I Really Hope They're Not Seriously Considering This

[rowyn]

The House Committee on Education and Labor hears testimony on nationalizing* pensions and 401(k) accounts.

Dear Congress:

I do not want a bailout. I do not want to be punished for having chosen to save for my retirement by having my savings taken away from me. I do not want my retirement savings to go bankrupt by the time I'm 65 the way the existing Social Security Administration is going to. In short:

DO NOT WANT.

Please keep your grubby hands off of my investments. K thx.

Love and kisses,
Rowyn

* Edit: shaterri looked at the actual testimony (which I can't do at the moment, so see his comment below), and apparently the article linked above is at the least inflammatory if not outright fabrication: the testifying speaker doesn't advocate "confiscating" existing 401(k)s or pensions. I feel better. Thanks, Shaterri! And I'm sure Congress wouldn't take her seriously even if she had. Really. 99.9% sure, anyway.

Comments

[level-head.livejournal.com]

But no matter how much you contribute, however many hundreds of thousands of dollars over the years, won't you be happy to know that the Government will pay you $50 per month for retirement? ($600 per year.)

The same that they would pay to someone who never worked at all, apparently.

There's some confusion between tax breaks and retirement benefits, but she feels that the system is unfair currently because people who put more in get more back.

This sort of thing has been a topic of discussion on the fringe for a long time. The phrase "spreading the wealth" doesn't remotely trouble her. The troubling thing here to me is that it is being seriously considered.

===|==============/ Level Head

[shaterri.livejournal.com]

Ummm, read the article more closely? The Ed&Labor committee did not conduct any such hearings; they merely had a hearing on, quote, "The Impact of the Financial Crisis on Workers’ Retirement Security," which seems under the circumstances like a perfectly reasonable thing to be holding hearings on. And at that hearing, they had a speaker in no way affiliated with the government who suggested GRAs. What's more, if you read her actual testimony, while Ghilarducci is obviously no fan of 401(k) plans and does suggest gradually scaling back the deductions on them (her own phrasing), never does she indicate that GRAs would be mandatory the way the article suggests. Here's a direct quote from her testimony:

Short term, I propose that since 401(k) accounts and the like are financial institutions [...] Congress let workers trade their 401(k) and 401(k)-type plan assets for a Guaranteed Retirement Account composed of government bonds.

And if you read the testimony of any of the other participants, it becomes clear that the committee was doing what committees are supposed to do -- gather information and suggestions from a plethora of sources. Even the article itself concedes that, quote, "[the committee chair] said he would not be in favor of 'killing the 401(k)' or of 'killing the tax advantages for 401(k)s.'"

I'm obviously not going to contend that the notion didn't come up; it obviously did. But there's no indication that it's under any serious consideration, and the whole article reads to me of distinctly slanted journalism (vis. the 'redistributive change' canard), well worth taking with many, many grains of salt.

Okay, I feel better

[rowyn]

Ah! I did read the article closely, and it said the individual testifying advocated "confiscating workers' retirement accounts". I can't follow your link right now (doesn't work on my cellphone browser). But since that's not what she was saying, yeah, that's reporting which goes beyond "misleading" and into "outright fabrication". O_o

I knew the hearing wasn't devoted exclusively to her views anyway (hence my "hope this isn't serious") -- I'll edit my post to clear that up. Sorry!

[rowyn]

Well, being seriously considered by someone, I suppose. I don't think by Congress, though. Shaterri looked at the actual testimony and said it didn't even include anything like the "confiscate existing accounts" the article contended. Which was the part that really ticked me off.

Not that I want the tax breaks for retirement savings to go away, either, mind, but at least doing that isn't a bait-and-switch. And I gather the committee wasn't too impressed by that part of the proposal, either. I really need to stop talking about this until I get a chance to look at the record for myself. :)

Re: Okay, I feel better

[jordangreywolf.livejournal.com]

Hoo boy. I'm glad I saw your edit note there.

[level-head.livejournal.com]

The $600 is apparently the government's contribution. The prepared speech, oddly, contains many typos and in some cases is quite unclear.

But it's clear that this is an immediate proposal, not gradual -- she is advocating that 401(k) contributions be valued at "mid August" levels, which makes no sense for anything that is not immediate.

Again and again, this is pushed as "fair" because it is taking money from high income earners to fund those too poor to save money.

And the 401(k) system is described as a "failure" because it is not helping poor people.

===|==============/ Level Head

Re: Okay, I feel better

[sebkha.livejournal.com]

Foxtaurs: our gatekeepers of journalistic integrity.

[level-head.livejournal.com]

She is talking immediate, "short term", swap out of 401(k)s and into this "mandated savings program".

And she contents that Social Security is fine, and the only failure is 401(k)s -- perhaps because the money is not in government hands to "spread the wealth". Specifically, she said:

American workers know we have a short term and long term pension crises but it
is not with Social Security but with the voluntary, self-directed, commercial- account -
based pension system.

The article takes an alarmist tone -- but there is much to be alarmed about in her testimony.

Yes, there were others testifying, but the article was specifically talking about and quoting her. Her testimony implies confiscation but does not use the word. And it clearly is speaking to immediate action, and it clearly wants to bring an end to private savings programs, and "exchange" them for GRAs.

===|==============/ Level Head

[telnar.livejournal.com]

Btw, something along those lines really is in the process of being decided on in Argentina.
http://www.economist.com/world/americas/displaystory.cfm?story_id=12480990

[bburnell.livejournal.com]

Yes, they've been talking about this even before the election. The "gotcha" will be that they will bring your 401k back to August levels (before the crash) and give you a guaranteed cost of living increase per year. Also, how much you can put in will be severely limited and they are considering making you pay taxes on it as well. Also, from what I know they are talking "spread the wealth" with these as well. Lord, help us all!

[zaimoni.livejournal.com]

Having read the actual testimony: since the proposal includes, as a later stage, completely wiping the law authorizing 401(k)s from the map, it is a confiscation (at that time) for everyone who cannot afford to pay the tax penalties from cashing out.

There is no point pretending otherwise. And while this floats like a lead balloon now, it is not so clear that when 401(k)s are empirically bad for everyone that U.S. Congress will refuse to do what West Virginia's Congress did for its teachers' unions: confiscate all of the 401(k)s because the claims made about them as retirement savings were false, and replace with a politically correct pension. [In West Virginia's case, the affected teachers had their retirement payouts immediately double.]