Americans Retirement Funds Risk being Seized

Teresa Ghilarducci may be the most dangerous woman in America.

Never heard of her? Read on…

Not many Americans who have private retirement plans have heard of Professor Teresa Ghilarducci.  Yet she’s a woman that has the ear of some powerful lawmakers in Washington. She’s working to sway minds and shape the opinions of movers and shakers in the nation’s capital.

And, as far as the private retirement system goes, she is anathema.

Simply put, Ghilarducci, a professor of economic policy analysis at the New School for Social Research in New York, wants the federal government to grab all private retirement funds—401-k’s, IRAs and company pension plans—in the name of “economic justice.”

Economic justice is an old socialist code phrase for redistribution of wealth: taking assets from the hands of those more fortunate and redirecting them into the pockets of those less fortunate. It’s just another form of the timeworn socialist credo “From each according to his ability, to each according to his need.” It’s naked Marxism and undermines the incentive of any individual to produce because all rewards are leavened out in the name of social and economic justice.

In this case, all monies set aside by individuals—including any company matching funds—will be confiscated under her plan and added to the general coffers of the massively mismanaged and bankrupt Social Security Administration. What’s being bandied about is a guaranteed stipend of 3 percent a year in return for the confiscated retirement monies.

Worse, if an individual dies before collecting their money, all of it would be kept by Washington.

Some peoples’ retirement funds are well into six and seven figures. Under her plan, anything not doled out by the government before a coerced participant’s death will be kept by the government. Nothing will pass on through the estate to heirs despite the fact that the monies were all earned and managed and built up by the individual.

All this would be done in the name of mandating equality.

During shocking testimony before the House Committee on Education and Labor, the good professor advocated a multistage plan. First, eliminate all tax breaks for 401-k and other private retirement accounts. Next, confiscate by federal edict all workers’ retirement programs and dump them into the bottomless coffers of a gigantic public pool she has named “Guaranteed Retirement Accounts” (GRAs).

Finally, for those miscreants that resist, fines—even jail time—could be threatened.

You see, the American people just don’t know what’s best for themselves. Thank God there are people like the brilliant professor. They are above the fray, like a god (or in her case, goddess) looking down their noses from Mount Olympus at confused, milling humanity beneath their feet. The people need help, direction, a sense of purpose.

Or perhaps, like the mad Roman Emperor Caligula once dreamed, the world should just be one throat that can be easily cut.

As James Pethokoukis reported in US News & World Reports, “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.'”

Ghilarducci and others like Representative McDermott (she’s only the spokesperson for this new movement) are unhappy with the American citizen’s ability to invest their money pretax. They don’t like the fact that employers can match contributions up to a defined amount or percentage. And the people seeking to impose their economic view of “equality” on all American citizens are really incensed that workers can increase their savings tax-deferred while reducing their exposure to annual income taxes.

How unjust is that?

Worse, those accounts can be passed onto heirs, unlike Social Security which gobbles them up and may redistribute what’s left of a deceased 81-year old’s account to a alcoholic “disability” recipient in Podunk, Michigan.

Ghilarducci’s white paper “(GRAs) Guaranteed Retirement Accounts” was touted by some House members as the answer to the Social Security problem. Her idea was presented to the Economic Policy Institute: Agenda for Shared Prosperity on Nov. 20, 2007. In it, the professor argues that America’s private retirement system “exacerbates income and wealth inequalities.” How? She argues that the tax breaks for private 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.”

What is being ignored is the fact that the private retirement system works well. At fault are all the government retirement systems that have gone—or are about to go—bankrupt. In certain cases the word “bankrupt” is being kind when one considers the unfunded liabilities of some state pensions like California, Illinois or New York that run into the tens of billions with no way to meet the obligations and no way to service the incurred debts.

Actual federal public debt as of this writing tops $16.2 trillion and counting. For those with nerves of steel that’s $16,200,000,000,000. Compare the number of zeroes to those following your annual income. Even Bill Gates is choking.

Now add to that the Fannie Mae and Freddie Mac debt that continues to surge upwards at over $18 trillion. The unfunded liabilities of Social Security and Medicare are now projected at costing Americans $128 trillion (conservative figure) to $180 trillion (a figure probably closer to the horrifying truth).

Is it any wonder that many of the men and women that legislated us into this impending disaster are eager to listen to Professor Teresa Ghilarducci’s Machiavellian scheme on how to go about legally stealing as much as possible from unsuspecting Americans in a desperate bid to postpone the approaching Doomsday?

Blogger Brenda Bowers sums it all up:

“Let us deconstruct this. Here’s how it would work. The government would seize the $3 to $4 trillion in assets currently invested in retirement plans. The government would now own all the assets, having taken them out of the private sector. That would be in return for a promise that the government would make timed payouts—monthly or whatever—to the pensioners over the coming years. The government has already betrayed the public trust by spending the assets in the social security trust fund, leaving worthless IOU’s as placeholders. Now they want to do this with our employee retirement plans and our personal retirement investments.”

Of course the way things work in Washington, D.C. all the elected officials would be exempt from contributing to GRAs—they’d have their own protected retirement plans. Federal and state employees might be exempt too. And don’t be surprised if they pass this atrocity that somehow esteemed professors like Teresa Ghilarducci find themselves blessed with a special waiver from the program.

This nightmare is still percolating amongst House and Senate members and has gained some traction.

Truly, the schemes and scams being contemplated by some “revered” government officials at the highest levels dwarf any crime financier Bernie Madoff perpetrated.

And they sent him to jail for life…