If Obama’s Administration Takes Your 401K, Can We Call Him A Socialist Then?
October 24, 2008 / 12:18 pm • By Dr. Melissa ClouthierA dear reader wrote yesterday that using the term “socialist” is a code word:
Martin Luther King Jr, W.E.B. Du Bois, Paul Robeson, A. Philip Randolph, etc were all denounced as “socialists”. Just as with Obama, the term is employed as a euphamism for something else entirely.
Righties have simply reached back in history to use an old code word for black. It set whites apart from those deemed unAmerican and those who could not be trusted during the communism scare. It’s funny, McCain wants to buy your house - and Obama’s the socialist.
Well, I don’t know about whether the aforementioned men were socialist or not. What I know is this: socialism is soothing ideology in troubled times and for people who are afraid about their survival. And socialism never turns out the way people hope or plan.
Long-time readers know that I have expressed worry about Americans generally and our leadership in particular when it comes to government handouts. It seems that far too many people are willing to enslave themselves (for that is exactly the relationship when one depends on the government for survival) in order to have a guarantee of economic safety. So today, we have businesses and individuals who because of irresponsible living, rely on the government long-term. The government is a harsh taskmaster. A nameless, faceless bureaucrat will decide a person’s fate.
Long-time readers also know of my unease about John McCain and my discomfort about the “bailout”. So, when I criticize Barack Obama, it’s a matter that I think he is more extreme than John McCain when it comes to big government and redistribution. That is to say, I have not liked the socialistic trend our government has taken. There seems to be an impulse, no matter the leader, to invade every aspect of American’s lives. The most invasive way to do that is to take a person’s money–their economic choices via taxation.
Obama is just more extreme in his desire for the government to control American’s money. He has more socialistic impulses than the other candidate. That is just one reason I oppose his candidacy. It’s a big reason.
Here is the 401K concern:
House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401(k) plans, she would have workers transfer their dough into government-created “guaranteed retirement accounts” for every worker. The government would deposit $600 (inflation indexed) every year into the GRAs. Each worker would also have to save 5 percent of pay into the accounts, to which the government would pay a measly 3 percent return. Rep. Jim McDermott, a Democrat from Washington and chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, said that since “the savings rate isn’t going up for the investment of $80 billion [in 401(k) tax breaks], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should.”
A few respectful observations:
1) McDermott is right when he says the savings rate isn’t going up. But the savings rate doesn’t include gains to money you invest in the stock market. It ignores the buildup of net worth. (If you bought a share of XYZ Corp. in January at $100, for instance, and its value doubled by December, the savings rate measure would still value that investment at $100. In short, the savings rate is a phony number.)
2) So based partly on the above faulty logic, the $4.5 trillion, as of the start of the year, invested in 401(k) plans doesn’t count as savings.
3) Ghilarducci would have workers abandon the stock market right at the bottom of the market. A stupid idea, according to Warren Buffett: “I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: ‘Put your mouth where your money was.’ Today my money and my mouth both say equities.”
4) Ghilarducci would offer a lousy 3 percent return. The long-run return of the stock market, adjusted for inflation, is more like 7 percent. Look at it this way: Ten thousand dollars growing at 3 percent a year for 40 years leaves you with roughly $22,000. But $10,000 growing at 7 percent a year for 40 years leaves you with $150,000. That is a high price to pay for what Ghilarducci describes as the removal of “a source of financial anxiety and…fruitless discussions with brokers and financial sales agents, who are also desperate for more fees and are often wrong about markets.” Please, I’ll take a bit of worry for an additional $128,000.
5) What effect would this plan have on an already battered stock market? Well, I would imagine it would send it even lower, sticking a shiv into the portfolios of everyone who didn’t jump aboard. But I am sure the Chinese would love to jump in and buy all our cheap stocks to fund the retirement of their citizens.
With the Democrats controlling Congress, having Barack Obama in the White House will mean there is no stop to any socialist impulses. For me, I like an adversarial relationship in Washington. Gridlock is a beautiful thing. That means that no laws can be made. Good.
Everything the government touches turns to dung. Democrats unfettered frightens me. They believe in big government generally. They believe in government as a solution to all problems.
Since I believe that the government is not a force for good and never will be, I am not voting for a guy who believes that the problem isn’t big government, it’s just that big government isn’t done right. That, to me, is rank hubris.
