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Would you trade-in your 401k and IRA for a guaranteed annual 3% real return from the US government?
Maurice, I remember when this was all the political attack rage. If I remember right the Democrats never had any such proposal. This was just one testimony among others in a committee investigation of the various ideas people had about how to better address retirement plans. It became a campaign attack against people who never even suggested such an idea. This is very old, yesterday stuff unless something has happened recently.
I am not supporting this idea. But Maurice said it is 3% real return. That means 3% over the inflation. You can argue the inflation would be represented fairly or your starting point of assuming 3% nominal return is incorrect.
I do not like the mandatory choices. But I am not opposed to a GRA that is voluntary in participation.
You don't trust the government to provide 3% real rate of return. i.e. 3% + inflation. I find no fault with that suspicion. But I think putting the blame on Democrats is unfair where Republicans are trying to convert Medicare to voucher scheme which will very likely not going to keep up with inflation. As a matter of fact, if this was not the intention, there would be no benefit on the long run from such a conversion.
In short, both parties have some very questionable behavior. Luckily, democrat or republican, there are common people from both parties that are saying "hold-on a second" and showing stick to the politicians.
I think this defect is not democratic or republican. It is a politician defect.
Could you identify specific Democrats and left leaning persons leading the charge to confiscate retirement plans? No one was leading such a charge in 2008.
A proposal presented at the time was to require workers to contribute to a new type of account that would provide a 3% real rate of return. This wouldn't touch retirement plans. If anything, it strikes me as a fairer (read arithmetically simple) form of Social Security, since the payout wouldn't have a bend in it. http://www.ssa.gov/oact/cola/bendpoints.html
Maurice- as MSF points out above, it isn't a bad idea to run stuff like this by an organization such as FactCheck. It's bad enough with all of the politicians of BOTH parties lying and misleading us without adding to the misinformation and chaos by doing it to ourselves also.
FactCheck, by the way, is an organization which was started by the Annenberg family, who you may remember were very close friends of the Nixons. Over the years I have found FactCheck to be fair, accurate, and impartial- a great non-ideological resource, which is a lot more than can be said of a lot of groups out there.
If you have not yet had time to read the linked article in Maurice's original post, I suggest you do so and to that end have relinked the article by Karen McMahan below. I confess to not having paid much attention to this thread until today. I have read the other comments including msf's fact-checking, but feel compelled to offer some observations nevertheless.
1. Look at the date of the article, November, 2008. This was the depths of perhaps the worst stock market crash in history, rivaling the 1929 debacle. My own conservative retirement account had lost nearly a third of its value by this point and many, perhaps some here, had seen half of their retirement savings disappear overnight. It was against that backdrop that the House hearings were held.
2. While the author would have you believe that the views expressed were those of House Democrats, and even the President to be, in truth the views are mainly expressed by two liberals testifying before the investigating committee: Teresa Ghilarducci from the New School for Social Research (whatever that is) and Robert Greenstein who appears to be from a liberal Washington think tank and who did serve under President Carter in the Agricultural Department. Some of the comments attributed to Ghilarducci were not even made in the hearings, but are excerpted from a radio interview elsewhere.
3. The writer makes extensive use of partial quotations. I have neither the time or inclination to follow through on the complete context for each, but offer them up as something less than scholarly journalism. Here's one example taken from the article. I have omitted quotation marks so you can see how the author presented it. (Asterisks mine)
*** 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. ***
Notice how the word "not" was inserted by the journalist, not necessarily part of the original quotation. Note also the inference about Supreme Court Justices which the writer linked to the Obama quotation.
I don't fault Maurice or anyone else for presenting controversial articles/opinions. The board can tolerate diversity. However, the linked piece appears not to be "journalism", but rather a piece of biased and misleading political propaganda.
