Earlier this month Sen. Tom Harkin (D-Neverland) held a recess hearing to consider ways for the government to take over Americans’ 401(k) and IRA plans.
It’s not a new idea—Democrats have been hinting at the notion since they took control of Congress in 2006. But fearing their “reign of spending” coming to an end in the next few months, they are trying to make hay while the sun isn’t shining, so to speak.
There are three problems that Harkin and others want to fix. First, personal retirement accounts like IRAs and 401(k)s took a hit in the economic downturn, creating that “crisis mentality” situation of which Rahm Emanuel explained Democrats like to take advantage.
Second, Democrats have put the deficit spending machine into overdrive. Since Nancy Pelosi promised "no new deficit spending" in 2007, national debt has increased by $5 trillion. That spending spree is one of the primary reasons behind voter outrage, and Democrats need to reduce that debt, or at least hide it.
Third, liberals are very dissatisfied with the current retirement patterns, where millions of Americans who worked and saved all their lives are able to retire with decent nest eggs while others can’t.
So Democrats are exploring the notion of taking over Americans’ 401(k) and IRA plans, and in return giving them a “Guaranteed Retirement Account.” The GRA would operate like an annuity. The government would give each retiree a fixed amount of monthly income for the rest of their lives.
Currently, 401(k) plans have about $2.5 trillion in total assets, while IRAs have about $3.5 trillion. If Washington could steal those funds, it could dramatically reduce the national debt and still have a trillion dollars or so to start handing out in current annuities.
The annuitized debt would likely be handled off the current accounts budget, just as Social Security is, so Democrats could claim to have eliminated the federal debt and made retirement security even stronger—just as they did with Medicare under ObamaCare.
Fortunately, there is little chance this idea will go anywhere in the lame duck session, and no chance it will go anywhere in a Republican-controlled Congress. But bad ideas never die in Washington, they just emerge later under a new name when—and if—proponents are given a second chance.