Where’s Lumpy?

While out on the campaign trail, Senator McCain, fresh from his jaunt to DC to actively promote the socialization of Wall Street’s losses, was painting Senator Obama red, this article on Workforce.com hit cyberspace:

Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion 401(k) system, including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive.

House Education and Labor Committee Chairman George Miller, D-California, and Rep. Jim McDermott, D-Washington, chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute.

A plan by Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered. She testified last week before Miller’s Education and Labor Committee on her proposal.

At this point, some silly neo-liberals have done nothing more than ask a comically deluded, out-of-touch, ivory tower technocrat to testify.  I’d like to think that they wouldn’t seriously consider such a move, even if they gain control of both houses of Congress, and the White House, in January.  I know such a move would be political suicide on a grand scale, and in so doing render 2010 a repeat of 1994.

At that hearing, the director of the Congressional Budget Office, Peter Orszag, testified that some $2 trillion in retirement savings has been lost over the past 15 months.

Yep, that’s what happens when the market tanks.  Those of us who value our 401K’s see this as an opportunity to buy low.  See, we’re comfortable taking that risk, and we knew what we were getting into.  We don’t need Ms. Ghilarducci’s help, no matter how piously intent she might be about saving us from ourselves:

Under Ghilarducci’s plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.

The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.

Well whoop-de-do.  Employers and employees will give up their tax breaks for a measly $600/year for bonds issued by a government that’s $10 trillion in debt on paper, and several times that figure in debt counting unfunded liabilities?  For this we get 3 percent a year, which trails a rate of inflation that will inevitably accelerate as they print money to cover this debt?  Oh, but it’s OK:  the Social Security Administration will take care of us.  They’ve done such a great job so far.

Waiter, I’ll have whatever Ms. Ghilarducci is drinking.

“I want to stop the federal subsidy of 401(k)s,” Ghilarducci said in an interview. “401(k)s can continue to exist, but they won’t have the benefit of the subsidy of the tax break.”

As a good collectivist, Ms. Ghilarducci presupposes that wealth created by the citizenry belongs first to the state, then to the citizen that created it.  Under this nonsensical but prevalent view, any fiscal restraint the state exercises in confiscating its share is derided as largesse.  How ideologically confused can she be to claim Fedzilla is subsidizing me by allowing me to keep what I earned?  Well, let’s see:

“I want to spend our nation’s dollar for retirement security better. Everybody would now be covered” if the plan were adopted, Ghilarducci said.”

There it is: “our nation’s dollar” that she “want(s) to spend.”  The inanity boggles the mind.  Every dollar earned belongs first to the laborer, technician, software developer, physician, teacher, and yes, plumber that earned it, and not to some federally-subsidized academic hack and the politicians that invite her to testify.

Hat tip once again to my friend Todd, who I’ll pingback and link to as soon as he gets his blog up and running.  Til then, keep the tips coming, buddy!