I also missed the start of this discussion. A quick Google search for Teresa Ghilarducci turns up a rich set of links, mostly from a few years ago, but some more recent, characterizing her as the "most dangerous woman in America". Basically, she cites the underuse of 401(k)s and thinks it would be better to have a mandatory defined contribution plan (5% of income contributed by employee and employer together, I think) with guaranteed 3% minimum real return. The assets would belong to the employee, but (it seems) would not be under employee control. So it actually seems like kind of a hybrid of Social Security and the TIAA "guaranteed" plan. I did not delve into this enough to find out if it actual had a confiscatory element, taking away what folks already have saved.
The whole scheme sounds like a non-starter to me even without the confiscatory aspect.
I prefer the behavioral finance angle, which looks at the way people make choices and tries to alter the "choice architecture" with better starting defaults (i.e. automatic opt-in, default allocation to a target retirement fund) and making it at least as easy to choose "save more later" as "save exactly what I can save now forever". In other words, don't take choice away just because people choose badly; instead make it easier to choose well. The interesting, semi-ideological spin Thaler and Sunstein put on it is to say "libertarian paternalism is not an oxymoron" -- the paternalism lies in creating a choice architecture with some notion of what you are hoping most people will choose -- the libertarianism lies in leaving it to people to choose, and even opt out, if they insist.
Morn'in hank, First, my below rant is to the topic; not you. I'm not going to chew on all of this much............but, I did watch testimony about this on CSPAN TV; and yes, the period of this discussion with the market melt may have added some flames to this. I recall that this was in place with Rep. Geo. Miller of CA. I also recall the Rep. Miller did not seem to be an off the wall socialist; but I am always concerned when those in power think that only the "gubment" and those like Ms. G's plans can save mankind and have the best plans. The last 3 years of gov't monies and planning have had some benefit; but plans and play "make work" projects such as a high speed rail from Tampa, FL to Disneyworld are large piles of poorly thought plans in my opinion and waste my and your monies. I am hard pressed to find many organizations that can stand on their own without your and my monies in the form of a "grant". Sadly, most citizens don't stop to think about where does all of this "magic money" come from and who pays for same. In MI for the past several years, every drainage ditch that passes under a county backroad somewhere has had two pretty signs placed along the roadside to give one and all the "name" of the ditch, drain or creek. One wonders what this cost with the "free grant money" from the DOT or some other gubment agency. I would rather have this money fix the hugh pot hole in the road near the pretty new sign; that just took out 5 cars worth of front struts or broke a wheel or tire. There is so much crap money flowing around to support everything, that I am reminded of the false economy of the old Soviet Union. Nothing was real work or free enterprise. The only free enterprise I see around me are the private store owners or the folks mowing lawns in the summer and plowing snow in the winter; much of the remainder is "play money" supporting things that should be left to fail on their own. One could write a very large book about this "fantasy topic". Take care of you and yours, Catch
Morn'in GFB, I also posted this reply to hank. First, my below rant is to the topic; not you. I'm not going to chew on all of this much............but, I did watch testimony about this on CSPAN TV; and yes, the period of this discussion with the market melt may have added some flames to this. I recall that this was in place with Rep. Geo. Miller of CA. I also recall the Rep. Miller did not seem to be an off the wall socialist; but I am always concerned when those in power think that only the "gubment" and those like Ms. G's plans can save mankind and have the best plans. The last 3 years of gov't monies and planning have had some benefit; but plans and play "make work" projects such as a high speed rail from Tampa, FL to Disneyworld are large piles of poorly thought plans in my opinion and waste my and your monies. I am hard pressed to find many organizations that can stand on their own without your and my monies in the form of a "grant". Sadly, most citizens don't stop to think about where does all of this "magic money" come from and who pays for same. In MI for the past several years, every drainage ditch that passes under a county backroad somewhere has had two pretty signs placed along the roadside to give one and all the "name" of the ditch, drain or creek. One wonders what this cost with the "free grant money" from the DOT or some other gubment agency. I would rather have this money fix the hugh pot hole in the road near the pretty new sign; that just took out 5 cars worth of front struts or broke a wheel or tire. There is so much crap money flowing around to support everything, that I am reminded of the false economy of the old Soviet Union. Nothing was real work or free enterprise. The only free enterprise I see around me are the private store owners or the folks mowing lawns in the summer and plowing snow in the winter; much of the remainder is "play money" supporting things that should be left to fail on their own. One could write a very large book about this "fantasy topic". Take care of you and yours, Catch
Long experience has shown that the federal government has no ability at all to measure and report the REAL rate of inflation - how in the world will they pay 3 percent more than a number that they consistently and wildly underestimate?
