Back around the last Election Day, far-left Congressmen George Miller and Jim McDermott floated the idea of ending the 401(k) tax break in favor of “redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.”
The left has always hated private retirement accounts. First of all, they’re, you know, private, meaning the government doesn’t control them, and we can’t have that. Worse still, people with individual accounts aren’t beholden to a union for their retirement — although what good that does anybody who worked for a company that’s gone broke, for instance Pan Am, is a question never really answered by old-fashioned pension advocates.
From the perspective of politicians, a private account also means you can’t scare people by saying, “If you don’t vote for me, those evil Republicans will take away your monthly check.” The power to hold that (empty) threat over the heads of seniors is among the most beloved in the Democratic Party’s bag of electoral tricks, and the prospect of a populace with its own retirement money clearly drove many Democratic politicians nuts.
But above and beyond those issues, the governmental class really hates IRAs and 401(k) accounts because in their eyes such accounts take all that glorious tax money away from the U.S. Treasury. Billions upon billions, deferred for decades — or given up completely in the case of Roth accounts — money that they could be spending to buy votes. It’s unconscionable! Who do all those little people think they are?
Last year’s stock panic must have looked like a golden opportunity to say, “See, we told you rubes what would happen if you tried to take care of yourselves!” That argument fizzled and the plot quieted down as the markets made back most of 2008′s losses, but after a year of madcap spending from the Obama administration and the Democratic congress, it appears to be back.
According to Theo Francis at BusinessWeek, “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.”
It turns out that Obama appointees Phyllis Borzi (assistant secretary of labor) and Mark Iwry (deputy assistant treasury secretary) are floating the idea of “the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams.”