Green Room

Proposed Government 401k Grab

posted at 1:04 pm on October 14, 2010 by

Jay Tea is on a tear at Wizbang about  Democrat Senator Tom Harkin’s hearing on a proposal to confiscate your personal retirement savings.  In the interest of protecting you, and of course, fairness.

Human Events has been on this story for a while.

In a nutshell, under the GRA ["Guaranteed Retirement Account"] system government would seize private 401(k) accounts, setting up an additional 5% mandatory payroll tax to dole out a “fair” pension to everyone using that confiscated money coupled with the mandated contributions.  This would, of course, be a sister government ponzi scheme working in tandem with Social Security, the primary purpose being to give big government politicians additional taxpayer funds to raid to pay for their out-of-control spending.

Read more about this and about the inevitable Soros connection at Human Events.

This government confiscation is being considered along with a union pension bailout, which needs to occur before new financial transparency rules take effect on December 15.  It’s so patently insane for anyone – even Democrats like Harkin who don’t have to worry about campaigning again until 2013 – to give this idea a serious look that I wonder if it’s being put out there in order to make the union pension bailout seem more reasonable.  Yes, we’re requiring taxpayers to bail out irresponsible, corrupt unions but at least we’re not directly confiscating your savings to do so!

If this were to happen in a mad duck session after the Democrats get wiped out in the upcoming elections, then it’s certain that the GOP will quickly move to rescind such a policy/law/however they try to implement it.  Because otherwise the crowd of people with torches and pitchforks would come after them.  Even the GOP is not so stupid and statist that they’re going to permit this to happen.  Still – don’t relax, because it’s the (entirely justified) outrage of voters that will prevent this theft.

Crossposted.

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I seem to recall clinton tried this and it was a huge flop. There is so much money in 401 and IRS’s just setting around that the feds can’t get their slimy hands on, they will try every way they can to get to it. This move by anyone in dc will go ballistic by the citizens if they try it!
L

letget on October 14, 2010 at 1:16 PM

Fascism.

rbj on October 14, 2010 at 1:36 PM

I seem to recall clinton tried this and it was a huge flop. There is so much money in 401 and IRS’s just setting around the health care industry that the feds can’t get their slimy hands on, they will try every way they can to get to it. This move by anyone in dc will go ballistic by the citizens if they try it!
L

letget on October 14, 2010 at 1:16 PM

Sounds like what some of us said about health care reform. NEVER SAY NEVER.

gryphon202 on October 14, 2010 at 2:06 PM

Well didn’t you know, Obama voters are far more deserving of what you earned and saved … Fascism is the word. Redistribution is the goal. Stealing is the real meaning.

tarpon on October 14, 2010 at 2:08 PM

How is that even legal? It’s not a tax; it’s a direct seizure of assets, without compensation. We’re not Venezuela — yet.

jwolf on October 14, 2010 at 2:10 PM

If there were to happen there would be a revolt.

Oil Can on October 14, 2010 at 2:14 PM

How is that even legal? It’s not a tax; it’s a direct seizure of assets, without compensation. We’re not Venezuela — yet.

jwolf on October 14, 2010 at 2:10 PM

That’s what taxation is now, jwolf! There is nary a soul in America alive today that can imagine a time that there was no direct personal taxation. Dated from 1776, our republic is 234 years old. Only since 1913, 97 years ago, has government had the power (and only with the blessings of the people, by way of constitutional amendment) to take money directly from our paychecks.

That was a big effin deal 97 years ago, people! What makes you think that they Dems are going to stop there?

gryphon202 on October 14, 2010 at 2:14 PM

Taking money out of my 401K and IRAs is a red line. A government that does that is a domestic enemy, and I swore an oath to protect the Constitution against all enemies, foreign and domestic. OPSEC on what I will do, but I’ve give it some thought.

NaCly dog on October 14, 2010 at 2:32 PM

gryphon202 on October 14, 2010 at 2:14 PM

I still do not believe that a 100% tax on assets of a certain type is legal. But I admit I am out of my depth on this issue.

jwolf on October 14, 2010 at 2:37 PM

As to how they would do it, the second Human Events link has the details. Biden/Obama floated the idea back in February. Again, it’s all for our protection – they guarantee a lifetime income with a particular rate of return above inflation and you’re prevented from borrowing against it or withdrawing it early. The government would entirely control the payout.

So, for example my mother, who is recently disabled, would be prevented from using part of her own retirement savings to help pay for an addition to be built onto my house for her to move into so I can more easily take care of her yet still provide her with her own living space and privacy. We are *hustling* to get the construction done before the year is out… just in case. I really do not expect this to go through, but I’m not willing to bet too much that it won’t. It would be political suicide for the GOP to fail to promptly undo whatever the Dems might manage to ram through in a lame duck session. But I lack total confidence in the GOP not to commit political suicide.

