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!
When *I* get to tell Mooch that she has *enough* pairs of shoes, then *they* can tell me how much I can save. Not that I have 3 mil in savings, but really, is it any of their business? And if so, then someone needs to tell the Obamas that since they are now worth 10 mil, isn’t that quite enough for one family? So: no $500,000 speeches for Barack or Mooch when they leave the WH.
Aside from issues of principle, the policy of extremely loose money will inevitably be highly inflationary. Just as the alternative minimum tax was once a trap for the wealthy but ordinary people got promoted into it (congratulations!), so will today’s “reasonable” limit on pensions soon become tomorrow’s poverty level.
Also, it irks me that this sort of planning always takes aim at people that try to build their lives on a solid foundation. There are two types of pensions, those based on savings and those based on promises. We’re going broke because promises have been made that simply cannot be kept. This is obvious, and some of us have been screaming about it for years, as Washington and other governments make more and more unsustainable promises. And as the houses of cards crumble, they’re going to do their damnedest to bring down the poor slobs that knew the promises were false and tried to build their lives on something tangible. It’s a crime.
You’re exactly right, Shifra and Maynard. I decided when I was about 27 years old that I would be responsible and build my own nestegg. If they think for one skinny minute they or any other tyrants have the right to say when I “have enough money” they can think again.
I personally don’t care how many pairs of shoes Mooch has. It’s none of my buisness.
Nor should it be the business of Urkel to tell you or me what a “reasonable retirement” should be. The sad fact remains that our 401K and other retirement vehicle are the largest pot of money that is doing nothing for an out of control gov’t. His plan of taxing over 3 mil will not yield sufficient funds for his leftist plans so he will get down to 2 mil then 1 mil. Eventually he will get into the 250K range.
This is not a new plan Teresa Ghilarducci wrote a book on the subject.
Here is a youtube link: http://www.youtube.com/watch?v=aivQdKasKpc
She is scary as is her plan.
Right Maynard. Those of who tried to tell people that gov’t. is one beast that wants to control and possess every aspect of your life. Even your very body. I got rolled eyes and “that will never happen here” all the live long day. I knew I was right though because I knew what the plan was. Incremental socialism. Tyranny by baby steps. HELL NO!!! No me and not mine. Please wake up America.
considering we’ve got 150 TRILLION in unfunded liabilities, at some point these tyrants will come to steal whatever they can get their hands on. either by inflation & deflation, or by gunpoint. i’m afraid most people don’t take this seriously enough.
It is about to the point that I wish I could leave this crumbling country – sorry to say it, but it’s just one thing after another, to the point that it feels like you can’t even fight it all! Of course, the problem is this nation was probably the last one to which freedom lovers could go. I know of no other place that’s not already pulling these kinds of shenanigans. So, it feels like – we’re screwed! If the sorry republicans can’t bring themselves to oppose some of this mess, it’s over, isn’t it?! I can’t imagine our pulling ourselves back out of ALL this cr*p – it’s too much! Cannot believe how quickly it can all go to hell, so to speak. Sorry to be so negative; I don’t know how else to feel about it right now…
Thanks for the post, Maynard. I am still stunned by this part of Obama’s budget proposal. No telling what else is in it. I will be reading it.
I was told just a few years ago that on the day following his takeover of Cuba, Castro drained every personal bank account in the country. Gone. Before Obama, Americans would have scoffed at the idea anything such could happen here. Are we scoffing today? Now, even the Wall Street Journal is taking Obama’s madness seriously, advising how to plan accordingly. “Obama would require everyone to have an IRA account.” That is all but stating a plan to set up accounts for their convenience — to siphon, tax, or “assess” those accounts.
It’s not a matter of whether one has 3 mil. In this country you don’t have to excuse yourself for building wealth, as you do in Britain; it is NO one’s business what you have or don’t have. To even say “not that I have 3 mil” is to buy into this mindset. Creating and building wealth in this country is now a punishable offense.
Are the H’wood elite ok capped out at $200k/yr for retirement? Many of them seem to spend that on breakfast. What about the Obamas? John Kerry? Clintons? Warren Buffet (his secretary?)? George Soros? Don’t you get the definite feeling that they don’t mean *they* will have to live by Obama’s tyranny? After all, this is surely just the start.
We in America now have what we fled some 250 years ago: a ruling class. Our reps no longer even pretend to represent us. They are smacking us down right and left; we are the commoners, the unwashed masses. Let us eat cake! It is sickening and NOT who we are. It must change, this has got to stop. I feel beaten and bloodied so often that I want to give up. I am overwhelmed by the fact that, not only does Obama always win, he wins *handily* — it seems people in this country are happy to offer their very lives for him. I feel certain it even shocks him. He is laughing at us day in and out, you can see it in his face these days.
I won’t give up. I can’t give up. But wow, EVERY DAY is a beat down from this bunch. WHY WHY WHY is he meeting little or no opposition in Washington??
Is this a red herring to get the ever incompetent John Boehner and the Republicans that re-elected him as Speaker, to meet him half way? Which is really Obama’s all the way. Again, I blame everything that Obama gets away with on the Republicans who through their bungling and refusal to listen to other voices, screw everything up.
I don’t think we are going to take the Senate in 2014 and I think we’ll be lucky to keep the House. Until true Conservative voices either take back the Republican Party or make it irrelevant, we are going to stay divided and people are going to stay home on voting day. All metrics supposedly say that this is a center right nation and that outside the cities we are more conservative in our beliefs. Well, obviously people aren’t voting that way. They are staying home on voting day because they don’t understand the political system or they aren’t inspired by any of the candidates.
