Coming Soon: Substituting Government Annuities for Your 401(k)?
The Democrats believe you are too dumb to invest your own money wisely.
by Will Collier
pajamasmedia.com
Back around the last Election Day, far-left Congressmen George
Miller and Jim McDermott floated the idea of ending the 401(k)
tax break in favor of “redirecting those tax breaks to a new
system of guaranteed retirement accounts to which all workers
would be obliged to contribute.”
The left has always hated private retirement accounts. First
of all, they’re, you know, private, meaning the government
doesn’t control them, and we can’t have that. Worse still,
people with individual accounts aren’t beholden to a union
for their retirement — although what good that does anybody
who worked for a company that’s gone broke, for instance
Pan Am, is a question never really answered by old-fashioned
pension advocates.
From the perspective of politicians, a private account also
means you can’t scare people by saying, “If you don’t vote for
me, those evil Republicans will take away your monthly check.”
The power to hold that (empty) threat over the heads of
seniors is among the most beloved in the Democratic Party’s
bag of electoral tricks, and the prospect of a populace with
its own retirement money clearly drove many Democratic
politicians nuts.
But above and beyond those issues, the governmental class
really hates IRAs and 401(k) accounts because in their eyes
such accounts take all that glorious tax money away from the
U.S. Treasury. Billions upon billions, deferred for decades
or given up completely in the case of Roth accounts — money
that they could be spending to buy votes.
It’s unconscionable!
Who do all those little people think they are?
[SOTB: And that's exactly what their attitude is.]
Last year’s stock panic must have looked like a golden
opportunity to say, “See, we told you rubes what would happen
if you tried to take care of yourselves!” That argument
fizzled and the plot quieted down as the markets made back
most of 2008’s losses, but after a year of madcap spending
from the Obama administration and the Democratic congress,
it appears to be back.
According to Theo Francis at BusinessWeek, “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.”
It turns out that Obama appointees Phyllis Borzi (assistant
secretary of labor) and Mark Iwry (deputy assistant treasury
secretary) are floating the idea of “the conversion of 401(k)
savings and Individual Retirement Accounts into annuities or
other steady payment streams.”
Well, this raises more than a few questions. Why annuities,
for instance? As noted later in the article, “Seven in 10 U.S.
households would object to a requirement that retirees convert
part of their savings into annuities,” and the “why” of that
opinion isn’t that hard to figure out: they’re a bad deal for
everybody except the guys selling them.
Consumer gurus like Clark Howard have been warning people away
from high-commission “guaranteed” annuities for years. I bet
everyone reading this knows of somebody who’s been ripped off
by an annuity salesman.
But now … now the government would be the annuity salesman —
except that if the administration gets its wish, there won’t
be any “selling,” you’ll just be forced to take the money
you’ve earned and “convert” it to a construct that they’ll
allow you to “invest” in. No more of this willy-nilly mutual
fund nonsense for you plebeians; we’ll tell you how you’re
going to pay for things, so hand over the cash — it’s your
patriotic duty!
It would be plenty bad enough if the “guaranteed” government
annuities were limited to bailed-out insurers like AIG. But
Karl Denninger of The Market Ticker took a deeper look and
found an even scarier outcome. Denninger believes this is
really a scheme to prop up the market for Treasury bonds by
forcing citizens to “invest” in them.
[SOTB: That's exactly what it is. In fact, it's openly
acknowledged to be a tool to fill the when, not if, Treasury
auction gap that will surely arrive in early 2011, given
the wave of global sovereign debt bailouts yet to come,
which will suck up global funds that otherwise could be
used to buy US Treasuries.]
As Denninger points out, “Forcing people into Treasuries as
an ‘annuity’ is exactly what Social Security allegedly is.
Except that Treasury stole the money that was collected in
FICA taxes and spent it!”
And he’s right. The fictitious “Social Security trust fund”
is just a pile of Treasury notes. If we’re all forced to buy
trillions more of them — because the government has over-
borrowed so dramatically that nobody else will — all we’re
going to get in return are more IOUs with nothing backing
them up but the promises of politicians.
Those politicians will be retired themselves — on rich
taxpayer-funded pensions that you and I aren’t eligible for —
long before the IOUs come due. But they’ll have taken your
money to pay for their games, and if you think you’ll be
getting it back, I have some oceanfront property in Atlanta
that you might be interested in.
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It's public knowledge that the Obama administration has been
holding high level talks on the mandatory conversion of
private 401K and IRA accounts into government annuities,
in addition to pressuring private and public pension funds
to backstop the FDIC, by investing in bad banks.
Public and private pension funds are basically bankrupt,
the FDIC is bankrupt, the US banking system is bankrupt,
and a funding crisis for US Treasuries surely awaits,
especially so - given the global sovereign debt crisis
that is only just beginning.
With the Social Security and Medicare lock boxes already
looted, there remains one giant honey pot of "private cash"
yet to pilfer... and that's your 401K and IRA accounts.
With the Europeans now openly admitting the $1 trillion
dollar bailout of the PIIGS, is only going to "buy time" and
is merely a temporary fix while the G-20 gropes for a global
solution to the sovereign debt crisis, a still insolvent
global banking system, and $1.5 quadrillion dollars in derivatives
which have yet to be addressed... it could get real interesting
in early 2011, after the 2010 mid-term elections in the US.
I'm kind of thinking Mr. Darwin is going to be doing some
hard culling of the herd in 2011.
Survivor, or victim?
The choice is all yours.
SOTB |
