Obamaland

Workforce Magazine

The spectre of a Democrat super majority continues to provide more chills than a Hollywood Halloween movie. The assault this time is against our 401k and the attempt to "help us" to not lose money on Wall Street by eliminating the tax break on 401ks, and requiring payment into a government administrated program that invest our money for us and guarantees a whopping 3% !

House Democrats Contemplate Abolishing 401(k) Tax Breaks

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.

(Teresa Ghilarducci in an article entitled," The End of Retirement" calls Social Security privatization a "nightmare". And laments "decline of union contracts" and "the substitution of defined contribution or 401(k)-type accounts for traditional defined benefit pensions. " She concludes that "401(k) plans reveal that workers will never be able to accumulate enough assets in individual accounts and choose payout options that will provide a steady stream of income for life after retirement. This means that Americans will turn to the option that American adults have always relied on—contingent, low-paying jobs—"

In other words, the government need to make sure we are "taken care of" in retirement because its obvious to her that we are doing a poor job of it ourselves! The answer? Socialized retirement program. Obama will love this)

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.

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. “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.”

Under the current 401(k) system, investors are charged relatively high retail fees, Ghilarducci said. “I want to spend our nation’s dollar for retirement security better. Everybody would now be covered” if the plan were adopted, Ghilarducci said.

She has been in contact with Miller and McDermott about her plan, and they are interested in pursuing it, she said. “This [plan] certainly is intriguing,” said Mike DeCesare, press secretary for McDermott. “That is part of the discussion,” he said.

While Miller stopped short of calling for Ghilarducci’s plan at the hearing last week, he was clearly against continuing tax breaks as they currently exist. Savings rate“The savings rate isn’t going up for the investment of $80 billion,” he said. “We have to start to think about ... whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should.”

“From where I sit that’s just crazy,” said John Belluardo, president of Stewardship Financial Services Inc. in Tarrytown, New York. “A lot of people contribute to their 401(k)s because of the match of the employer,” he said. Belluardo’s firm does not manage assets directly.

Higher-income employers provide matching funds to employee plans so that they can qualify for tax benefits for their own defined-contribution plans, he said. “If the tax deferral goes away, the employers have no reason to do the matches, which primarily help people in the lower income brackets,” Belluardo said.

“This is a battle between liberalism and conservatism,” said Christopher Van Slyke, a partner in the La Jolla, California, advisory firm Trovena, which manages $400 million. “People are afraid because their accounts are seeing some volatility, so Democrats will seize on the opportunity to attack a program where investors control their own destiny,” he said.

The Profit Sharing/401(k) Council of America in Chicago, which represents employers that sponsor defined-contribution plans, is “staunchly committed to keeping the employee benefit system in America voluntary,” said Ed Ferrigno, vice president in the Washington office.

“Some of the tenor [of the hearing last week] that the entire system should be based on the activities of the markets in the last 90 days is not the way to judge the system,” he said.

No legislative proposals have been introduced and Congress is out of session until next year. However, most political observers believe that Democrats are poised to gain seats in both the House and the Senate, so comments made by the mostly Democratic members who attended the hearing could be a harbinger of things to come.

In addition to tax breaks for 401(k)s, the issue of allowing investment advisors to provide advice for 401(k) plans was also addressed at the hearing. Rep. Robert Andrews, D-New Jersey, was critical of Department of Labor proposals made in August that would allow advisors to give individual advice if the advice was generated using a computer model.

Andrews characterized the proposals as “loopholes” and said that investment advice should not be given by advisors who have a direct interest in the sale of financial products.

The Pension Protection Act of 2006 contains provisions making it easier for investment advisors to give individualized counseling to 401(k) holders.
“In retrospect that doesn’t seem like such a good idea to me,” Andrews said. “This is an issue I think we have to revisit. I frankly think that the compromise we struck in 2006 is not terribly workable or wise,” he said.

On Thursday, October 9, the Department of Labor hastily scheduled a public hearing on the issue in Washington for Tuesday, October 21.
The agency does not frequently hold public hearings on its proposals.

Filed by Sara Hansard of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Obama's Global Tax

Part Two of the excellent IBD Series The Audacity Of Socialism

INVESTOR'S BUSINESS DAILY
Posted Tuesday, July 29, 2008 4:20 PM PT

Election '08: A plan by Barack Obama to redistribute American wealth on a global level is moving forward in the Senate. It follows Marxist theology — from each according to his ability, to each according to his need.

We are citizens of the world, Sen. Obama told thousands of nonvoting Germans during his recent tour of the Middle East and Europe. And if the Global Poverty Act (S. 2433) he has sponsored becomes law, which is almost certain if he wins in November, we're also going to be taxpayers of the world.