Until we get some serious leadership, not a bumbling cry baby who speaks like he’s either drunk or has marbles in his mouth and never says anything of substance, we will continue to fail at convincing other Americans that Conservatism is better for their lives and the lives of their families.
Yes, S_J. To a small extent, I can understand Republican establishment wrong-headed notion of keeping out the peasants (Palin et al), but I really can’t understand why they keep looking to cave on amnesty and now Toomy on 2A. WHAT’S WRONG WITH THEM? Whew, thanks.
All animals are equal, but the pigs are more equal. Welcome to the third world where all your freedoms are decided by the beneficence of the current dictator.
It is sad and painful to see the greatness of a free America dissolve into a memory of better times. It will continue to get worse and there’s not a damn thing anyone can do about it. It’s closing time folks and we will all have to pay the piper. The last best hope is of mankind is now not the USA. Thank you liberal scum.
This needs to be stopped, and I have limited trust in Republican establishment that it will be. Democrats/liberals may not push on this very much, this time. But if not now, then in the future they’ll come back to it and say, the time has come. The Dems/Libs/MSM argument will be that it ‘only’ affects the rich. Majorly wrong, it will only affect the middle class and below.
There is already a limit on how much you can put in tax deferred IRA each year. People accept that because that is really a limit only on the upper middle class and above. This would put on in-effect a limit on no. of years, eg, depending on amount put in every year and investment return, you could reach this limit in 25 years or 30 years or 35 years, etc. Once that is reached, the rich have enough money that they can put their money in investments that require $1 million minimum for example. But the middle class with $15 or $25,000 for retirement investment won’t be able to do that. And with savings interest of 0%, there would be no reason to put private money into savings.
The effect will be; unemployed people will not be saving, rich will not be putting as much money into banks, and middle class will be further discouraged from saving. Think about that effect on the general economic health of the nation. Major reason an annual deficit has been handled by the economy is private saving. With only the Fed/Treasury printing money, the soaring interest on the debt and runaway entitlements will ensure destruction.
Can Republican establishment present a coherent case that this is a bad idea or will MSM roll them as protecting the rich. I wasn’t born in a bar, maybe that’s why I can see it clearly.
A number of financial commentators have made the point that these accounts are not tax exempt, but rather tax deferred. When you reach the correct retirement age, you start pulling money out and that income is then taxed. Thus any cap on total assets is a transfer of future tax revenues into the present. That results in a short term boost to the treasury at the long term cost of future income. You can collect it now or collect it later, but you can only collect it once. The Obama administration is trying to get money that would have been collected in the future, and giving it to the government today. But that means lower government revenues in the future, which implies the need for greater taxes down the line to make up the shortfall that would have been there otherwise.
And in EU banking news, the EU has passed a law that makes banks have more capital (good) and limits bankers bonuses to 100% of salary (stupid windowdressing at best). London has the most bank financial exchanges so the UK was against the bonus limit and therefore the EU vote was 27-1 in favor. This is what happens in multilateral unions be it EU or UN.
UK has a point: “…’The problem is a flawed banking system… None of this is going to save us from another disaster,” he said. He lamented that “what we’ve had here is criminal activity by bankers and not a single banker sent to prison – this is a disgrace’….”
http://www.bbc.co.uk/news/world-europe-22164384
And in German tax news, apparently hackers/leakers have found a way to make a good profit. A German State has paid over $5 million for a CD with the names of 40,000 Germans with supposedly a Swiss tax haven bank account. And now the State is raiding the homes of those suspected tax haven users looking for confirmatory info. (This is partly the German flaw, they have the best economy in the world, but yet feel no compunction against raiding homes based on under the table info. on a CD.) Look for this to spread.
http://www.dw.de/germany-raids-suspected-tax-dodgers-using-cd-data/a-16748305
Obama has come up with a new attack. Dept. of Interior is proposing cuts to royalty payments to the States for oil & mineral extraction on federal land within the States. Interior’s ‘reason’ is cuts must happen because of sequester. States view is, an agreement on royalty payments is not a federal expenditure but rather the feds get all the royalty money from the business and then just distributes the agreed upon royalty share to the States. Proposed cut is $26million for New Mexico and $53million for Wyoming and lesser amounts for other States.
http://watchdog.org/78378/nm-may-sue-obama-administration-over-mineral-and-energy-sequester-cuts/
This is reminding me of FDR’s confiscation of gold during the Depression, to “regulate the value of the currency.” It was the same sort of thing: Frugal people were seen as hoarding money when “the economy needed it.” The gov’t needed the money. Sure, people were given cash in exchange for it, but it was cash that the Fed could devalue to some degree.
The Democrats do not believe in the idea of saving. They’ve bought the Keynesian idea that saving is bad. You hear it every time they talk about “how much cash is sitting on the sidelines. Trillions of dollars.” We’re all “supposed” to be spending it. You talk to them privately about it, they don’t think saving makes macroeconomic sense. “It’s bad for the economy” they say. “You save too much and it leads to deflation. Once that spiral starts, you can’t control it.” Let the gov’t take care of our retirement (and you’re going to love that deal!) Don’t you care about the underfunded?
If we went through with this, we would start to hear complaining down the road about how $3 million isn’t enough. The Democrats will see it as the whining of the “selfish” who want to “have it better than everyone else.” We’re supposed to lower our expectations so that our masters can rule us more at their whim. When they get to supply our “nuggets” at the feed tray they can make “prudent” decisions about who gets what. They get to pick the winners and losers. This way they can “mold the world to their heart’s desire.”