Barack Obama has been very vague about his policy plans for his presidency if he should win the election. Now, I know his supporters will complain that he has laid out an agenda such as “tax cuts for 95% of the people” although even his supporters are skeptical that his tax increases will be limited to the over 250,000 income group. Others doubt that anything like a tax cut will be enacted. Bill Clinton was elected in 1992 promising a “middle class tax cut,” which was discarded even before his inauguration as he claimed that the deficit was worse than he had thought. That was that.
We do have a few clues, however. This week, Argentina announced government seizure of private pension plans, much like the seizure of bank deposits a few years ago. That could never happen here. Could it ?
Well, maybe it could.
House Democrats Contemplate Abolishing 401(k) Tax Breaks
Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.
House Education and Labor Committee Chairman George Miller, D-California, and Rep. Jim McDermott, D-Washington, chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.
That almost sounds like Bush’s plan to privatize Social Security, but with a difference.
A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered. . . .
Under Ghilarducci’s plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.
There’s one difference. Obama refers to “gambling with the stock market” so the government would “invest” the funds.
The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.
“I want to stop the federal subsidy of 401(k)s,” Ghilarducci said in an interview. “401(k)s can continue to exist, but they won’t have the benefit of the subsidy of the tax break.”
They will end private pensions and substitute yet another government pension system. We already have one with Social Security.
“I want to spend our nation’s dollar for retirement security better. Everybody would now be covered” if the plan were adopted, Ghilarducci said.
She has been in contact with Miller and McDermott about her plan, and they are interested in pursuing it, she said.
“This [plan] certainly is intriguing,” said Mike DeCesare, press secretary for McDermott.
“That is part of the discussion,” he said.
While Miller stopped short of calling for Ghilarducci’s plan at the hearing last week, he was clearly against continuing tax breaks as they currently exist.
Does this sound like socialism ? It does to me. Pete Du Pont has some predictions for the agenda.