Democrats can save their charges of racism. It’s offensive and to quote their Dear Leader, a distraction. The problem with Barack Obama is not his skin color. In fact, I eagerly anticipate the day when I can vote for a black man for president. But not this man. My opposition is based in ideology. It is philosophy. It is policy. And because I disagree with Barack Obama on nearly everything, I’m not voting for him.
14 Responses to “If Obama’s Administration Takes Your 401K, Can We Call Him A Socialist Then?”
By Dave on Oct 24, 2008 | Reply
So, are you saying the stock market can guarantee a 7% return a year over 40 years? And what about circumstances such as we face right now? What about the people who have had their money in the market for those 40 years as of now, and have lost a significant amount of that “return”? Do they start over and wait another 20 or so years for it to come back?
The other thing that jumped out at me from this post was the “government-created “guaranteed retirement accounts””. There is no way in hell I want the government having any hand in tending my personal money that it hasn’t already absconded with through taxation. The government has been spending all sorts of money it doesn’t have, what do you think it will do with money in hand? Has anybody heard of a thing called Social Security that the goverment has been “borrowing” from for a couple decades?
By Cousin Dave on Oct 24, 2008 | Reply
Dave: The 7% is the average historical rate going back to the beginning 20th century. It already takes into account the Great Depression, the recession of the 1950s, the Carter years, 9/11, etc. Obviously no one can predict what the market is going to do over the short term, but over the long run, the stock market is the best investment that exists. Now, as for your 40-year investors who just got set back, they didn’t get completely or even mostly wiped out. They basically got set back about five years. Not good, obviously, but you need to go look up some Dow Jones numbers from 1968 to get the full perspective. Even if the 40-year investors sell today, they still have come out ahead of where they would have been with a passbook savings account.
As for government-mandated investment funds, you are absolutely right. People don’t realize that there isn’t a single penny in the Social Security Trust Fund, and there never has been. It’s nothing but a pile of IOUs, of which no means exists to pay them back. All current receipients of Social Security are being paid out of the FICA taxes collected now. Social Security has been a big pyramid scheme from the start. Talk about toxic mortgages…
By Dave on Oct 24, 2008 | Reply
Ghilarducci’s statement “Each worker would also HAVE to save 5 percent of pay…” just speaks of a 5% tax. No good.
By Mr. Chuckles on Oct 24, 2008 | Reply
I’m ok with calling Obama a socialist if he takes my 401K, just as long as we agree that Bush is a socialist for taking my tax dollars and bailing out the little corporate welfare whores on Wall Street. Of course, Obama hasn’t done anything yet, but Bush/McCain have already proven themselves to be socialists.
Felt the need to add more here as well:
Doc: You claim you can’t vote for Obama because dems are for big government. Have you been living in a cave for the last 8 years? The gov’t is now larger than it ever has been. Just because someone you like has been in charge for the last 8 years doesn’t mean that he’s fiscally responsible. Bush is the single biggest spender in the last 50 years, and you won’t call him on it. None of you will, because it would require a spine to go against your own party. Again, big gov’t seems to be ok with you folks if it’s your team in the white house, spending money on equally frivilous ventures like Iraq and corp. bailouts. Tell me which is worse, Bush pissing away tax dollars on killing Iraqis, hiring his cronies for huge gov’t rebuilding contracts and pumping 12 billion per month overseas, or having that money spent here at home? My life, my business and my investments were pretty good under Clinton, and they have been for shit the last four years with the monkey in charge. Trust me, with either McCain or Obama, the money is going to be spent. At least with Obama, there is a chance Americans might see some benefit out of it.
By Glynn W. on Oct 24, 2008 | Reply
In other words, because the George Bush that you “proudly” voted for perpetrated policies that naturally decimated the economy - that means Obama’s a socialist?
You quoted my response to your first page blog story where crazed black men are wandering about carving “B’s” on the virginal faces of innocent young white lasses.
Let us be real for a moment. While the story was obviously ridiculous to anyone with a brain - it spread like wildfire through your Rightosphere because it fit your current meme. You WANTED to believe, it fit the racial storyline.
Don’t call Barack an “n-word” (that’s uncouth) . . . call him a terrorist or a socialist or some such nonsense instead.
And look, here’s proof! One of his Black supporters carved a “B” into a young lilly white face! As the good Doctor so sagely asked, “should concervatives expect more of this?” Oh no!
