The Federal Government, a Complete and Absolute Private Entity with Its Own Agenda, Is Coming After Your Retirement

I hate to use the “S” word, but the American government would never do something as, well, socialist as seize private pension funds, right? This is exactly what cash-strapped Argentina just did in the name of protecting workers’ retirement accounts. Now, even Uncle Sam isn’t that stupid, but some Democrats might try something almost as loopy: kill 401(k) plans. 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. 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% of pay into the accounts, to which the government would pay a measly 3% return. Rep. Jim McDermott, a Democrat from Washington, 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.” - James Pethokoukis, Will Obama And The Democratic Majority Congress Kill Your 401k Retirement Plan?, October 23, 2008

Teresa Ghilarducci would force all workers to save 5% of their annual income in a new type of retirement vehicle, which she calls a Guaranteed Retirement Account. These savings could not be controlled by workers like IRAs and 401(k) assets, but would instead be deposited with the government. Workers could not touch the money until retirement, she says, and even then the savings could not be drawn out any way workers might desire, but would be converted to an annuity -- a guaranteed stream of income for life. Ghilarducci argues that these new accounts would avoid stock market risks; the government would guarantee that the savings earn a 3% annual return on top of inflation. The government would also pay each worker $600 a year in the form of a tax credit, which would help workers who now earn too little to take advantage of a tax deduction because they owe little or no federal income tax anyway. At the Oct. 7 hearing, Ghilarducci further proposed that Congress address the recent stock market drop by allowing workers to trade their existing 401(k) or IRA accounts for her proposed Guaranteed Retirement Accounts. (Her words can be heard starting at 33 minutes and 23 seconds into the video of the hearing.) - IRAs, 401(k)s and You, FactCheck.org, November 26, 2008


George Carlin was right: They'll get it, they'll get it all.

Government Confiscation of Retirement Accounts

March 27, 2011

Mangan's - Quantitative easing, i.e. money printing by the Federal Reserve, looks like it's set to continue forever, there being no other source of large amounts of money with which to fund the government's huge and growing deficits.

But wait, maybe there is another source of funds: your retirement accounts.

Gonzalo Lira makes a convincing case for the ease and plausibility of government confiscation of retirement accounts:

What pool of money is just sitting there, not doing much, while being legally barred from its owners? What pool of money is easily accessed, yet is large enough to fund the deficit?

The retirement accounts of the American people: Both individual private accounts, and pension funds.

After all, the total for all pension monies is roughly 100% of GDP (this includes Social Security). And the Federal government has already raided the “Social Security lock box”—that box is stuffed with Treasury IOU’s.

So the Federal government might well turn to the private sector for cash. The Federal government might conceivably claim that ongoing funding needs require that every single 401(k) and IRA divest from its portfolio of stocks and bonds, and be fully invested in Treasuries.

This could be accomplished very easily, from a practical standpoint — just inform banks, and have them turn over to the Federal government all your mutual funds and stocks you agonized over, and get long-term Treasury bonds of nominal equal value in exchange.

401(k)’s and IRA’s would be the first ones the Federal government would go after — for the obvious reason that union pension funds have the union’s political muscle. But individuals? They have no political machine. So they’re screwed. [...]

There might be short-term political damage, but like losing your virginity or carrying out state-sponsored torture programs, it would be the necessary start for a slide that will never end. After this first “retirement asset swap” carried out on the 401(k)’s and IRA’s, the Treasury department would start doing more of this to ever-bigger pension funds, until eventually all retirement assets would be converted into Treasury bonds.

Hey, they did it in Argentina. And as Yves Smith always sez, America has become Argentina, but with nukes.

I'm not so sure about the lack of political damage; it seems to me that a huge public outcry would ensue, which doesn't mean that it couldn't happen. The wealthy — and that means just about anyone who's been reasonably frugal and saved their money for retirement — are a huge target; the 51% of the population that has little money would love to get their hands on it, and the elite on Wall Street and in Washington will help them do so.

An article at Lew Rockwell's site recommends a number of actions to take for those who believe that this threat is real. For starters, stop contributing to your retirement account — that's an action I've already taken.

As if we didn't have enough to worry about, now we have to worry about America becoming another Argentina.

U.S. Government Will Soon Seize Your Retirement Account

May 17, 2011

NaturalNews – When it comes to your retirement account, you probably keep an eye on Wall Street and the financial markets because when they lose value, your account loses value. Little did you know you are going to have to keep an eye on Uncle Sam as well, because he’s eyeing your retirement too, and he could soon take what he will claim is his fair share of it.

If you think that sounds absurd, think again. In fact, it’s a concept that is already being used by some governments, the most recent of which is Ireland.

In a bid to finance a “jobs” program, the Irish government, which is heavily in debt, is set to impose a new levy — read “tax” — on private retirement accounts. The accounts of government workers will be exempt.

“It’s truly disgusting logic to force private workers to pay for years of political incompetence while absolving government employees,” writes Simon Black, entrepreneur and founder of SovereignMan.com, a Web site about financial and practical independence.

Black says the idea of robbing private pension funds by broke governments to pay for existing or expanding government programs is an idea that is catching on.

“Pension funds are attractive targets for politicians who have wide eyes and the most carnal thoughts at the site of any large pool of cash,” he says, noting that the French government last year adopted laws “allowing politicians to steal retirement funds from the public in order to pay off other debts.”

It’s an idea that is catching on in the United States too, mostly because there are trillions of dollars in private retirement accounts, and the federal government is trillions of dollars in debt — with trillions more promised in benefits like Social Security, Medicare and now a massive new health care law.

Black says it’s likely any attempt by the U.S. government to seize private retirement accounts would be preceded by a cataclysmic economic event similar to the 2008 financial crisis, only worse. This time, lawmakers will respond by changing investment law that may force retirement account holders to invest a portion of their savings in, say, 30-year Treasury notes.

Some lawmakers are onto this, however. Rep. Michele Bachmann, R-Minn., has recently criticized such efforts in a letter to the Obama administration warning against attempts to confiscate Americans’ retirement accounts.

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