Speaking in Berlin, Obama said: "While the 20th century taught us that we share a common destiny, the 21st has revealed a world more intertwined than at any time in human history."

What the 20th century really showed was a series of totalitarian threats — from fascism to Nazism to communism — defeated by the U.S. military. Hitler's Germany, Mussolini's Italy, Tojo's Japan and the Soviet Union offered destinies we did not share.
Our destiny of peace and freedom through strength was not achieved by a transnationalist fantasy of buying the world a Coke and singing "Kumbaya."

Obama's Global Poverty Act offers us a global socialist destiny we do not want, one that challenges America's very sovereignty. The former "post-racial" candidate obviously intends to be a post-national president.

A statement from Obama's office says: "With billions of people living on just dollars a day around the world, global poverty remains one of the greatest challenges and tragedies the international community faces. It must be a priority of American foreign policy to commit to eliminating extreme poverty and ensuring every child has food, shelter and clean drinking water."
These are worthy goals, but note there's no mention of spreading democracy, expanding free trade, promoting entrepreneurial capitalism or ridding the world of despots who rule and ravage countries such as Zimbabwe and Sudan.

Obama would give them all a fish without teaching them how to fish. Pledging to cut global poverty in half on the backs of U.S. taxpayers is a ridiculous and impossible goal.

His legislation refers to the "millennium development goal," a phrase from a declaration adopted by the United Nations Millennium Assembly in 2000 and supported by President Clinton.
It calls for the "eradication of poverty" in part through the "redistribution (of) wealth of land" and "a fair distribution of the earth's resources."

In other words: American resources.

It's a mantra of liberals that the U.S. is only a small portion of the world's population yet consumes an unseemly portion of the planet's supposedly finite resources. Never mentioned is the fact that America's population, just 5% of the world's total, also produces a stunning 27% of the world's GDP — to the enormous benefit of other countries.

Nonetheless, their solution is to siphon off the product of our free democracy and distribute it.We already transfer too much national wealth to the United Nations and its busybody agencies. Obama's bill would force U.S. taxpayers to fork over 0.7% of our gross domestic product every year to fund a global war on poverty, spending well above the $16.3 billion in global poverty aid the U.S. already spends.

Over a 13-year period, from 2002, when the U.N.'s Financing for Development Conference was held, to the target year of 2015, when the U.S is expected to meet its part of the U.N. Millennium goals, we would be spending an additional $65 billion annually for a total of $845 billion.

During a time of economic uncertainty, the plan would cost every American taxpayer around $2,500.

If you're worried abut gasoline and heating oil prices now, think what they'll be like when the U.S. is subjected in an Obama administration to global energy consumption and production taxes. Obama's Global Poverty Act is the "international community's" foot in the door.

The U.N. Millennium declaration called for a "currency transfer tax," a "tax on the rental value of land and natural resources," a "royalty on worldwide fossil energy production — oil, natural gas, coal . . . fees for the commercial use of the oceans, fees for the airplane use of the skies, fees for the use of the electromagnetic spectrum, fees on foreign exchange transactions, and a tax on the carbon content of fuels."

Co-sponsors of S. 2433 include Democrats Maria Cantwell of Washington, Dianne Feinstein of California, Richard Durbin of Illinois and Robert Menendez of New Jersey. GOP globalists supporting the bill include Chuck Hagel of Nebraska and Richard Lugar of Indiana.

Lugar has worked with Obama to promote more aid to Russia to promote nuclear nonproliferation. Lugar also promotes the Law of the Sea treaty, which turns over the world's oceans to an International Seabed Authority that would charge us to drill offshore and have veto power over the movements and actions of the U.S. Navy.

Obama's agenda sounds like defeated 2004 Democratic candidate John Kerry's "global test" for U.S. foreign policy decisions where "you have to do it in a way that passes the test — that passes the global test — where your countrymen, your people understand fully why you're doing what you're doing and you can prove to the world that you did it for legitimate reasons."

Obama has called on the U.S. to "lead by example" on global warming and probably would submit to a Kyoto-like agreement that would sock Americans with literally trillions of dollars in costs over the next half century for little or no benefit.

"We can't drive our SUVs and eat as much as we want and keep our homes on 72 degrees at all times . . . and then just expect that other countries are going to say OK," Obama has said. "That's not leadership. That's not going to happen."

Oh, really? Who's to say we can't load up our SUV and head out in search of bacon double cheeseburgers at the mall? China? India? Bangladesh? The U.N.?

In an Obama White House, American sovereignty will become an endangered species. The Global Poverty Act is the first toe in the water of global socialism