News Flash: Government Grabs More Power

And the beat goes on… Another government power grab in the wake of the financial crisis:

A recommendation to shake up the nation’s 401(k) system is gaining traction as workers and retirees gape in horror at their investment account balances.

“Four weeks ago this plan didn’t have a chance,” conceded its author, Teresa Ghilarducci.

Suddenly, things have changed. Ghilarducci’s proposal to create what she calls Guaranteed Retirement Accounts is gaining attention in Washington as the nation grapples with the issue of retirement security in the wake of a 40-percent-plus drop in the U.S. stock market this year.

“These last three weeks people are learning their 401(k) plans can go down,” said Ghilarducci, an economist at the New School for Social Research in New York.

Called to testify before Congress earlier this month, Ghilarducci’s ideas are gaining wide exposure nearly a year after she published a policy paper on the subject. She followed up that paper with a book published in May, “When I’m Sixty-Four: The Plot Against Pensions and the Plan to Save Them.”

Her proposal calls for knocking down the 401(k) plan system and replacing it with a government-run pension plan funded by employee contributions. Participants would be guaranteed an inflation-beating return and a lifetime stream of income.

What people want from their pensions is guaranteed income for life,” Ghilarducci said in an interview Monday. [Emphasis added.]

It boggles the mind how quickly the Left begun exploiting their public execution of capitalism on trumped-up charges.

Incidentally, for more on how to deal legitimately with the Social Security crisis (of which we have to presume the 401(k) power grab is a part), the Ayn Rand Institute has some ideas. Any of it sound familiar?

Under Social Security, lower- and middle-class individuals are forced to pay a significant portion of their gross income–approximately 12 percent–for the alleged purpose of securing their retirement. That money is not saved or invested, but transferred directly to the program’s current beneficiaries–with the “promise” that when current taxpayers get old, the income of future taxpayers will be transferred to them. Since this scheme creates no wealth, any benefits one person receives in excess of his payments necessarily come at the expense of others.

Under Social Security, every aspect of the government’s “promise” to provide financial security is at the mercy of political whim. The government can change how much of an individual’s money it takes–it has increased the payroll tax 17 times since 1935. The government can spend his money on anything it wants–observe the long-time practice of spending any annual Social Security surplus on other entitlement programs. The government can change when (and therefore if) it chooses to pay him benefits and how much they consist of–witness the current proposals to raise the age cutoff or lower future benefits. Under Social Security, whether an individual gets twice as much from others as was taken from him, or half as much, or nothing at all, is entirely at the discretion of politicians. He cannot count on Social Security for anything–except a massive drain on his income.

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