Wednesday, 29 January 2014 17:30

Obama to Force Americans to Buy Government Bonds?

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Halfway through his State of the Union message last night, President Obama announced he was unilaterally going to fix another perceived problem through an executive order: mandating a requirement that all employers not already offering retirement plans start doing so. Said the president:

Let’s do more to help Americans save for retirement.

Today, most workers don’t have a pension. A Social Security check often isn’t enough on its own. And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401ks.

That’s why, tomorrow, I will direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA. It’s a new savings bond that encourages folks to build a nest egg. MyRA guarantees a decent return with no risk of losing what you put in.

This perfectly encapsulates the Obama presidency: Claim a problem exists, then solve it by government edict while dressing it up to look reasonable. And ignore Congress in the process.

While it’s true that about half of America’s employers don’t offer retirement plans, that’s only a problem to progressives looking to expand the power and reach of government while helping to fund its deficits. Until yesterday, that half were very happy letting their employees save money on their own, if they so wished. Not any longer.

Pushed by his special White House counselor, John Podesta, the president's edict actually solves two problems: one perceived for show, and the other one real. With more than $20 trillion in pension assets and a government faced with huge deficits and the Federal Reserve starting to “taper” off its buying of treasury securities, tapping into that vast pool is a temptation that can’t be resisted. But the United States isn’t Argentina, or Poland, or Cyprus — at least not yet — and so such confiscation must be taken a step at a time. That process has started with Obama’s announcement of “starter” IRAs for those employees who don’t have them.

This has been in the planning stages for years. Back in 2010, former Senators Jeff Bingaman (D-N.M.) and John Kerry (D-Mass.) offered a bill requiring employers without pension plans to enroll their employees in an “automatic” IRA, whether they wanted them or not. One of the options was a “principal preservation fund” called an “R-Bond” or Treasury Retirement Bond. The bill went nowhere as most Americans cherished their right to do with their earnings as they saw fit.

That effort was backed by the Service Employees International Union (SEIU) and the AFL-CIO at their “Retirement USA” website, which promoted the idea that all workers in the country have a right to a government retirement account in addition to Social Security. As expressed by Nancy Hwa, a union spokeswoman, “Our goal is to involve all workers and all employees in a government-mandated retirement program.”

In November 2012, officials from the U.S. Departments of Labor and Treasury held joint hearings on whether government lifetime annuity options, funded with treasury bonds, should be required (there’s that word again) for private retirement accounts including IRAs and 401(k) plans.

In October 2013 Mark Iwry, a Treasury Department official, said his department was rolling out the R-Bond concept in January 2014, which “would have all the characteristics of an IRA and be eligible to be rolled over into a [real] IRA once the savings reach a [specific] threshold.” Iwry added at the time that this program would not require congressional authorization. On Tuesday night the president sealed the deal.

Could this be the first step to confiscation? Back in 2008, Argentina’s President Cristina Fernandez pulled the same stunt, as Jerome Corsi explained:

In 2008, Argentine sovereign debt was trading at 29 cents on the dollar, reflecting the devalued state of the Argentine peso, with the result that private pensioners holding [peso-denominated] debt in their retirement accounts could not be assured those bonds would have any meaningful value at maturity.

And so, to rescue the government, private pension assets were confiscated and traded for government debt, shoring up the country’s balance sheet temporarily, and, for the moment at least, improving those faltering pension plans.

In March 2013, Cypriots awoke to discover that their government would be seizing up to 15 percent of all savings accounts as part of its attempt to meet the requirements of a bailout deal with the European Union.

In September, the Polish government announced that all bonds held in private pension plans would be seized and exchanged for government paper in order to bring down the country’s massive debt. Said Polish Prime Minister Donald Tusk: “We believe that, apart from the positive consequences of this decision for [the country’s public debt situation], pensions will also be safer.” What remains in those pension plans will be liquidated and transferred into government paper over the next 10 years.

Like bank robber Willie Sutton looking for new sources of funding, progressives are leering at the opportunity to capture some of the trillions in pension plans, but are just taking the first step, with “starter” MyRA accounts required to purchase government debt.

In a survey conducted by the Investment Company Institute, more than 70 percent of people polled disagreed with the idea of the government requiring them to buy government-funded retirement annuities, while 96 percent asserted instead that retirees should make their own decisions about managing those assets.

