House Democrats contemplate abolishing 401(k) tax breaks

[laylamcb]

http://www.sharedprosperity.org/bp204.html I thought it might be interesting to read the actual proposal as opposed to the cliffs notes version that is likely a distortion in some way. I read it through and am uncertain this would be the cure all it purports to be. However, there is far more reason to consider the idea when you consider the reasons behind it...Google GM at WSJ and it is clear that something should be done.

 

Thanks for this, Elizabeth! I just breezed over it, but what I'm gathering is that folks in favor of this change are bemoaning the death of the pension at the hands of the 401K. I DO understand that: DH will get a pension when he retires, which is a totally awesome and, assuming that the county he works for doesn't go bankrupt in this financial crisis (:001_huh:), much more secure stream of income. We still save the max in a 457, though.

 

I'll need to read more closely, but I'm a little calmer now. I at least "get" where the proponents of this idea are coming from (or claim to be coming from: that economist's statement about the "nation's dollar" rankles my ruggedly individualistic and libertarian-leaning sensibilities. ;)).

 

ETA: Again with the creepy names, though: Agenda for Shared Prosperity? Do I want everyone to be financially independent? Of course I do! But shared prosperity? How come when Jesus says it it sounds so good, but when I see it at the top of a policy paper it creeps me out? Is it me? (I'm really asking, here. Maybe it IS me.)

Edited October 25, 2008 by laylamcb

[Haiku]

 

And now they want to take over our retirement accounts??

 

I don't think that one person invited by the Democrats to testify at some sort of committee hearing means that all Democrats wants to take over retirement accounts.

 

Tara

[Pam "SFSOM" in TN]

In addition to that Ted Kennedy will have his day trying to nationalize healthcare as well! Here's an article.

 

In a non-related aside, the pictures of poor John McCain and Michelle Obama in the "Who is most likely to cheat?" sleaze-ad on the side of that article are downright evil-creepy.

 

*shudder*

 

 

(And my perverse curiosity wondered if the ad were a political ad or some sort of prurient question about the candidates potential for adultery. It was the latter. And my computer security killed it as an "attack site." So don't click. It'll bode badly for your computer. (The ad, not the Washington Times article. The Moonies don't want to attack you directly, after all. Wouldn't be prudent.)

[laylamcb]

The Moonies don't want to attack you directly, after all. Wouldn't be prudent.)

 

No, not directly. ;)

 

ETA: I'll take my Washington Post, thanks. (Or as some prefer, the Washington Compost. To each his or her own.)

[melissel]

You are much more of an optimist than I. I think we're in for a long, hard, stupid ride, no matter who wins.

 

"Yo! That's such a great idea that it deserves its own governmental agency: the Crazy-Ass Administration!"

 

I think you are both onto some brandy new sig lines there, ladies!

 

I'm confused about the use of the term "subsidize" as well. I always learned that one of the benefits of a 401K is that you're putting in money now and paying taxes on it later, when you're likely in a much lower tax bracket. Is it possible that this is why they're considering it some kind of subsidy?

 

And yes, while I am a flaming liberal, even I consider the idea of mandated contributions to a government-managed retirement fund a bit crazy-ass.

[CAMom]

Bless your heart, Pam. I'm with you: I want everyone to have a seat at the table. But what we need are people like YOU prevailing at the table, dear, and not the folks who say, "Yo! That's such a great idea that it deserves its own governmental agency: the Crazy-Ass Administration!"

 

Get out and vote these crazy asses out of office, y'all.

 

:lol: The Crazy-Ass Administration!:lol: That lightened the mood for me.:D

 

Pam, the politicians were as diplomatic, well-reasoned, thoughtful as you, we would be in a much better position.:grouphug:

[lovemyboys]

I don't think that one person invited by the Democrats to testify at some sort of committee hearing means that all Democrats wants to take over retirement accounts.

 

Tara

 

Actually, I've heard 401k accounts mentioned several times in the last week or so from several sources....so it's obviously in discussion.

 

When someone attending the hearings subsequently makes the mistake of referring to tax deferments as subsidies and that they should be done away with ... well, then I think we'd better be paying attention, don't you? Especially if that person considers the terms interchangeable or really doesn't understand the difference.

 

Certainly there are some Democrats that aren't in agreement with their leadership, but Pelosi, Reid, Frank and Dodd (to name a few) have very powerful positions and they were at the lead both for the flawed policies and then for placing all the blame at the feet of Bush and Republicans.

[Pam "SFSOM" in TN]

No, not directly. ;)

 

ETA: I'll take my Washington Post, thanks. (Or as some prefer, the Washington Compost. To each his or her own.)

 

I so miss the WaPo. I have to say, home delivery of the Johnson City Press just doesn't quite do it for me.

[hsmamainva]

I so miss the WaPo. I have to say, home delivery of the Johnson City Press just doesn't quite do it for me.

 

Same here!!!!!! The Washington Post was our local paper for over 20 years, till we moved to the Fredericksburg area and now we get the "Free Lance Star" ... ugh....

 

I drive up to the local 7-Eleven and buy a copy of the Washington Post every Sunday to get a chance to read some real news!!

[laylamcb]

 

I'm confused about the use of the term "subsidize" as well. I always learned that one of the benefits of a 401K is that you're putting in money now and paying taxes on it later, when you're likely in a much lower tax bracket. Is it possible that this is why they're considering it some kind of subsidy?

 

And yes, while I am a flaming liberal, even I consider the idea of mandated contributions to a government-managed retirement fund a bit crazy-ass.

 

I only know about retirement savings from the "user" end, so to speak. Does anyone know if companies receive some kind of tax break for offering these plans to their employees? Could THAT be where the "subsidy" idea comes in? The policy paper that Elizabeth posted seemed to be hinting at that, but I breezed over it too quickly to digest (In another screen I'm editing an article about fly fishing the South Fork of the Snake River, so I'm flipping back and forth).