Comments
I remember when this was all the political attack rage. If I remember right the Democrats never had any such proposal. This was just one testimony among others in a committee investigation of the various ideas people had about how to better address retirement plans. It became a campaign attack against people who never even suggested such an idea. This is very old, yesterday stuff unless something has happened recently.
I do not like the mandatory choices. But I am not opposed to a GRA that is voluntary in participation.
You don't trust the government to provide 3% real rate of return. i.e. 3% + inflation. I find no fault with that suspicion. But I think putting the blame on Democrats is unfair where Republicans are trying to convert Medicare to voucher scheme which will very likely not going to keep up with inflation. As a matter of fact, if this was not the intention, there would be no benefit on the long run from such a conversion.
In short, both parties have some very questionable behavior. Luckily, democrat or republican, there are common people from both parties that are saying "hold-on a second" and showing stick to the politicians.
I think this defect is not democratic or republican. It is a politician defect.
FactCheck.org (Nov 26, 2008) - Are congressional Democrats talking about confiscating IRA and 401(k) investment accounts?
http://www.factcheck.org/askfactcheck/are_congressional_democrats_talking_about_confiscating_ira.html
A proposal presented at the time was to require workers to contribute to a new type of account that would provide a 3% real rate of return. This wouldn't touch retirement plans. If anything, it strikes me as a fairer (read arithmetically simple) form of Social Security, since the payout wouldn't have a bend in it.
http://www.ssa.gov/oact/cola/bendpoints.html
You were not accused of being partisan. I recognized the material and said ".... unless something has happened recently."
FactCheck, by the way, is an organization which was started by the Annenberg family, who you may remember were very close friends of the Nixons. Over the years I have found FactCheck to be fair, accurate, and impartial- a great non-ideological resource, which is a lot more than can be said of a lot of groups out there.
1. Look at the date of the article, November, 2008. This was the depths of perhaps the worst stock market crash in history, rivaling the 1929 debacle. My own conservative retirement account had lost nearly a third of its value by this point and many, perhaps some here, had seen half of their retirement savings disappear overnight. It was against that backdrop that the House hearings were held.
2. While the author would have you believe that the views expressed were those of House Democrats, and even the President to be, in truth the views are mainly expressed by two liberals testifying before the investigating committee: Teresa Ghilarducci from the New School for Social Research (whatever that is) and Robert Greenstein who appears to be from a liberal Washington think tank and who did serve under President Carter in the Agricultural Department. Some of the comments attributed to Ghilarducci were not even made in the hearings, but are excerpted from a radio interview elsewhere.
3. The writer makes extensive use of partial quotations. I have neither the time or inclination to follow through on the complete context for each, but offer them up as something less than scholarly journalism. Here's one example taken from the article. I have omitted quotation marks so you can see how the author presented it. (Asterisks mine)
*** 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. ***
Notice how the word "not" was inserted by the journalist, not necessarily part of the original quotation. Note also the inference about Supreme Court Justices which the writer linked to the Obama quotation.
I don't fault Maurice or anyone else for presenting controversial articles/opinions. The board can tolerate diversity. However, the linked piece appears not to be "journalism", but rather a piece of biased and misleading political propaganda.
