Based on the current information that's out there, it looks like progress is quietly moving forward. This subject was first covered on Moneytalk back in November, 2008. I transcribed and paraphrased some of the conversation and Jeffchristie found the transcript for us:
Sunday, February 21, 2010
Bob Brinker: Possible IRA/401K Government Confiscation
February 21, 2010....Yesterday, much of Bob Brinker's Moneytalk was devoted to the talk in Washington about the government helping themselves to our IRAs/401ks. I transcribed some of Brinker's dialogue on the subject. Please see yesterday's summary.
Based on the current information that's out there, it looks like progress is quietly moving forward. This subject was first covered on Moneytalk back in November, 2008. I transcribed and paraphrased some of the conversation and Jeffchristie found the transcript for us:
Based on the current information that's out there, it looks like progress is quietly moving forward. This subject was first covered on Moneytalk back in November, 2008. I transcribed and paraphrased some of the conversation and Jeffchristie found the transcript for us:
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Kevin in Kalamazoo called in and asked Bob about the government taking over IRAs and 401k's. This subject was first discussed back in November of 2008 and Honey documented it here at the Bee hive. Here is what took place back then:
(Honey said:) I am going to cover the call from Ken in depth because the subject is very important and I know that some of you are concerned. I have included excerpts from Brinker's very interesting comments:
Caller Ken said he had met Brinker a few years back in San Jose at the Leukemia "Curathon" and had been a Moneytalk listener since 1986. He thanked Brinker for making his road to CRITICAL MASS very smooth. (Honeybee EC: That's about the time that I began listening to Moneytalk -- late 1986 or early 1987). Ken asked Brinker about the House of Representative plan involving George Miller and Jim McDermott to eliminate the 401K system and replace it with a mandatory federal program.....
Brinker said: "This basically started with hearings that were held by committees involving the politicians you mentioned....... And what they did, they had a witness come into the hearing from the New School in Manhattan, and her name was Theresa Ghillarducci. (Honeybee EC: Some are calling her the most dangerous woman in America.) Theresa's idea is to develop a program that would allow 401K members........to convert those accounts to government retirement programs. Now what that would involve, if you elected to convert your account, you would give all the money in your 401K to the United States government.......and in return for that, you would receive a guaranteed retirement payout for the rest of your life once you became eligible.......
......On the program........we suggested that one of reasons that you would invite Ms. Ghilarducci into your hearings to present this scheme would be that you think it's a pretty good idea. I think it's a reasonable leap of faith to think that some of the people, either chairing or on the committee, think this might be a pretty good idea, and that's the reason they invited Theresa Ghilarducci in to present her scheme -- and that's what it's all about."
Ken pointed out that even though they are saying it's not going to be mandatory, if it doesn't get much participation, they will turn around and make it mandatory -- that's scary.
Brinker responded: "I think that if it's not voluntary that you are absolutely right.......Not only would I oppose it vehemently, but I would expect that large numbers of 401K holders people across America would rise up in protest of a mandatory confiscation -- that's what it would be........If they made it mandatory that would mean that the United States Government.......would confiscate all assets in 401K and replace those assets with a guaranteed retirement payout. Now I think if they proposed that to be mandatory that would be a dramatic step toward basically a Socialist system in Washington."
Ken said that would be just like they did in Argentina.
Brinker replied: "Yeah, I wonder, and I don't know where Ms. Ghilarducci got her idea, but I noticed that her testimony occurred not that far away from El Presidente Christina in Argentina announcing that the government of Argentina -- and this just happened within the last several weeks -- has announced that they are confiscating all pension fund assets in the country of Argentina -- it is a government confiscation of funds."
Ken said that with all the programs that are currently being proposed, suddenly there is a $3Billion pot of money out there that they could go get, and that they have been saying we are all going to have our own little account in the Social Security Trust Fund, and we all know that is just a bunch of IOUs.
Brinker agreed that Ken was exactly right -- the Social Security "Trust Fund" is a pile of IOUs. He said this whole 401K thing does bear monitoring, but that he had not heard the president-elect give any opinion on it yet. Brinker said that he had done some research and the only connection he made was with the two House of Representative members and Ms. Ghilarducci -- but he found nothing coming out of the White House or White House-elect. Brinker repeated that he has no problem with it if it is voluntary, but mandatory is a different story.
Ken said that if they stop the tax breaks that you get with a 401Ks, and stop the tax-breaks to companies that do a match to 401Ks -- you are "out of luck."
Brinker told Ken that he thought there were two reasons that would make this an especially appealing option to members of congress. Firstly, if they make it mandatory, they could confiscate $trillions of dollars of 401K assets and put that money into the coffers of the United States Government. And Brinker said that you know "the government spends every penny it gets its hands on -- then they go out and borrow and spend more."
Brinker said: "I think there are members of congress who look at these $trillions of dollars of assets and they salivate at the thought of spending that money, which they would........The second thing that I think appeals to certain members of congress is if they establish a mandatory program, that would de facto eliminate your ability to deduct a portion of your income from your taxable income in the form of a 401K contribution. That means that would be an immediate increase in annual revenue for the federal government because you would no longer have that deduction. I think there are CERTAIN members of congress who salivate at the thought of spending that additional revenue."
(Honeybee EC: In my opinion, they will of course start out with a voluntary program to get their noses under the tent, but it won't stay that way. It's astonishing to read about the original Social Security Act and compare it to what it is now. Does anyone know what the original payroll tax withholding was?)