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Monday, March 02, 2009

And just which stellar "investment vehicle" should we pick, there, Mr. President?
Posted by Jill | 5:34 AM
I've never been under any delusion that a politician is going to go to Washington and serve anyone other than his corporate masters. After all, there's only so much that $25 donations from ordinary people will do. But do we really have to kowtow to Wall Street to THIS degree -- to the point that we're talking about a system of "workplace pensions" that are not pensions at all, but that would involve your employer withholding money from your paycheck and putting it into a direct-deposit IRA account:
Obama is proposing a 4.7 percent increase in the Labor Department’s budget to $13.3 billion for the fiscal year beginning Oct. 1. That’s an increase from an estimated $12.7 billion in the current fiscal year and $11.8 billion in 2008, according to a budget outline submitted to Congress today.

The budget “lays the groundwork for future establishment of a system of automatic workplace pensions, to operate alongside Social Security, that is expected to dramatically increase” retirement and personal savings, Obama’s Office of Management and Budget said in its outline, without giving details on the costs.

The plan would force employers that don’t offer retirement plans to enroll employees in a “direct-deposit IRA account,” with the option for workers themselves to opt out. Currently, 75 million working Americans, or about half the workforce, lacks employer-based retirement plans, according to the administration.


I remember when 401(k) plans started to come into play; how they were sold as a way for employees to control their own retirement funding and "make more in the stock market" than they would have had from a traditional defined-benefit pension. How's YOUR 401(k) balance these days? I know I was on the way to if not an easy retirement, at least a sort-of manageable one, but that notion is gone now, probably forever. How many employers do you think will continue to offer 401(k) plans with a match once these plans are in effect? And what happens if you don't have an employer because your job and any other job you could conceivably do has disappeared, either to outsourcing or because the company went under due to greed and mismanagement?

It's all well and good to encouraging saving, but the notion of an employer withholding the pay of, say, a home health aide making seven bucks an hour while her agency pockets twenty-five, into what they can call a "workplace pension" is just laughable. Low-wage workers often don't have anything left to save after putting food on the table and a roof over their heads. And just how much of a pension is putting away five bucks a week going to provide in someone's old age, especially after Big Wall Street gets through taking their cut and "investing" it in stocks of companies that cook the books?

As Lambert notes over at Corrente:
Why are there only two options?

Right now the proposal is:

[ ] Private plan
[ ] Opt out

but why isn't it:

[ ] Social Security
[ ] Private plan
[ ] Opt out

Suppose I accept the implicit argument that Americans don't save enough, and more retirement money is good. Why are they forcing me to give Big Money a second chance at vaporizing my money with an IRA instead of a 401(k)? Seems to me that for many, Social Security would be the better option because it's safer.

And isn't the argument here exactly the same as with health care? Force the private sector to compete with government and the public will get a better deal?

As it is, this just looks like a scam to generate more fees for Big Money to manage my account. But I don't want it managed. I want it safe.


I realize that the Obama Administration's economic team consists of the many of the same clowns who allowed us to get into this mess, with people who might represent actual CONSTRUCTIVE change like Paul Krugman and Joseph Stiglitz and Nouriel Roubini forced to sit on the sidelines and watch. But if the President thinks that handing more employee money to Wall Street is going to make Rush Limbaugh shut up, he'd better guess again.

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Blogger Interrobang said...
Apropos of the world system, I note that the Bank of Canada plans to drop its interest rate to 0.5%. We currently have a batch of stupid neocons in government here, and they seem to think it'll help somehow. The only reason we aren't currently as in the toilet as the US is, is that the stupid neocons didn't manage to eke out an election victory in time to deregulate banking before everything fell to hell. I hope Stephen Harper's currently feeling like he dodged a bullet.

As to my personal investments, I'm glad I went with a government issued Guaranteed Income Certificate at 3.25% instead of listening to the people who were telling me I should invest in mutual funds. Maybe they'll get the idea that I'm not so damn dumb after all, next time. I may have only made $220 on my $4K so far, but at least I made money...
3/2/09, 4:14 PM  
Blogger Unknown said...
"Opt out" for me, please.
3/2/09, 7:52 PM  
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