Laura Curtis on October 14, 2010 at 2:38 PM

Government workers have their own plans called 461 somethings. I doubt they intend to confiscate their plans. Just yours.

Blake on October 14, 2010 at 2:39 PM

Has anyone here given any thought to what this would do to the market it it were to pass? Remember, a 401k is NOT a savings account, it is an investment account. Most 401k’s are tied up in STOCK. The “run” on 401k accounts by people eager to empty them before the law goes into effect would make the 1929 run on banks look like nothing!

With all that money leaving the market, all those “sell” orders, the market really WOULD crash. We’re talking about a 60-70% total market value loss here. It would be INSTANT economic depression.

I don’t think even the Dems are THAT stupid.

wearyman on October 14, 2010 at 3:42 PM

don’t think even the Dems are THAT stupid.

wearyman on October 14, 2010 at 3:42 PM

I hope that’s true, but history of the Obama administration tends not to support that optimism. But, if the Dems want to remain out of offce for the next 40 years or so, this will do it.

jeanie on October 14, 2010 at 3:49 PM

Catch the Levin interview….. it’ll make your eyes bleed!
http://www.marklevinshow.com/Article.asp?id=1312416&spid=32364

….and you know what else, in general, your heirs don’t inherit your Social Security. Done properly, your spouse and children receive your IRA with little or no tax.

2nd Ammendment Mother on October 14, 2010 at 3:54 PM

I don’t think even the Dems are THAT stupid.
wearyman on October 14, 2010 at 3:42 PM

Obamacare… Cap n’ tax… “shovel ready…” V.P. Biden…

Q.E.D.

Laura Curtis on October 14, 2010 at 3:58 PM

I don’t think even the Dems are THAT stupid.

wearyman on October 14, 2010 at 3:42 PM

hahahahahahahahahahaha.

Oh, it’s not stupidity that drives them…it’s ARROGANCE. Now go eat your cake. Just watch.

search4truth on October 14, 2010 at 4:15 PM

Glad I drained my 401(k) shortly after 0bama was immaculated.

Sekhmet on October 14, 2010 at 4:26 PM

Glad I drained my 401(k) shortly after 0bama was immaculated.
Sekhmet on October 14, 2010 at 4:26 PM

Just out of curiosity – how did you do that?
(Oh Noes! What blasphemy! I don’t trust the Statists.)

Chip on October 14, 2010 at 4:35 PM

Just out of curiosity – how did you do that?
(Oh Noes! What blasphemy! I don’t trust the Statists.)

Chip on October 14, 2010 at 4:35 PM

Took a big tax hit for it, but took all my money out.

Sekhmet on October 14, 2010 at 5:09 PM

Are you reading about this in NV, MA, CT, DE, and all the other blue states? Are you going to help us stop this insane grab of every last dime we have or are you going all depends on us? Vote for the witch, the top rope and the crazy woman, Daisy Duck anybody but a dem.

Kissmygrits on October 14, 2010 at 5:13 PM

If this were to happen in a mad duck session after the Democrats get wiped out in the upcoming elections, then it’s certain that the GOP will quickly move to rescind such a policy/law/however they try to implement it.

If the Democrats don’t have a majority in January, everything from then on will be in the form of executive orders.

logis on October 14, 2010 at 6:53 PM

Sekhmet@5:09,
I sold almost all stocks in hubby and my ira some time ago when I saw what this bho was up to. I have cash to take out if the Bush tax cuts is not extended. I will take the tax hit this year, not next year when it will be much worse. I will wait till near the end of the year to take the money out when the dc bunch ‘might’ get to this. At any rate, we have cash! Might need a car full to buy a loaf of bread!
L

letget on October 14, 2010 at 6:58 PM

Took a big tax hit for it, but took all my money out
Sekhmet on October 14, 2010 at 5:09 PM

Ditto. Cashed out when Dow was pushing 14000. Even after the tax hit it was win win.

AH_C on October 14, 2010 at 7:36 PM

If this were to happen in a mad duck session after the Democrats get wiped out in the upcoming elections

Mad duck – excellent, although it may turn out to be more like a rabid duck.

Luka on October 14, 2010 at 8:09 PM

I still do not believe that a 100% tax on assets of a certain type is legal. But I admit I am out of my depth on this issue.

jwolf on October 14, 2010 at 2:37 PM

Oh I think you’re probably more aware of what’s going on than most. You consider yourself conservative, dont’ you? ;)

What makes our federal tax structure tolerable in the eyes of many is that it is a tax on income rather than wealth. But not every tax is like that. Estate tax, anyone?

It’ll happen; when the dems think we’re ripe for the picking, they’ll go from taxing income to taxing static assets. It’ll end up being just like health care reform was: gotta wait for an opportune moment.

gryphon202 on October 14, 2010 at 8:10 PM

So…. here’s my conspiracy theory for the day…..

