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Blueprint for Government Takeover of IRAs

Posted by Larry Doyle on January 11, 2010 12:05 PM |

An individual whom I highly respect submitted this commentary and requested I publish it. Given the respect I have for him, the depth of his perspectives, and the serious nature of this topic, I am happy to provide an outlet via Sense on Cents for his thoughtful analysis and projections. This commentary and the implications as outlined should give us all reason to pause and think.

LD

Blueprint for Government Takeover of IRAs by Comrade Joe

This blueprint is imaginary; the references are factual. Let’s connect the dots:

1.  Learn from Argentina (Oct 2008):
Argentina’s Property Grab – A cautionary tale for anyone who owns a retirement account. – Argentine President Cristina Kirchner announced this week that her government intends to nationalize the country’s private pension system. If Congress approves this property grab, $30 billion in individually held retirement accounts — think 401(k)s — managed by private pension funds will become government property.  – Wall Street Journal 10/23/2008

2.  Study Professor Teresa Ghilarducci’s Paper (Oct 2009):
Democratic leaders in the U.S. House discuss confiscating 401(k)s, IRAs – … The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism. Testifying for the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs, and confiscate workers’ retirement plan accounts and convert them to universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration. Carolina Journal Online

Read Ghilarducci’s paper: Guaranteed Retirement Accounts – Toward retirement income securityEconomic Policy Insitiute

3.  Have government propose legislation to allow conversion of 401(k) and IRAs into annuities. (Jan 2010):
Retiree Annuities May Be Pushed by Obama After Market Losses –  By Theo Francis – 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. The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams. Bloomberg

4.  After the next market crash, with populace roused, have legislative leaders decry the greedy and obscenely profitable private sector insurance and annuity companies demanding a more ‘competitive’ government sponsored solution.

5.  Propose and pass legislation for nationalizing retirement accounts using similar methods employed in passing national health care legislation. Rolls Royce (large) pension annuities can be taxed in order to provide annuities to those less fortunate (nonsavers).

Comrade Joe wishes to remain an unnamed member of the proletariat.

  • Fed Up

    There will be a run on pitchforks if they ever try to pass this.

    Actually there has been an enormous demand for guns and safes over the last year or so.

    Great links. Thanks Comrade Joe.

  • Bill

    A gun store has a photo of Obama with the caption–
    “America’s Number One Gun Salesman.”

  • Patrick Henry

    Could Uncle Sam try to enact a program of this magnitude? Special circumstances require special actions. Do not think for a second that the crowd in Washington is beyond trying anything to generate short term cash flow.

    Washington will likely see more and more states asking for federal bailouts. Long term interest rates have moved up by almost a full 1 per cent over the last few months.

    America needs cash. There is a LOT of money sitting in these retirement accounts.

    Do I think Uncle Sam will compel people to turn over their pensions (IRAs and 401-Ks)? No. But I have to admit that I never thought Uncle Sam would go to the lengths he has already on a number of fronts.

    Nothing is sacred anymore. All bets are off.

    America needs to be very vocal on this issue. Let your reps know they had better not even think about touching your pension.

    The Tea Parties last year were a walk in the park compared to what would happen if Uncle Sam thinks about this money grab.

    Great post, Joe.

  • Steven

    Tomorrow I will stop my 401k contributions for the time being. Heck, last week I cashed out the IRA.

    Perhaps I’ll resume the 401 at some point if this is a false alarm. If not, if it looks like it’s really going down then I’ll borrow against the 401k and let the gov try to hit me up for any penalty.

    Beat the corrupt bankster controlled government to the punch. Screw them before they screw you.

    • Susan Titus

      Nancy Pelosi brought this up 2 yrs ago and is still talking about it. I pulling half out and at least I will have it. If I pull 1/2 out then I have to pay myself back but when the Govt comes to take what is left I will have to accept the penatly as you. I probably should just stop paying into it but need the money right now to pay bills. Just love OBAMA, NOT! Wake up America, got screwed and never even got kissed!

  • Comrade Joe

    Blueprint update: Obama is promoting private sector annuities. This NY Times article should be inserted between steps 2&3 in blueprint above.

    The Unloved Annuity Gets a Hug From Obama – By RON LIEBER- … But there were annuities, in a report from the administration’s Middle Class Task Force that came out this week. They are among the tools the administration is promoting as it tries to give Americans a better shot at a more secure retirement http://www.nytimes.com/2010/01/30/your-money/annuities/30money.html

  • Comrade Joe

    followup: Hungary Follows Argentina in Pension-Fund Ultimatum, `Nightmare’ for Some – By Zoltan Simon – Hungary
    is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension. – … “This is effectively a nationalization of private pension funds,” David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. “It’s the nightmare scenario.” … – Bloomberg http://bit.ly/fl401p






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