Link to article: http://www.carolinajournal.com/exclusives/dems-target-private-retirement-accounts.html
The whole scheme sounds like a non-starter to me even without the confiscatory aspect.
I prefer the behavioral finance angle, which looks at the way people make choices and tries to alter the "choice architecture" with better starting defaults (i.e. automatic opt-in, default allocation to a target retirement fund) and making it at least as easy to choose "save more later" as "save exactly what I can save now forever". In other words, don't take choice away just because people choose badly; instead make it easier to choose well. The interesting, semi-ideological spin Thaler and Sunstein put on it is to say "libertarian paternalism is not an oxymoron" -- the paternalism lies in creating a choice architecture with some notion of what you are hoping most people will choose -- the libertarianism lies in leaving it to people to choose, and even opt out, if they insist.
gfb
First, my below rant is to the topic; not you.
I'm not going to chew on all of this much............but, I did watch testimony about this on CSPAN TV; and yes, the period of this discussion with the market melt may have added some flames to this. I recall that this was in place with Rep. Geo. Miller of CA. I also recall the Rep. Miller did not seem to be an off the wall socialist; but I am always concerned when those in power think that only the "gubment" and those like Ms. G's plans can save mankind and have the best plans. The last 3 years of gov't monies and planning have had some benefit; but plans and play "make work" projects such as a high speed rail from Tampa, FL to Disneyworld are large piles of poorly thought plans in my opinion and waste my and your monies. I am hard pressed to find many organizations that can stand on their own without your and my monies in the form of a "grant". Sadly, most citizens don't stop to think about where does all of this "magic money" come from and who pays for same.
In MI for the past several years, every drainage ditch that passes under a county backroad somewhere has had two pretty signs placed along the roadside to give one and all the "name" of the ditch, drain or creek. One wonders what this cost with the "free grant money" from the DOT or some other gubment agency. I would rather have this money fix the hugh pot hole in the road near the pretty new sign; that just took out 5 cars worth of front struts or broke a wheel or tire.
There is so much crap money flowing around to support everything, that I am reminded of the false economy of the old Soviet Union. Nothing was real work or free enterprise. The only free enterprise I see around me are the private store owners or the folks mowing lawns in the summer and plowing snow in the winter; much of the remainder is "play money" supporting things that should be left to fail on their own.
One could write a very large book about this "fantasy topic".
Take care of you and yours,
Catch
I also posted this reply to hank.
First, my below rant is to the topic; not you.
I'm not going to chew on all of this much............but, I did watch testimony about this on CSPAN TV; and yes, the period of this discussion with the market melt may have added some flames to this. I recall that this was in place with Rep. Geo. Miller of CA. I also recall the Rep. Miller did not seem to be an off the wall socialist; but I am always concerned when those in power think that only the "gubment" and those like Ms. G's plans can save mankind and have the best plans. The last 3 years of gov't monies and planning have had some benefit; but plans and play "make work" projects such as a high speed rail from Tampa, FL to Disneyworld are large piles of poorly thought plans in my opinion and waste my and your monies. I am hard pressed to find many organizations that can stand on their own without your and my monies in the form of a "grant". Sadly, most citizens don't stop to think about where does all of this "magic money" come from and who pays for same.
In MI for the past several years, every drainage ditch that passes under a county backroad somewhere has had two pretty signs placed along the roadside to give one and all the "name" of the ditch, drain or creek. One wonders what this cost with the "free grant money" from the DOT or some other gubment agency. I would rather have this money fix the hugh pot hole in the road near the pretty new sign; that just took out 5 cars worth of front struts or broke a wheel or tire.
There is so much crap money flowing around to support everything, that I am reminded of the false economy of the old Soviet Union. Nothing was real work or free enterprise. The only free enterprise I see around me are the private store owners or the folks mowing lawns in the summer and plowing snow in the winter; much of the remainder is "play money" supporting things that should be left to fail on their own.
One could write a very large book about this "fantasy topic".
Take care of you and yours,
Catch