Retirement accounts aren’t just giant piles of cash sitting in the bank earning interest (oh for the good old days of rolling CD’s).

Retirement accounts are full of all sorts of financial instruments including stocks, bonds, mutual funds and the like.

If the government seizes every IRA, they won’t be getting a giant pile of cash. They get all those stocks. Stocks in every publicly traded company in the United States.

And when you combine all of my great-granny’s AT&T stock with all of your great-granny’s AT&T stock and everyone else’s AT&T stock….. Guess who will have majority ownership if AT&T?

And when the government has majority ownership of every publicly traded company in the US….. Well, I’ll let someone else finish that thought since I’ve now freaked myself into a fetal ball under my desk!

Likewise, all those little old ladies lean towards lots of safe investments like municipal bonds… and if the Feds aquire most the outstanding bonds issued by the City of Austin…. Guess who suddenly “owns” the City of Austin?

For grins I’ll throw in a couple of random items that don’t really fit, but then again they do:

This President is very fond of governing by regulation and executive order, executing hostile takeovers of industries and destroying industries that he doesn’t like.

No one is still completely sure what’s in the Financial Overhaul Bill.

Obama “appointed” Elizabeth Warren, a person whom Dems wouldn’t even approve and who is openly hostile to the entire financial services industry, to write all of the new rules.

The Unions are still pissed over Card Check, but the fastest way to eliminate Right to Work is for everyone to suddenly be government employees.

2nd Ammendment Mother on October 14, 2010 at 8:18 PM

When that happens, there should definitely be a million man march on D.C.

That’s about a hundred divisions.

I reckon that should be plenty.

justltl on October 14, 2010 at 10:28 PM

The DC leeches have looted everything else. The IRAs are the last big pile of cash, of course they are going to make a try for it.

It is also a bright red line.

GnuBreed on October 15, 2010 at 12:43 AM

The DC leeches have looted everything else. The IRAs are the last big pile of cash, of course they are going to make a try for it.

It is also a bright red line.

GnuBreed on October 15, 2010 at 12:43 AM

The problem is that “bright red line” is always moving.

Did anyone think home loans were a “grey area” three years ago?

logis on October 15, 2010 at 9:44 AM

Just out of curiosity – how did you do that?
(Oh Noes! What blasphemy! I don’t trust the Statists.)
Chip on October 14, 2010 at 4:35 PM

Took a big tax hit for it, but took all my money out.
Sekhmet on October 14, 2010 at 5:09 PM

Okay, thanks for your answer – I kind of guessed at that, but figured I’d ask anyways.

Now the question is whether to take that hit now, or possibly get nothing later…

Chip on October 15, 2010 at 10:55 AM

Given that there’s about to be another mortgage backed securities crisis – bank stocks are about to take a big hit- if you’re getting it out, you might want to investigate this new crisis to see how fast you ought to move or if it’s better to wait it out. Read this, published by a blogger well in advance of when the WSJ got around to reporting on it at 9pm – and even that was very downplayed.

Laura Curtis on October 15, 2010 at 11:22 AM

Here’s what WSJ published two days after the blogger. I have a feeling people are running around behind the scenes panicking, and I don’t blame them.

Laura Curtis on October 15, 2010 at 11:31 AM

That’s what taxation is now, jwolf! There is nary a soul in America alive today that can imagine a time that there was no direct personal taxation. Dated from 1776, our republic is 234 years old. Only since 1913, 97 years ago, has government had the power (and only with the blessings of the people, by way of constitutional amendment) to take money directly from our paychecks.

That was a big effin deal 97 years ago, people! What makes you think that they Dems are going to stop there?

gryphon202 on October 14, 2010 at 2:14 PM

Yeah and you know how they got away with it?

Yep you guessed it. “Only The Rich will be taxed – but they will finally pay their fair share.”

Why come up with a new lie when voters will fall for the same old one every time.

Lily on October 15, 2010 at 2:40 PM

Why come up with a new lie when voters will fall for the same old one every time.

Lily on October 15, 2010 at 2:40 PM

Contrary to popular belief, the dumbing down of America did not begin in the 1960′s. It started in 1913.

gryphon202 on October 15, 2010 at 6:09 PM

The filibuster can stop this in the Senate, now that the Dems have only 59 votes. The GOP doesn’t even need any Democrats to prevent cloture if they all hang together. But I think they would get a Democrat or who’s up for reelection in 2012.

That’s if this actually came to the serious prospect of a vote. I agree with Laura Curtis that the likelihood of that is remote.

Of course, if everyone is happy with judicial autocracy — as many seem to be in the wake of Judge Phillips’ egregious directive to the Defense Department — then there’s nothing stopping a federal judge from ordering the executive branch to nationalize all the 401(k)s.

J.E. Dyer on October 15, 2010 at 8:50 PM