Dems Target Private Retirement Accounts

For all those Obama supporters that are employed (probably not many as a percentage): I hope you start to see the light and ask: What in the world did we just do??

Democratic leaders in the U.S. House discuss confiscating   401(k)s, IRAs

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By Karen McMahan

November 04, 2008

RALEIGH — Democrats in the U.S. House have been conducting hearings on proposals to confiscate workers’ personal retirement accounts — including 401(k)s and IRAs — and convert them to accounts managed by the Social Security Administration.

Triggered by the financial crisis the past two months, the hearings reportedly were meant to stem losses incurred by many workers and retirees whose 401(k) and IRA balances have been shrinking rapidly.

The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism. Testifying for
the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs, and confiscate workers’ retirement plan
accounts and convert them to universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration.

Rep. George Miller, D-Calif., chairman of the House Committee on Education and Labor, in prepared remarks for the hearing on “The Impact of the Financial Crisis on Workers’ Retirement Security,”
blamed Wall Street for the financial crisis and said his committee will “strengthen and protect Americans’ 401(k)s, pensions, and other retirement plans” and the “Democratic Congress will continue to
conduct this much-needed oversight on behalf of the American people.”   Currently, 401(k) plans allow Americans to invest pretax money and their employers match up to a defined percentage, which not only
increases workers’ retirement savings but also reduces their annual income tax. The balances are fully inheritable, subject to income tax, meaning workers pass on their wealth to their heirs, unlike Social
Security. Even when they leave an employer and go to one that doesn’t offer a 401(k) or pension, workers can transfer their balances to a qualified IRA.

Mandating Equality
Ghilarducci’s plan first appeared in a paper for the Economic Policy Institute: Agenda for Shared Prosperity on Nov. 20, 2007, in which she said GRAs will rescue the flawed American retirement income system (www.sharedprosperity.org/bp204/bp204.pdf).

The current retirement system, Ghilarducci said, “exacerbates income and wealth inequalities” because tax breaks for voluntary retirement accounts are “skewed to the wealthy because it is easier for them to
save, and because they receive bigger tax breaks when they do.”

Lauding GRAs as a way to effectively increase retirement savings, Ghilarducci wrote that savings incentives are unequal for rich and poor families because tax deferrals “provide a much larger ‘carrot’ to wealthy families than to middle-class families — and none whatsoever
for families too poor to owe taxes.”

GRAs would guarantee a fixed 3 percent annual rate of return, although later in her article Ghilarducci explained that participants would not “earn a 3% real return in perpetuity.” In place of tax
breaks workers now receive for contributions and thus a lower tax rate, workers would receive $600 annually from the government, inflation-adjusted. For low-income workers whose annual contributions
are less than $600, the government would deposit whatever amount it would take to equal the minimum $600 for all participants.

In a radio interview with Kirby Wilbur in Seattle on Oct. 27, 2008, Ghilarducci explained that her proposal doesn’t eliminate the tax breaks, rather, “I’m just rearranging the tax breaks that are
available now for 401(k)s and spreading — spreading the wealth.”   All workers would have 5 percent of their annual pay deducted from their paychecks and deposited to the GRA. They would still be paying
Social Security and Medicare taxes, as would the employers. The GRA contribution would be shared equally by the worker and the employee. Employers no longer would be able to write off their contributions.
Any capital gains would be taxable year-on-year.

Analysts point to another disturbing part of the plan. With a GRA, workers could bequeath only half of their account balances to their heirs, unlike full balances from existing 401(k) and IRA accounts.

For workers who die after retiring, they could bequeath just their owncontributions plus the interest but minus any benefits received and minus the employer contributions.

Another justification for Ghilarducci’s plan is to eliminate investment risk. In her testimony, Ghilarducci said, “humans often lack the foresight, discipline, and investing skills required to
sustain a savings plan.”
She cited the 2004 HSBC global survey on the Future of Retirement, in which she claimed that “a third of Americans wanted the government to force them to save more for retirement.”

What the survey actually reported was that 33 percent of Americans wanted the government to “enforce additional private savings,” a vastly different meaning than mandatory government-run savings. Of the
four potential sources of retirement support, which were government, employer, family, and self, the majority of Americans said “self” was the most important contributor, followed by “government.” When broken out by family income, low-income U.S. households said the “government”
was the most important retirement support, whereas high-income families ranked “government” last and “self” first (www.hsbc.com/retirement).

On Oct. 22, The Wall Street Journal reported that the Argentinean government had seized all private pension and retirement accounts to fund government programs and to address a ballooning deficit. Fearing an economic collapse, foreign investors quickly pulled out, forcing the Argentinean stock market to shut down several times. More than 10 years ago, nationalization of private savings sent Argentina’s economy into a long-term downward spiral.

Income and Wealth Redistribution

The majority of witness testimony during recent hearings before the House Committee on Education and Labor showed that congressional Democrats intend to address income and wealth inequality through
redistribution.

