"'In place of 401(k) plans, she would have workers transfer their dough into government-created "guaranteed retirement accounts" for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, said that since "the savings rate isn't going up for the investment of $80 billion [in 401(k) tax breaks], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that's not generating what we now say it should."
And continued by quoting directly from the same article:
"Straight from the jackasses mouth, the Democratic plan is to SIEZE your 401k and take $80 billion that is currently the property of American citizens. Effectively, this plan will end all of the incentives that the majority of Americans not only enjoy but rely on. I am sure you or someone you know takes advantage of their employer matching their 401k contribution. Under the iron fist of the Democratic empire your employer would no longer receive a tax benefit for matching your contribution, so they won't do it. And you will lose half of your retirement contributions. And don't forget, that you will lose your tax breaks from the 401k plan also, so you'd be paying the government to let you retire."
So what are the facts in this matter?
The last quoted paragraph is from an article titled "Would Obama, Dems Kill 401(k) Plans?" by James Pethokoukis (who has an enviable vita) that appears in the October 23, 2008 online version of U.S. News & World Report here:
http://www.usnews.com/blogs/capital-commerce/2008/10/23/would-obama-dems-kill-401k-plans.html
In the first sentence of the quoted article (which is not included in the email), Mr. Pethokoukis writes, "House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans."
After some further research, I found Professor Ghilarducci's source paper on this topic, titled "Guaranteed retirement accounts: Toward retirement income security" (November 2007, EPI Briefing Paper #204 from The Economic Policy Institute), at the end of which we find the following biographical entry:
"Teresa Ghilarducci, after 25 years as a professor of economics at the University of Notre Dame, will be the Schwartz Chair in Economic Policy Analysis at the New School for Social Research in January 2008. She is the 2007 and 2008 Wurf Fellowship holder at the Labor and Worklife Project at the Harvard Law School."
The actual paper may be found here:
http://www.sharedprosperity.org/bp204.html
(And a rather interestingly named link for that url, eh? Clearly Professor Ghilarducci and other faculty members of the New School for Social Research have something more on their minds than simply the "initiative for solutions that match the scale of the problems" shibboleth that appears on the masthead of that web page. BTW, I am most certainly not taking a shot at this institution because of its name. It is a most respected institution with a rightly deserved reputation for scholarship, one which my mother attended in the 1930s. However, as is true with so many colleges and universities today, it shelters more than a few idealogues, and if my own prosperity is to be shared, I'm sure they have a plan for doing so.)
Ghilarducci's paper is quite lengthy, but worth taking the time to consider thoughtfully because it clearly forms the basis of her invited comments to Congress and will likely inform their continued discussion (as well as Obama and his advisers).
And, more to the point, the summary which Pethokoukis drew of her paper in his own article, and the conclusions at which he arrived as a result of his reflections on this matter, mirror my own . . . and I strongly encourage readers to visit the first link to read these for themselves. But I'll note in passing that I particularly enjoyed the sarcasm of his fifth observation: "What effect would this plan have on an already battered stock market? Well, I would imagine it would send it even lower, sticking a shiv into the portfolios of everyone who didn't jump aboard. But I am sure the Chinese would love to jump in and buy all our cheap stocks to fund the retirement of their citizens."
Food for thought.
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