Your Retirement Savings May Be Next

Originally found at: GetLiberty.org

By Rick Manning

Could the Democrats in Congress actually be considering confiscating all 401(k), SEP and IRA accounts in exchange for offering Americans a “guaranteed annuity”?

The subject almost seems too far out there to even write about. While it is something that I had heard rumors of, I just couldn’t believe this type of proposal would ever be considered in America. Let alone become part of an active public policy debate.

But when the Wall Street Journal writes on the subject, and the House Republicans on the committee that oversees our nation’s pension system send a letter expressing concern to both Treasury Secretary Timothy Geithner and Labor Secretary Hilda Solis expressing concern, and then issue a press release on it, it is time to get concerned.

The least damaging scenario is that the Democrats are considering changes to the retirement security system that takes away the tax deductibility of retirement savings in exchange for using those dollars to create a new “guaranteed annuity” that will provide workers with a fixed amount each month. Sounding eerily like the insolvent Social Security system, these accounts would ensure that all people living in America had some small fixed amount of income each month in retirement.

However, this doesn’t really solve the biggest problem facing the Democrats. Their largest donors, organized labor, have a huge pension insolvency problem. Labor unions, both private and public, have severely mismanaged their pension funds. In fact, Moody’s considers many private funds to be in “critical condition”.

Believe it or not, public employee pension funds are in even worse shape. California’s public employee pension fund alone is reported to be underfunded by a whopping $500 billion (that’s half a trillion bucks or $500,000,000,000.00).

So, who has the money to make these colossal failures whole and keep union leaders and their members happy?

That’s right, you guessed it. The poor slob who doesn’t have a guaranteed pension, but has been putting off vacations and eating burger rather than steak for his/her whole career to put 5% of his income into a tax deferred retirement account is the one with the money. Right in his/her tax deferred retirement accounts.

According to the Investment Company Institute, in 2008, $2.4 trillion was invested by private citizens in 401(k) accounts.

Quite a tempting morsel of money if the Democrats in Congress can just convince the American public that they will be getting the security of a GUARANTEED payment every month, rather than dealing with the nasty ups and downs of the market.

As stated at the beginning of this piece, this isn’t yet a proposed law, but is merely a twinkle in the eye of those in the Obama Administration and in Congress who are desperate for cash to fill big labors pension black hole. But every bad idea starts as the twinkle in someone’s eye, and no bad idea seems to be too extreme for this gang of looters who have temporarily been given the keys to the nation.

So beware readers, when you start hearing about the need to avoid retirement risk coming from those who brought you government health care, and are in the process of putting into law a system that would monitor every single one of your financial transactions all under the guise of economic security.

Realize, that if you have been putting money away for your future, that these same jackals are eyeing your nest egg, to feather the nests of their political supporters.

Remember, forewarned is forearmed. So stay vigilant.

Rick Manning is the Director of Communications for Americans for Limited Government, and the former Chief of Staff of the Public Affairs Office at the U.S. Department of Labor that oversees the 401(k) system.

Unions Dont Know When To Stop

By Bill Wilson

Politics and policy has become surreal. Webster’s defines the term as “bizarre or dreamlike”. No word better describes the current state of affairs.

For yet another example of the “dreamlike” suspension of reality that is everyday Washington, D.C. consider the recent announcement from union-toady, Congressman George Miller. Miller is proposing to spend $100 billion on a bailout of local governments. That is $100 billion we will have to get from China or the Federal Reserve’s printing press to allow local governments to pretend a little while longer that they can act like spoiled children without consequence.

The Miller proposal would funnel the massive sum of borrowed money to local governments so they can “save or create” jobs. Boil it all down and the Miller scam is exposed as a temporary fix for the junkies who are attempting to avoid withdrawal at all costs. But cold-turkey withdrawal is exactly what they and America need.

The facts are well known. Government at all levels has grown faster than any other segment of the economy. Government, also, pays far more than corresponding workers in the private sector and has lavish benefit packages unmatched by any private worker. As the Cato Institute detailed in their January, 2010 Tax & Budget Bulletin # 59, the compensation scales and benefits of government are simply unsustainable. They cannot continue, there must be an adjustment.

But blocking that “adjustment” is the primary goal of labor unions. And whatever Big Labor wants, George Miller will try to deliver. So, the $100 billion bailout is meant for one thing and one thing only; paying off the unions and avoiding for even a little while the inevitable downsizing of government. Since the largest expenditure any government makes is on personnel, that downsizing means one thing – firing tens of thousands of unionized public employees.

Think for a second what Miller and his cronies are asking of American families, taxpayers and businesses. They want us to go deeper into debt, to the tune of another $100 billion, to pay employees we don’t need to do things that are of marginal value. We are eating our seed corn. This money will not be spent on things that will allow future growth and production or future prosperity. It is to be squandered on consumption. Like the raging alcoholic, full of bravado, we are maxing out the American credit card to buy lunch for everyone in the barroom.

The situation we confront is basic. We all know the nature of the choice. All of us were taught this choice as small children. We should all remember the story of the grasshopper and the ant. The grasshopper frittered away the summer, eating and having a great time. The ant, on the other hand, worked and saved and did without, so that he would have provisions for the winter. When winter arrived, the ant is secure and prepared while the grasshopper froze, starving from lack of food.

George Miller and his union masters are the grasshoppers of our time. They eat and drink and live in a dreamlike state where the bill never comes due. The only problem, of course, is that they do have a plan. They plan to stick all of us with the bill for their reckless behavior.

Its time we ants took matters into our own hands. The credit card needs to be cut into pieces. Local governments, as well as states and the Federal behemoth, need to face the facts. They have to live within the means of the people that fund them. The insane, surreal politics of spending and debt must come to a stop.

Any member of Congress, regardless of party, who opposes the Miller scheme should be praised and supported. Any local government that does the right thing and cuts its functions and personnel needs backing. Conversely, those who embrace the bizarre world of George Miller need to be shown the door. They are simply too sick to be in a position of authority.

Bill Wilson is the President of Americans for Limited Government.

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