 

Whether you're a flaming liberal, flaming conservative, or Sister Flaming Sword of Moderation, it's nice to confer with thinking individuals from all over the political spectrum, isn't it? I feel a group hug coming on: :grouphug:

 

ETA: You know what they say re the WP: If you don't get it, you don't get it. Yuck yuck yuck! :D

[Pam "SFSOM" in TN]

Same here!!!!!! The Washington Post was our local paper for over 20 years, till we moved to the Fredericksburg area and now we get the "Free Lance Star" ... ugh....

 

I drive up to the local 7-Eleven and buy a copy of the Washington Post every Sunday to get a chance to read some real news!!

 

The only thing we can get here without a major drive is the NYT. P'tooie! Blech. :glare:

[laylamcb]

The only thing we can get here without a major drive is the NYT. P'tooie! Blech. :glare:

 

ITA, except that the NYT does have the world's best crossword puzzle. Can't be beat. Beyond that, p'tooie!

[elizabeth]

 

http://blog.oup.com/2008/06/retirement/ This is a great three part debate on the proposals regarding 401k and paints a fair picture of both sides of the issue. Thought I would share as it was very helpful to this non economics major . I hope this is enjoyable and illuminating. I am undecided regarding which proposals are best despite leaning toward protectionist policies generally as that is where my sympathies lie but this is fascinating to ponder.

[Pam "SFSOM" in TN]

ITA, except that the NYT does have the world's best crossword puzzle. Can't be beat. Beyond that, p'tooie!

 

Oh, and I like their online student edition, complete with daily news quizzes and science Q & A. And the embedded glossary.

 

Oh, and the online health section. And, um, ok, I sorta like the online edition sometimes.

 

But other than that, p'tooie! So, ok, I just REALLY don't like the print edition. I've got some sort of aversion to the typeface, or the paper, or something.

 

:D

 

And don't get me started on the Baltimore paper. Oh. My. Goodness. It would be lovely if I had a sixth grade comprehension level, though.

[melissel]

(In another screen I'm editing an article about fly fishing the South Fork of the Snake River, so I'm flipping back and forth).

 

Whether you're a flaming liberal, flaming conservative, or Sister Flaming Sword of Moderation, it's nice to confer with thinking individuals from all over the political spectrum, isn't it? I feel a group hug coming on: :grouphug:

 

You're so disciplined. My mom has the kids right now, and I should be working. Instead I spent most of the day here, decompressing from my hellish week. Shame on me! Then again, if more of my projects were about things like fly fishing instead of how to adjust your online ad sales strategies in this economic downturn, maybe I'd be more willing to face them!

 

And yes, I'm enjoying this thread and learning a lot, and I'm very proud of us all for handling the discussion so maturely :thumbup1:

 

The only thing we can get here without a major drive is the NYT. P'tooie! Blech. :glare:

 

Hey hey HEY! Don't you talk about my beloved NYT that way :angry: :mellow: :001_tt2:

[laylamcb]

http://blog.oup.com/2008/06/retirement/ This is a great three part debate on the proposals regarding 401k and paints a fair picture of both sides of the issue. Thought I would share as it was very helpful to this non economics major . I hope this is enjoyable and illuminating. I am undecided regarding which proposals are best despite leaning toward protectionist policies generally as that is where my sympathies lie but this is fascinating to ponder.

 

This is great, Elizabeth--thanks! :001_smile:

[Sara R]

to raise the interest rates. Or to raise rates to the market. Interest rates ought to be a lot higher. Low interest rates encouraged too much debt. High interest rates encourage savings.

 

Unfortunately, higher interest rates will kill us because our country is in so much debt.

 

Unfortunately, soon we probably won't have a choice but to pay high interest rates because I don't see how our foreign creditors will continue to lend us money otherwise.

 

This is another reason why we didn't feel bad about cashing out our small Roth, without penalty, earlier this year. I doubt that the future government will be able to honor its promise to allow the earnings to be tax-free in retirement. This debt is burying us, and they will be scrambling to figure something out.

[laylamcb]

to raise the interest rates. Or to raise rates to the market. Interest rates ought to be a lot higher. Low interest rates encouraged too much debt. High interest rates encourage savings.

 

Unfortunately, higher interest rates will kill us because our country is in so much debt.

 

Unfortunately, soon we probably won't have a choice but to pay high interest rates because I don't see how our foreign creditors will continue to lend us money otherwise.

 

This is another reason why we didn't feel bad about cashing out our small Roth, without penalty, earlier this year. I doubt that the future government will be able to honor its promise to allow the earnings to be tax-free in retirement. This debt is burying us, and they will be scrambling to figure something out.

 

We did the same thing earlier this year, Sara, and for the same reason.

[Zelda]

And I thought I was the only one! Apparently people go to parking lots or something (like a church parking lot, for example) and kids go from car trunk to car trunk collecting treats. It seems to be a big thing. Zelda, where HAVE we been?

 

:lol:

 

It's a thing going on at the church we're attending. We bring our car and open the trunk -- decorated if we want, and kids go car to car and get candy.

 

Sort of a safer trick or treat, I guess. I've never done this before, so I don't know much about it except that now we don't have to go out on Halloween night.

 

Good idea. I saw a sign for a trunk or treat and have been wondering what it meant. Have fun!

[Sharon in SC]

Right. The taxes are deferred until the money is withdrawn. We put the money in out of our pre-tax salary, deferring the taxes. That encourages people to save. It's a good system. I don't see why we should break it, to fix what the government's done wrong.

 

 

Hear! Hear!