It’s safe to assume that employers feel the same way. That’s why it must be done by Executive Order. 

 

A graduate of Cornell University and a former investment advisor, Bob is a regular contributor to The New American magazine and blogs frequently at www.LightFromTheRight.com, primarily on economics and politics.

4 comments

  • Comment Link Heidi Preston Friday, 31 January 2014 00:59 posted by Heidi Preston

    Adapting auto-enrolment

    "Another drawback of auto-enrolment that will have to be addressed in future is that the contribution rates behind the scheme are just not high enough to secure people a good pension.

    The total contribution rate of auto-enrolment – comprising employee and employer contributions plus tax relief – will only increase to 8% of an individual's pay over the next five years. However, the contribution is based only on earnings over £5,668 which McLean said means the average contribution was only around 5% of a person's overall salary. " - Citywire money

    As someone wrote in comments- the impossible dream.

    Both McLean and Graves said this was half the level needed to generate a decent income in retirement. "

  • Comment Link Heidi Preston Friday, 31 January 2014 00:29 posted by Heidi Preston

    "Let’s do more to help Americans save for retirement"...that's rich.
    1. Young adults able to work but can not find jobs are not contributing to social security or Medicare based on age not income, so they will not have this safety net available to them. Some say so, they need to privatize their portfolio...what portfolio?
    There are no opportunities in a great recession /depression. The "income" is coming from the middle class which used to be considered rich.

    2. The little children who are forced (parents have to make decisions for them while they can't, but will suffer the consequences of their parents actions later) to be on Medicaid will have to repay this bill after they die...it is a loan from the government ....the government is acting like a bank who will indebt children before they even know what they are doing and why because of mandated executive decree by a President that "want's to help Americans save for retirement".

    3. Employers who are getting siphoned at each end by mandated healthcare or more part time employees which exempts them from covering their employee's with increased insurance rates aren't being helped into retirement.

    4. Employee's who have to investments in the government slush fund through bonds won't see any return on their investments because our executors of our estate haven't a clue how safeguard it. All the monetary policy makers know how to do is invest in other countries and profit big from low wages, and cheap labor...now does that sound like they have our people's best interest in mind? Ummmm , I think not.

    Germany tried this socialized medicine and belong to a melting pot of a shell game. The healthcare system has deteriorated and the German people who absorbed East Germany into their system without any benefits from it are seeing their savings being chipped away every second as I type.

    This pattern is being or at least trying to be repeated here in the United States. The North American Union is still alive and well. If and when our country can no longer pay it's debts because we have pumped so much money into it without and new production and other countries have absorbed our debts....who do you think will own our accounts for retirement and healthcare and well being? It won't be the U.S.A.

  • Comment Link Tionico Thursday, 30 January 2014 00:00 posted by Tionico

    no way will I submit to this theft at gunpoint. So, the krazy kinyun wants me to safe for my retirement, does he? Fine... but I'll do it with securities and investments I an certain will not deteriorate in value, which handily eliminates any government backed, supported, recommended, mandated, or confiscated "investment". It is MY money, whatever is left over after the "guardians" are done raking their mordita, and I will singlehandedly decide how I use it.

  • Comment Link Nora Wednesday, 29 January 2014 22:02 posted by Nora

    It's laughable that they think they can convince us that there wouldn't be any risk involved, since anytime the government gets near what we've worked for, it's more like a guarantee they'll figure out a way to take it. Look at Social Security.
    There is no Treasury anyway, and there is no trust fund called Social Security. We haven't had a trust fund or Treasury since the international bankers forced the United States into bankruptcy along with Portugal, Spain, Great Britain, Germany, Italy and France in 1930, after the five Geneva Conventions those seven countries attended in Switzerland. If you don't believe me, look up "Who's Running America?" by Barefoot's World, or Thirty Little Known Facts About America on youtube. All this has been hidden from us, by The Deceivers.

    I'm tired of this lawless government which is really just a bunch of criminals, telling me what to do. I'm not buying insurance through their idiotic Obamacare scheme, I'm not buying bonds for them to help themselves to later, and I'm not registering my guns or asking their permission in any way. They have no authority over me, and they can't scare me. We all need to dig our heels in and tell them to shuffle off. It's time to throw these bums out and show them what an American revolution looks like, from behind some sturdy bars.

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