Taking Away Our 401Ks

The dust has barely settled on the election of 2008 and we hear the first rumblings of what we most fear - the democratic overreach. With huge looming budget deficits and a long pent up demand for new social spending the democrats are looking to increase the limits on their charge cards. The tool that has caught their eye is our 401Ks, the same vehicle many of us have been planning to ride into the sunset of our lives.

Unless we are employed by the government with a gold plated pension with cost of living adjustments and free medical insurance, we have only our lowly 401K to provide for our golden years. In the private sector where most people struggle to find employment, pensions are now a thing of the past and even then without a cost of living adjustment they are a risky benefit to trust retiring on.

Reprentatives George Miller and Jim McDermott are looking to remove the tax deductibility of 401K plans for employers. Instead they would like you to pay into a "guaranteed retirement account administered by the Social Security Administration" - and they propose to give us a $600 a year annual subsidy in its place!

Once employers lose their tax breaks for our matching contributions, kiss these matching contribution goodbye. Don't expect company pensions to come back either. They also propose encouraging us to "invest" in "special" government bonds that are guaranteed to achieve a 3% rate of return. What is the asset they hope to tap into? It's our children of course who will be saddled with the bill, nothing is going to be put aside but a pile of IOUS for them to pay. Instead there will be more money to be spent.

Recently this same strategy has been exercised in Argentina where the government of Cristina Fernandez is attempting to seize all private pension plans in an effort to avert a government default on its debts. Under the banner of protecting the workers retirement money the government instead wants to take their money and give them newly printed government bonds in return allowing them to spend the cash, plug their budget shortfalls and spend more money on what they desire.

It's only fitting that a government such as ours would follow the lead of Argentina and seize people's retirement money. The Social Security system itself was set up on the ponzi principal that as long as population kept going up, up, up, current retirees would be paid for by a larger number of younger workers. This bubble of demographics ended some time ago with the end of the baby boom. No assets have ever been set aside except IOUS with our kids names on them. Where once six or seven workers paid for one retiree, we will have one or two workers responsible for each retiree. Instead of a 1% payroll tax like many retirees enjoyed they may see 15% or higher. These younger Americans will have little choice but to lead lesser lives and put off their own families as they labor under the burdens they are now being assigned.

With the reliability of Social Security becoming more dubious every day and with the 401K as our only real chance that we (us non-government workers), have to provide for ourselves in our golden years, these moves seem destined to leave us either working until we drop or to become wards of the state. We can visualize this the world of the future where only government workers will ever be able to retire and live off the fruits of their labor. Instead government will suck us all dry.

Will Obama follow in the path of these hungry democrats? We'll all see come January.