Why do liberals hate America’s Senior Citizens?

By Guest Poster

This is a follow-up to this post where I discussed the mechanics of debt auctions and highlighted a recent near-failure.  I’d encourage you to read that first because it reinforces what I’m going to say in this article.

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First, I’d like to direct your attention to this document.  Yes, it’s a real document, and here’s the summary:

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The Department of Labor and the Department of the Treasury (the “Agencies”) are currently reviewing the rules under the Employee Retirement Income Security Act (ERISA) and the plan qualification rules under the Internal Revenue Code (Code) to determine whether, and, if so, how, the Agencies could or should enhance, by regulation or otherwise, the retirement security of participants in employer-sponsored retirement plans and in individual retirement arrangements (IRAs) by facilitating access to, and use of, lifetime income or other arrangements designed to provide a lifetime stream of income after retirement. The purpose of this request for information is to solicit views, suggestions and comments from plan participants, employers and other plan sponsors, plan service providers, and members of the financial community, as well as the general public, on this important issue.”

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Pay particular to the language in item 13:

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Should some form of lifetime income distribution option be required for defined contribution plans (in addition to money purchase pension plans)? If so, should that option be the default distribution option, and should it apply to the entire account balance? To what extent would such a requirement encourage or discourage plan sponsorship?”

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If you haven’t gotten the joke so far, what’s being suggested is that 401K and IRA accounts be converted to fixed-income instruments, and that some portion (or even the entire balance) be allocated to (wait for it) Treasuries.

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Let’s be clear, I have no problem with a requirement that Treasuries be presented as an investment option in 401K or IRA accounts, but when you toss around language like “default distribution option” that starts to sound a lot like a mandate.  What curious timing for this request for comment to be floated.  Foreign demand for our debt is evaporating, and the Treasury sees the writing on the wall.  They’ve run out of ways to manipulate the yields, including cooking the CPI numbers.  The only way to prop up the Treasury market at this point is through mandated participation dressed up as 401K/IRA to annuity conversion (administered by the same wonderful people who run Social Security!), which is precisely what Argentina did in 2008 when no one in the world would buy their debt.  If you think this can’t happen, you should read this.

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Of course, the people who end up getting screwed the hardest by something like this are the seniors, simply because they’re been around longer and saved more.  All their class warfare rhetoric about the “rich” hits them the hardest.  This should come as no surprise, because you only have to look at the ObamaCare proposal to see their hostility towards seniors on display.  Remember all the throw-away lines about “if you like your health insurance, you can keep it?”  Yeah, unless you’re one of those poor elderly suckers who chose a Medicare Advantage plan.

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Maybe death panels weren’t such a bad idea after all, considering the path this administration appears to be headed down.  Indeed, it starts to look like a pretty good deal as opposed to being penniless and without health insurance at 75.

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Guest post by Cato the Elder


Comments

  • Dennis says:

    This is a good next step if the Obama administration is looking to start a civil war.

  • kelley in virginia says:

    goody. Cato is here, so I can learn something. so Cato, are you saying that we may all wake up tomorrow & our various retirement plans could be put in Treasuries? Good Gawd, man. What idiot would ever put their investments in Treasuries?

    ****There is no hope that our US Senators or my Obama-enabling Congressman (Perriello) would put a stop to this, is it?

  • Brian S says:

    Cato, we were working on a lot of things with EBSA while I was at Labor under the Bush Administration. One area was for those companies with 401(k)s making opt-in the default, rather than opt-out and requiring employees to affirmatively opt-in to the program. In terms of this issue, I agree with you, but for a different reason.
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    With defined benefit plans, one of the options (usually) is that the individual can opt for a lump sum payout of their benefits when they retire. They can then do whatever they want with the money, either invest it themselves or whatever. This has lead to a lot of issues, particularly with those who don’t invest the money wisely and either lose a lot of it or else blow it all without thinking. One of the big issues we had when I was at the labor union was that many of our members would opt for the lump sum pension when they retired, and instead of investing it in conservative investments and living off the interest, they’d buy a bar with it, or start a roofing business, or they’d day trade with it (these guys were generally getting high six figure or low seven figure lump sums). And if they were dumb and blew all the money, they’d come back to the union, begging to be able to ship out again – which they were barred from doing because they have to turn in their license when they retire.
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    What this looks like to me is placing a restriction on doing that – but on the defined contribution side rather than the defined benefit side. I have a problem with that, primarily because, unlike with a defined benefit, these folks have been actively managing their money throughout their careers, so it’s not as if someone is just handing them a pot of money when they retire. Keeping them from being able to spend the funds as they want to just strikes me as overly controlling – especially by a government that hasn’t exactly show itself to be that fiscally responsible.