On July 31, 2008, Robert Greenstein, executive director of the Center on Budget and Policy Priorities, testified before the subcommittee on workforce protections that “from the standpoint of
equal treatment of people with different incomes, there is a fundamental flaw”
in tax code incentives because they are “provided in the form of deductions, exemptions, and exclusions rather than in the form of refundable tax credits.”

Even people who don’t pay taxes should get money from the government, paid for by higher-income Americans, he said. “There is no obvious reason why lower-income taxpayers or people who do not file
income taxes should get smaller incentives (or no tax incentives at all),
” Greenstein said.

“Moving to refundable tax credits for promoting socially worthwhile activities would be an important step toward enhancing progressivity in the tax code in a way that would improve economic efficiency and
performance at the same time,” Greenstein said, and “reducing barriers to labor organizing, preserving the real value of the minimum wage, and the other workforce security concerns . . . would contribute to an
economy with less glaring and sharply widening inequality.”

When asked whether committee members seriously were considering Ghilarducci’s proposal for GSAs, Aaron Albright, press secretary for the Committee on Education and Labor, said Miller and other members
were listening to all ideas.

Miller’s biggest priority has been on legislation aimed at greater transparency in 401(k)s and other retirement plan administration, specifically regarding fees, Albright said, and he sent a link to a
Fox News interview of Miller on Oct. 24, 2008, to show that the congressman had not made a decision.

After repeated questions asked by Neil Cavuto of Fox News, Miller said he would not be in favor of “killing the 401(k)” or of “killing the tax advantages for 401(k)s.”

Arguing against liberal prescriptions, William Beach, director of the Center for Data Analysis at the Heritage Foundation, testified on Oct. 24 that the “roots of the current crisis are firmly planted in
public policy mistakes” by the Federal Reserve and Congress. He cautioned Congress against raising taxes, increasing burdensome regulations, or withdrawing from international product or capital
markets. “Congress can ill afford to repeat the awesome errors of its predecessor in the early days of the Great Depression,” Beach said.

Instead, Beach said, Congress could best address the financial crisis by making the tax reductions of 2001 and 2003 permanent, stopping dependence on demand-side stimulus, lowering the corporate
profits tax, and reducing or eliminating taxes on capital gains and dividends.

Testifying before the same committee in early October, Jerry Bramlett, president and CEO of BenefitStreet, Inc., an independent 401(k) plan administrator, said one of the best ways to ensure
retirement security would be to have the U.S. Department of Labor develop educational materials for workers so they could make better investment decisions, not exchange equity investments in retirement
accounts for Treasury bills, as proposed in the GSAs.

Should Sen. Barack Obama win the presidency, congressional Democrats might have stronger support for their “spreading the wealth” agenda. On Oct. 27, the American Thinker posted a video of an interview with
Obama on public radio station WBEZ-FM from 2001.

In the interview, Obama said, “The Supreme Court never ventured into the issues of redistribution of wealth, and of more basic issues such as political and economic justice in society.” The Constitution says
only what “the states can’t do to you. Says what the Federal government can’t do to you,” and Obama added that the Warren Court wasn’t that radical.

Although in 2001 Obama said he was not “optimistic about bringing major redistributive change through the courts,” as president, he would likely have the opportunity to appoint one or more Supreme Court
justices.

“The real tragedy of the civil rights movement was, um, because the civil rights movement became so court focused that I think there was a tendency to lose track of the political and community organizing and activities on the ground that are able to put together the actual coalition of powers through which you bring about redistributive change,” Obama said.

Karen McMahan is a contributing editor of Carolina Journal.

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Where his heart is: Obama, in 2001 Interview, Lamented Failure of Civil Rights Movement to Redistribute Wealth

In a radio interview in 2001, Barack Obama said the civil rights movement failed when it became so dependent on the Supreme Court that it never got around to working toward redistributing income.

A 7-year-old radio interview in which Barack Obama discussed the failure of the Supreme Court to rule on redistributing wealth in its civil rights rulings has given fresh ammunition to critics who say the Democratic presidential candidate has a socialist agenda.

The interview — conducted by Chicago Public Radio in 2001, while Obama was an Illinois state senator and a law professor at the University of Chicago — delves into whether the civil rights movement should have gone further than it did, so that when “dispossessed peoples” appealed to the high court on the right to sit at the lunch counter, they should have also appealed for the right to have someone else pay for the meal.

In the interview, Obama said the civil rights movement was victorious in some regards, but failed to create a “redistributive change” in its appeals to the Supreme Court, led at the time by Chief Justice Earl Warren. He suggested that such change should occur at the state legislature level, since the courts did not interpret the U.S. Constitution to permit such change.

“The Supreme Court never ventured into the issues of redistribution of wealth and sort of basic issues of political and economic justice in this society, and to that extent as radical as people try to characterize the Warren Court, it wasn’t that radical,” Obama said in the interview, a recording of which surfaced on the Internet over the weekend.

“It didn’t break free from the essential constraints that were placed by the founding fathers in the Constitution, at least as it has been interpreted.

“And the Warren court interpreted it generally in the same way — that the Constitution is a document of negative liberties, says what the states can’t do to you, says what the federal government can’t do to you, but it doesn’t say what the federal government or state government must do on your behalf, and that hasn’t shifted.

