Triggered by the financial crisis the past two months, the hearings reportedly were meant to stem losses incurred by many workers and retirees whose 401(k) and IRA balances have been shrinking rapidly.Ghilarducci's plan is based on a paper she wrote last year entitled, "Agenda for Shared Prosperity." The article in Carolina Journal quotes from Ghilarducci's paper her claim that private retirement accounts “exacerbate income and wealth inequalities” because tax breaks for voluntary retirement accounts are “skewed to the wealthy because it is easier for them to save, and because they receive bigger tax breaks when they do.” Under Ghilarducci's plan, 401(k)s, IRAs and other private investment vehicles would be eliminated and converted into GSAs. All workers would have 5% of their income automatically deducted from their paychecks and deposited into a GSA. The employer would be responsible for one half of the contribution but would receive no deduction for the contribution. Capital gains would be taxed annually. If you die, you are allowed to bequeath only one half of your GSA to your family. If you die after you retire, your heirs receive your contributions to your GSA, plus your interest but minus contributions paid to you before your death and contributions made by your employer.
The testimony of Teresa Ghilarducci, professor of economic policy analysis at the New School for Social Research in New York, in hearings Oct. 7 drew the most attention and criticism. Testifying for the House Committee on Education and Labor, Ghilarducci proposed that the government eliminate tax breaks for 401(k) and similar retirement accounts, such as IRAs, and confiscate workers’ retirement plan accounts and convert them to universal Guaranteed Retirement Accounts (GRAs) managed by the Social Security Administration.
According to Ghilarducci's plan, individuals simply don't have the ability to make investment decisions on their own. She said, “[H]umans often lack the foresight, discipline, and investing skills required to sustain a savings plan.” The Carolina Journal points out what happened in Argentina after the government seized private retirement accounts to pay for government programs and to deal with a ballooning national deficit. "Fearing an economic collapse, foreign investors quickly pulled out, forcing the Argentinean stock market to shut down several times. More than 10 years ago, nationalization of private savings sent Argentina’s economy into a long-term downward spiral."
This is pretty scare stuff. I suspect Sen. Evan Bayh would quickly distance himself from his former appointee's views if pressed on the issue. If you want to permanently destroy this country, I couldn't think of any better plan to do it than the one she's putting forward and which likely has the support of Big Labor. With Democrats fully in charge of the political branches of government, what's to stop them from attempting massive "wealth redistribution" as Obama told Joe The Plumber that he favored?
Hat tip to Atlas Shrugs.