Becky Fenger Fenger PointingNOVEMBER 10, 2010

"Guaranteed" retirement accounts

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There are any number of reasons to fear what surprises the "shellacked" (to use President Barack Obama's word) Democrats may have in store for the country in the upcoming lame duck session. But one of the more troublesome ideas that might surface is one that got a recess hearing in Congress on October 7. If passed, it could seize your private 401 (k) and IRA retirement accounts to fund a government-run plan that will be known as a Guaranteed Retirement Account (GRA).

Teresa GhilarducciThe proposal is the brainchild of Teresa Ghilarducci, an economist at the New School for Social Research in New York. When she testified in front of Congress in October of 2008, financial adviser David McPherson outlined the basics of her plan for us. Here they are: Employees would make mandatory contributions equal to at least 5 percent of their earnings. Those contributions would be offset by a $600 federal tax credit per year. The Social Security Administration would handle account management and the Thrift Savings Plan (used for federal employees) would manage the money. Participants would be guaranteed a fixed rate of return that exceeds inflation by 3 percent. At retirement, participants' account balances would be converted into a lifetime stream of income that adjusts for inflation.

When news of this surfaced, talk show host Rush Limbaugh hyperventilated, but Ghilarducci accused him of mischaracterizing the plan. The mainstream media dismissed the GRAs as merely brainstorming ideas that were not to be taken seriously.

Fast forward two years, and you have Democrat Senator Tom Harkin of Iowa, aided by avowed Socialist/registered Independent Rep. Bernard Sanders of Vermont, listening to specially-selected witnesses in front of his Health, Education, Labor and Pensions (HELP) Committee last month. Human Events reported that Democrats held the recess hearing to discuss a taxpayer bailout of union pensions and a plan to more "fairly" distribute these taxpayer-funded pensions to everyone.

Ah, now it becomes clear what the lame ducks would like to do, and that is to give a going-away present to the unions. Our 401 (k) accounts would be seized and co-mingled with the new mandatory payroll tax monies in order to rescue the union pensions that are underfunded by billions and billions.

Ms. Ghilarducci informs us that the Guaranteed Savings Accounts would not replace Social Security, mind you, but would supplement Social Security as a bonus. She has also suggested that the tax breaks currently being received for contributing to 401 (k) or IRA plans could be eliminated. Amazingly, she told Bloomberg Business Week in July that "All Americans, including the 64 million who have no pension plans, would get one at no extra cost." This reminds me of ObamaCare, which Obama claims would add 33 million uninsured to taxpayer rolls "at no extra cost."

At least Sen. Harkin has not called journalist Saul Friedman, a seasoned journalist who writes the column, "Gray Matters," to share his ideas on Social Security. Friedman insists that Social Security is not going broke or in need of cuts in benefits. Instead, he poses that we should expand it exponentially. Friedman bemoans the fact that Social Security alone "is not enough to provide a stable, poverty-free environment for many Americans."

Richard Trumka, president of the AFL-CIO, says, "Universal retirement security is our next hurdle." Until that happens, the National Academy of Social Insurance has some good ideas for Social Security, Friedman thinks. These include: Providing child care as a benefit; paying benefits to students who have lost a breadwinner up to age 22 (instead of 18); and increasing benefits across the board for all individuals in the next year in order to make up for losses in savings.

To all of you who complain that the government only bails out big corporations like Goldman Sachs and General Motors, and simply ignore the little people, look-y here. The taxpayer is now going to delay adulthood and make up for market swings so no one gets hurt. Big government must be better for me than I thought.