“And I think one of the tragedies of the civil rights movement was that the civil rights movement became so court-focused, I think there was a tendency to lose track of the political and organizing activities on the ground that are able to bring about the coalitions of power through which you bring about redistributive change, and in some ways we still suffer from that,” Obama said.

The 2001 interview evokes recent questioning by Joe “The Plumber” Wurzelbacher, the Ohio man who asked Obama about his proposal to raise taxes on people making more than $250,000. Obama told Wurzelbacher he wants to hike taxes on the wealthy so that the government can spread the wealth.

Obama campaign spokesman Bill Burton said Monday the comments on the tape have “nothing to do with Obama’s economic plan or his plan to give the middle class a tax cut.”

“Here are the facts. In the interview, Obama went into extensive detail to explain why the courts should not get into that business of ‘redistributing’ wealth. Obama’s point — and what he called a tragedy — was that legal victories in the civil rights led too many people to rely on the courts to change society for the better. That view is shared by conservative judges and legal scholars across the country,” Burton said..

“As Obama has said before and written about, he believes that change comes from the bottom up — not from the corridors of Washington. … And so Obama’s point was simply that if we want to improve economic conditions for people in this country, we should do so by bringing people together at the community level and getting everyone involved in our democratic process,” Burton continued.

John McCain’s campaign said the tape proves that Obama is too liberal for the White House.

Now we know that the slogans ‘change you can believe in’ and ‘change we need’ are code words for Barack Obama’s ultimate goal: ‘redistributive change,'” said McCain-Palin senior policy adviser Doug Holtz-Eakin.

“Barack Obama expressed his regret that the Supreme Court hadn’t been more ‘radical’ and described as a ‘tragedy’ the court’s refusal to take up ‘the issues of redistribution of wealth.’ No wonder he wants to appoint judges that legislate from the bench,” Holtz-Eakin continued.

National Review reporter Byron York, a FOX News contributor, said the U.S. government already has a progressive tax system that gives money earned by one group to another group, but it’s a matter of degree. He added that Obama’s outlook on that system hasn’t changed.

“It seems clear from listening to this that the Obama of 2001 and probably the Obama of today feels that the government doesn’t do that enough, and I think that’s probably the big point in this tape,” York said.

“You’ve got to take him at his word,” York added. “It seems to me that the tape shows that this is simply a goal he has had for a long time.”

In a speech in Cleveland on Monday, McCain said the Obama interview is just another indication that the Democrat wants to increase sharply the amount of government spending.

“Today, he claims he will only tax the rich. But we’ve seen in the past that he’s willing to support taxes that hit people squarely in the middle class, and with a trillion dollars in new spending, the most likely outcome is that everyone who pays taxes will be paying for his spending,” McCain said.

Click here to hear the interview.

It’s Redistribution; Obama Turns Blind Eye to Credit Card Donation Fraud

By: Kenneth R. Timmerman

What do Bart Simpson, Family Guy, Daffy Duck, King Kong, O.J. Simpson, and Raela Odinga have in common?

All are celebrities; and with the exception of Odinga and O.J. Simpson, they also are fictional characters. And yet, all of them gave money earlier this month to the campaign of Barack Obama, without any apparent effort by the campaign to screen them out as suspect donors.

The Obama fundraising machine may owe its sensational success in part to a relaxation of standard online merchant security practices, which has allowed illegal donations from foreign donors and from unknown individuals using anonymous “gift” cards, industry analysts and a confidential informant tell Newsmax.

Giving a Los Angeles address, he listed his employer as the “State of Nevada” and his occupation as “convict.” The donor used a disposable “gift” credit card to make the donation.

The Obama campaign sent O.J. a thank-you note confirming his contribution, and gave him the name of another donor who had agreed to “match” his contribution.

Four minutes earlier, an individual using the name “Raela Odinga” also made a $5 contribution, using the same credit card.

The real Raela Odinga became prime minister of Kenya in April and has claimed to be a cousin of Obama’s through a maternal uncle.

Obama donor “Raela Odinga” listed his address as “2007 Stolen Election Passage” in “Nairobi, KY.” This credit card donation raised no alarm bells in the Obama campaign.

A few minutes earlier, “Daffy Duck” gave $5 to the Obama matching campaign, listing his address as “124 Wacky Way, Beverly Hills, Calif.”

But just as with Odinga’s address, the “Wacky Way” address failed to raise any alarm bells or security traps on the Obama Web site. Daffy Duck also used the same credit card.

Within the hour, three other new donors gave $5 to the Obama campaign. They were:

READ THE REST HERE

  • [Editor’s Note: See “Obama Campaign Runs Afoul of Finance Rules.”]

    “I tried it myself a few days ago,” he said. “I’m attaching for you proof of the contributions I made in the names of Daffy Duck, Bart Simpson, Raela Odinga, and Family Guy.

    “What this means is that the Obama campaign does no verification of the name of the contributor. With a normal credit card, this wouldn’t wor[k], but with these disposable debit cards, no problem!

    “This needs to be exposed,” he said.