Thursday, October 23, 2008

Democrats to Kill 401(k) Accounts?!

This has to be the scariest thing I've read yet about a possible all-Democrat government: the end of 401(k) investing.

Powerful House Democrats are considering removing all existing 401(k) tax breaks -- goodbye, matching employer contributions! -- and forcing Americans to contribute to a second level of Social Security instead. (Bet you haven't heard about this one from the "Elect Obama" mainstream media...)

Details from Ed Morrissey at Hot Air:

"...your employer can no longer write off their contributions to your 401(k), and your capital gains would be taxable year-on-year. In other words, it becomes just another investment or savings account, with no tax benefit at all, and no employer contribution. Instead, Uncle Sam would give you your 'matching' funds — up to a whopping $600 per year! Whoopee!

"As Michelle Obama says, you could buy a pair of earrings every year … except, of course, you can’t. It’s in The Lockbox, defined by politicians as Locked Away from You but Accessible to Us. It goes there along with 5% of your gross earnings, apparently to play with the 7% of your gross earnings that already goes to Social Security. And what do they do with the money? They give you government bonds as your only investment option."

More:

"The Democrats want to end the private retirement system that has allowed Americans to become a vast investor class and put them back in thrall of the federal government. This is nothing more than a second welfare system that would sit on top of the crumbling Social Security entitlement. It would leave the American working and middle classes with no retirement option other than a government handout.

"If the Democrats control both Congress and the White House, kiss your 401(k)s goodbye, and get into the bread lines first before the crowd arrives."

Senator McCain needs to be hitting this issue hard in ads, starting immediately. A Republican Presidential veto pen is the only thing which can stop this plan from taking place.

Unfortunately, given the current state of the market and everyone's 401(k) plans, the issue may not have the same resonance it would normally have, but voters should also be reminded that historically market dips have always been temporary...always.

Like a lot of Americans, our 401(k), and the generous matching contributions by my husband's employer, provides much of our financial security. If Democrats take that away and instead tax us more for "a new system of guaranteed retirement accounts to which all workers would be obliged to contribute," it would be devastating, not only for American workers everywhere, but for the American economy.

Friday Update: James Taranto of Opinion Journal: "Eyeing Your Pension: Are 401(k)s Safe From Congressional Democrats?"

4 Comments:

Blogger J.C. Loophole said...

Thus ends Obama's claim of a tax cut to the middle class.
This would be a direct tax and attack on anyone- anyone- earning and saving like this regardless of whether you are earning 250,000 or not. This hist Joe the plumber, Ed the accountant, Linda the teacher and countless others.

Too many people are frightend by the economy because they lack the intelligence and education to understand it- so someone "taking care of them" is more appealing regardless of consequence. Which sounds just like the same people who had to get into a house now, even if they couldn't afford it, regardless of the consequence.
Thomas Jefferson wouldn't recognize the party he founded- and I believe he might would just start another to fight it.

It's shocking to me that the Dems are no longer afraid to hide their liberal socialism anymore. Remember the frog in the pot analog? I'm afraid we've gone past that now. We are knee deep in frog leg soup.

9:34 AM  
Blogger Laura said...

I was actually mulling this morning that maybe the U.S. needs to split in two, so that those of us who don't want to live under Socialism can be free...then I was shocked that I -- a patriotic American -- would even have such a thing cross my mind. A very sad commentary on where our country seems to be headed.

Thanks for your thoughtful comments, J.C., I couldn't agree more.

Best wishes,
Laura

9:39 AM  
Blogger Ugly Naked Guy said...

Obviously this better not ever happen, but I would hope that as a teacher who does not have SS deductions, I would be safe on a personal level. How does this deal with folks who are exempt from SS? I know that it is not just teachers, but I think clergy, federal workers and some state workers in CA.

3:44 PM  
Blogger Laura said...

Good questions, UNG...

I mentioned this story to a couple other homeschooling moms today at lunch and they were apoplectic the idea is even being discussed by Congressmen. I think if the Democrats ever really try this there would be a real revolution. Although we could also end up with a civil war of sorts: the earners vs. the population of takers, which is what's already brewing in the current battle of red vs. blue.

Best wishes,
Laura

3:57 PM  

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