  • Cato the Elder says:

    Agree to an extent. I’d say that the likely outcome of all of this is that all plans will require some portion (10-20%) of treasury exposure to maintain favorable tax treatment. Still, you’re forcing people into an instrument that isn’t likely to keep pace with inflation, at least not for the next ten years. You really only have two choices here: 1.) pay a richer return on the notes, which will cause rates to rise and exacerbate adjustable rate mortgage and credit card defaults, not to mention play hell with all the existing collateralized assets on the bailed-out banks or 2.) Prop up the market with artificial demand, which is exactly what this would do, however it would cause the non fixed income portions of retirement portfolios to drop because that money would now be flowing to treasuries instead of equities. This would, in turn, produce a “herding” effect as people reallocated their portfolios overweight fixed income as the equity markets underperformed, and perhaps this is what the architects have in mind.

  • Ron says:

    They are not liberals. They are leftists.

  • Let's Be Free says:

    I’ll tell you drives me not to take an annuity from my retirement accounts when the time comes (should be in the next five years or so). I have three kids who will start college after I turn 65. My retirement accounts will fund their education requiring large distributions when the time comes.

    If these all-knowing freaks and thugs risk my children’s education by forcing my impecably managed and well thought out investments into an annuity, they’ll have a revolution on their hands.

  • Loudoun Insider says:

    I nominate Cato for permanent TC poster status! Another excellent post!

  • Barbara Munsey says:

    I vote yes too.

  • G. Stone says:

    The Gov’t concocts a scheme ( Socials Security ) without having done the math or taken into account the myriad of possibilities that would have a detrimental effect on their ill conceived plan. They dismiss those who told them their plan was ill foolish, spending the next 60 years demonizing those who paid attention in math class. Now that it has been determined that the smart kids were right, the offspring of the offspring of the FDR social engineers want to use private sector retirement plans as a way to salvage Social Security.

    I too applaud Cato. Inspector Clouseau was right to have you around all those years.

  • Let's Be Free says:

    Enough of this public option nonsense. We need private options.

    People should be able to opt out of all, or a portion of social security, if they wish to set up their own accounts.

    By contributing to and managing their own accounts income earners will at least have an asset with real value, as opposed to the meaningless spreadsheet entry that stands in for the social security lockbox today.

    Keep up the commentary and the good work.

  • Eric the 1/2 troll says:

    I’m sorry Mom but since I am a Liberal I must hate you. So sorry, Your Son.

  • [...] To wit: The Obama Administration is talking about confiscating your retirement money and 401k funds If you haven’t gotten the joke so far, what’s being suggested is that 401K and IRA accounts be converted to fixed-income instruments, and that some portion (or even the entire balance) be allocated to (wait for it) Treasuries. [...]

  • Barbara Munsey says:

    Eric, glad to see you chiming in with some basic honesty instead of the usual snark. Good for you!

    lol

  • Jan says:

    http://www.examiner.com/article/rachel-maddow-uses-clint-eastwood-rnc-speech-to-slam-senior-citizens

    I have noticed from the liberal news media and newspapers that the young democrats love to bash senior citizens. They are especially bashing Clint Eastwood being 82 years old, the late great Mr. Heston, President Reagan & others. This is what the democrats represent – they want to do away with those of us who are seniors. They forget that they too will become seniors. I am sad for this younger generation as they show no respect for the older generation. They love Obamacare because it robs seniors of medical attention and would rather see seniors die than help them. THESE ARE THE DEMOCRATS AND OBAMA LOVERS. The commentary about Clint Eastwood being 82 years old was vile and Rachel Maddow and Chris Matthews are behind all the senior bashing as well. DEMOCRATS HATE SENIORS – REMEMBER IN NOVEMBER. They also hate successful people. Go figure. They are “shovel ready” to see us dead and buried.

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