This is about a planned takeover of the wealth of America for the New World Order.

    If you refer to yourself as a liberal, conservative, Democrat, Reupublican, far-left or far-right, THEN you have been DUPED... There is NO SUCH Thing...

    It's all a divide and conquer strategy. Please Please, do your homework and find out who is behind the curtain of ALL the politicians in Washington...

    Whether it's Bush, Cheney, Palin, Obama, Biden, Romney, or whomever... All of these are puppets and are controlled by the Israelis and the Bankers... JFK decided to stand-up for you (the american people) and got his brains knocked out...

    No other President wanted that fate, so they follow in step to the tune of the Elite Rulers.. Folks need to wake up and take their head out of the sand..

    The Wall Street Journal put out another article today detailing the come micro-chipped ID card that will be required for ALL AMERICANS... But under the guise of immigration reform.. They is no such thing as immigration reform when they are planning the North American Union with Mexico and Canada.. Please look that up too...

    Here is the Wall Street Journal article.. And remember, it is not a Dem or Repub thing, ALL of them are corrupt, but play on people's ignorance blaming each other when all of them are owned..

    http://online.wsj.com/article/SB10001424052748703954904575110124037066854.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsThird

    God Bless...

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  20. About 40 plus years ago, many pension plans were funded with insurance company guaranteed annuities. After the economic crash and loss of 401(k) values, people wanted alternatives to the equity markets and some pension planners were advocting putting some of your money into an insurance annuity, as they have less risk than the stock market.
    We should be demanding that the causes of the economic crisis (credit default swaps,credit default obligations and other derivatives)be fixed, with reasonable regulation, now.
    We need to separate Investment Bankers from our tax monay (the Federal Reserve)and limit the use of leveraage. You should watch the youtube video when Spitzer calls what the Federal Reserve did, in favoring the investment bankers with billions of our money, the biggest Ponzi scheme ever pulled on the global financial system.
    We have been involved in a fraudulent transfer of our money to the investment bankers of wall street and no one is demanding a federal investigation of all the players involved. As Charles Munger has said,"credit default swaps should be eliminated, 100%".

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  21. Social Security is not a mess and has paid millions of people for many years. About 56% of retired people over the age of 65, rely on Social Security, as their primary source of income. Without Social Security payments, these retirees would be at or below the poverty level. My check shows up every month on time. It's the spending by Congress, both parties, of our social security tax dollars, that has caused a problem with the S.S Trust Fund.

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  22. Mary Jean Strawins East McKeesport PA 15035March 11, 2010 at 10:54 AM

    Stay away from robbing the USA,the young planning a future, the school children lining up their goals, the middle age hoping to continue working or unemployed trying to support and feed and clothe their families, the Medicare or our poor who count all their pennies, How dare you touch 401K (if they even offer them anymore) Medicare, Social Sec. Bail out the banks again, and ignore our poor. The car industry should not get another bailout,,they aren't even making a "price deal" except for those who want the high end choices.

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  23. The Democrats ARE looking to confiscate retirement plans.It has been discussed in Congressional committees and it is very real. It seems your dislike for Gingrich is foolish as he is the first politician I have heard that is warning people about this. How else is the tab being run up in Washington going to be paid ?
    Is it "time to be patriotic" yet?

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  24. The 401k is worth defending! Good post, thanks.

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  25. The Democrats ARE looking to confiscate retirement plans.It has been discussed in Congressional committees and it is very real.

    ReplyDelete

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