This is a preliminary move, and a harbinger of a lot more to come. With spending out of control and the political impossibility of bringing it under control, the seizure of vulnerable pockets of wealth is inevitable. Private retirement accounts are the obvious low-hanging fruit, and the political rationale is also likewise obvious enough: With Social Security and other public pensions going broke, it’s only fair that the private retirement assets become a community resource. Never mind how we got here or who caused the problem or how to solve it; we’ve got an emergency! People are starving, and we need cash now!
Read this WSJ editorial, keeping in mind that this is only the beginning.
How many times have you read financial-advice stories lecturing you to max-out on your IRA, save as much as you can in your 401(k), and even pay taxes now to change your regular IRA into a Roth IRA that will be tax-free until you die?
Well, be careful how much you save.
That’s the message in President Obama’s budget for fiscal 2014, which for the first time proposes to cap the amount Americans can save in these tax-sheltered investment vehicles. The White House explanation is that some people have accumulated “substantially more than is needed to fund reasonable levels of retirement saving.” So Mr. Obama proposes to “limit an individual’s total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million for someone retiring in 2013.”
Thus do our political betters now feel free to define for everyone what is “needed” for a “reasonable” retirement. Not to be impertinent, but does this White House definition include being able to afford summers at age 70 at Martha’s Vineyard near the Obamas?
The feds may think $3 million is all you need after a lifetime of work, but that’s roughly the value of a California police sergeant’s pension if she works for 30 years, retires at age 50 and lives to normal life expectancy.
Historical addendum: A New York Times report from 2008, “Argentina Nationalizes $30 Billion in Private Pensions”.
Argentina’s government said Tuesday that it would seek to nationalize nearly $30 billion in private pension funds to protect retirees from falling stock and bond prices as the global financial crisis continues.
Of course. The people must be protected. Why else would the government do such a thing?
The measure, confirmed in a speech in Buenos Aires late Tuesday by Cristina Fernández de Kirchner, Argentina’s president, was criticized by political opponents and analysts as a move to shore up government coffers to try to head off a fiscal crisis in 2009, when Argentina might be struggling to make billions of dollars in debt payments.
I’m sure the looming government debt crisis was merely an unfortunate coincidence, and in no way influenced the decision to seize private assets.
Anyway, don’t worry, the sort of shenanigans they pull in Argentina and Cyprus; that stuff could never happen here. And if it ever did happen, it would only happen to the other guy, the greedy rich guy who neither needs nor deserves his ill-gotten loot. So you’ve got nothing to worry about, and in fact you’ll probably be a lot better off when we’re done. Trust us!