Growls

James Pethokoukis writes on his “Capital Commerce” blog at U.S. News & World Report yesterday there may be Democrats in the U.S. House of Representatives who “might try something . . . loopy: kill 401(k) plans.” (emphasis added) He explains:

“House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created "guaranteed retirement accounts" for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee's Subcommittee on Income Security and Family Support, said that since "the savings rate isn't going up for the investment of $80 billion [in 401(k) tax breaks], 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."

Pethokoukis’s bottom line:

“My bottom line: If you believe in the long-run dynamism of the American economy, then you have to believe in the stock market. Listen to superinvestor Buffett, not the prof from the New School.”

Bret Jacobsen, founder and president of a research and communications firm, writes in his op-ed in yesterday’s DC Examiner:

“All working Americans should be concerned about retirement proceedings under the watch of House Education and Labor Committee chairman Rep. George Miller, D-CA. According to recent reports, Miller and other Democrats are considering portions of a plan that would take away nearly $80 billion in tax incentives for 401(k) plans.

“It’s possible the policy would force workers to pay an additional five percent of their paychecks into government-controlled accounts, from which they would earn only a three percent return. In other words, proponents of private Social Security accounts would see their grandest dreams, and worst nightmares, realized in one fell swoop.

“Democratic leaders and their labor allies can kill two birds with one stone. First, they will effectively neuter private, defined-contribution plans, which have replaced union-controlled defined-benefit pension plans for millions of Americans (after all, why would workers lock money away if there were no tax incentive?). At the same time, they can force those resources into a bigger, bloated government bureaucracy.”

Think carefully, very carefully, before you cast your vote on Tuesday, November 4!