Four years ago, my remarkably prescient wife warned, "You just watch, one day he will go after our retirement accounts." The "he" she was referring to was the new President who had placed priorities on "spreading the wealth" and "transforming America."
I responded that no politician, not even the uber progressive Barack Obama, would be foolish enough to confiscate personal IRA and 401-k accounts. It looks like my wife was right, again.
According to a White House statement released in advance to Politico.com, Obama's 2014 budget to be delivered to Congress on April 10 puts a big target on personal retirement accounts:
"The budget will include a new proposal that prohibits individuals from accumulating over $3 million in IRAs and other tax-preferred retirement accounts. Under current rules, some wealthy individuals are able to accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving. The budget would limit an individual’s total balance across tax-preferred accounts to an amount sufficient to finance an annuity of not more than $205,000 per year in retirement, or about $3 million in 2013. This proposal would raise $9 billion over 10 years." Read more
This is from the same Barack Obama who somehow also knows how much Americans can earn. In 2010 in a rare unscripted, off-teleprompter moment he showed both his arrogance and his disdain for earned success by industrious Americans. "I do think at a certain point you've made enough money," he told a Quincy, Illinois audience. It was only "fair," Obama continued to argue, that government should confiscate the rest by raising taxes.
Now we learn that Obama also believes he knows the upper limit of what is "needed to fund reasonable levels" of retirement savings to sustain senior citizens.
Unfortunately, attacking personal savings – even money set aside for retirement – is not a new idea with the most radical leftist Democrats. In 2008, then Chairman of the House Labor and Education Committee Rep. George Miller (D-CA) and Rep. Jim McDermott (D-WA) Chairman of the Ways and Means Subcommittee on Income Security and Family Support held a hearing to promote a plan to eliminate all tax incentives for 401k plans, and force workers to set aside 5 percent of their wages in a government administered account that could only be invested in government securities (aka: debt).
Then, again, in early 2010 Timothy Geithner's Treasury Department floated a similar idea by issuing a notice of a public comment period on a plan for "the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams."
As Newt Gingrich and Peter Ferrara of the American Enterprise Institute succinctly said of the Treasury scheme, "They will tell you that you are 'investing' your money in U.S. Treasury bonds. But they will use your money immediately to pay for their unprecedented trillion-dollar budget deficits, leaving nothing to back up their political promises, just as they have raided the Social Security trust funds."
Larry Kudlow of CNBC hosted a panel discussion on Obama's budget attack on IRAs as part of his nightly Kudlow Report on April 8. Kudlow ridiculed the idea as the "Michael Bloomberg version of retirement planning." A member of the panel was A Line of Sight friend, Ross Kaminsky who authored a fine opinion piece on the subject published in The American Spectator. Another panelist, former Senator Kay Bailey Hutchinson (R-TX) agreed with Kudlow that "this is not going to happen." Maybe not today, but….?
B.O. (Before Obama) I would have confidently said this would never happen, too. I also would have said America would never have four consecutive trillion dollar plus deficits or a President who openly lamented the "essential constraints" placed on him by the Founding Fathers in the Constitution.
There was also a time, I expect, when Europeans thought the government would never confiscate personal deposits in their bank accounts. But, it happened. As absurd as Obama's budget proposal to cap retirement savings might sound, it really isn't a new idea, and the Democrats sure haven't given up going after private accounts. Welcome to Cyprus!