Instead of the apology and retraction you promised - you instead cloud this nonsense in 401K gobblegook? Perhaps you recall Bush’s plan to invest Social Security dollars in the stockmarket? Perhaps you recall the need for taxpayers to shoulder over a trillion dollars worth of debt and nationalize the banks (last week). Perhaps you recall McCain’s demand that the federal goverment purchase everyone’s house.
So, let’s get real. Obama’s not the socialist here. It’s just that the other word is uncouth.
Dear, dear, Righties, to paraphrase Joseph N. Welch when fighting off McCarthy’s attacks, “At long last, have you no shame?”
By Chalmers on Oct 24, 2008 | Reply
So Glynn, is there no Legislature in the United States anymore? Is everything about race?
I think you have forgotten that the bailout was initially supported almost 50/50, but for once it was not along party lines. Half of each party didn’t get the memo, but fear not, they were quickly set straight by the party leadership on both sides of the aisle. The spending under Bush has been out of control, mostly because of 6 years of synergy. Clinton had no synergy, he had gridlock (remember all of the emergency spending bills?). I would say that what we need more of is gridlock, so since the Dems are running the Legislative branch, give the executive to the GOP… but in the end, maybe it would be better to give the Executive to the Dems and set up the GOP for major wins in 2 years. Either way, gridlock is good for America.
As for the race issue. Are you really so much the angry black man, or are you being melodramatic for effect? No doubt there is still racism in America, but it is not the driving force that you imply (or out and out claim). 92% of Americans don’t give a crap about Obama’s race. 8% of Americans don’t give a crap about Obama’s policies, because of his race (check out Howard Stern’s on the street interviews). Racism won’t get Obama elected and it won’t keep him from being elected.
By the way, Socialist is a nicer word for Marxist, not the N word. Find a new soap box, separate but equal was struck down decades ago, both in the courts and in the hearts and minds of Americans.
By Glynn W. on Oct 24, 2008 | Reply
Chalmers,
Puleeezzeeee.
If some clown had posted a story about crazy hillbillies running into Detroit to carve “M’s” on hapless Negroes - the story would never have seen the light of day. Turn the tables and it spreads like wildfire.
Now then, I wrote, from minute one, that yesterday’s featured posting was bullshit. Do I have magic prognostication powers unavailable to white Righties?
No. I simply don’t have a natural prejudice to believe nonsense as long as it’s about Black folk. And, Chalmers, it would be helpful to simply dismiss me as an “angry black man”, but it really doesn’t fit these facts.
Plenty of White people are just as angry as I am about this nonsense. Don’t blame me for calling it out.
By Dave on Oct 24, 2008 | Reply
Hey Glynn, I just read the news story on the comcast home page. The idiot scratched the B on her own face backward. I suspect she did it watching herself in the mirror.
By Chalmers on Oct 25, 2008 | Reply
Glynn,
I was responding to the post about 401k’s and Socialism, not the one about some nutters with a new homemade “B” tattoo on her face.
If you are interested in forming a more coherent response, feel free to read my comment again and respond to what was actually written.
By Frank McLaughlin on Oct 26, 2008 | Reply
>So, when I criticize Barack Obama, it’s a matter that I think he is more extreme than John McCain when it comes to big government and redistribution.
I earn a lot of money and I think some wealth redistribution is a good thing. America is a long-way from socialism under any senario.
Having said that I do wish to point out that Ronald Reagan and George Bush out spent Bill Clinton in every discretionary Federal spending budget category when averaged over their term. And of course current Bush is just off the charts. I also should point out that there was more new job growth under Carter (3.1)and Clinton (5.4) than under Reagan (2.4) or current Bush (don’t have figures but I know he’s way behind Clinton).
By Robert Arvanitis on Oct 27, 2008 | Reply
A WaPo editorial on regulation as an “iatrogenic illness.”
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/19/AR2008101901416.html
By Paul on Oct 27, 2008 | Reply
On the subject of socialism, here is a chart of the inflow of federal tax dollars to Red states from Blue states.
Talk about redistribution of wealth…
By Devlin on Nov 1, 2008 | Reply
The problem with America is that, being a world leader, it fails to observe and learn from other countries. It even ignores the lessons of history.
Other Western countries are experiencing an economic downturn, thanks to the U.S. and its collapsing socialist housing market. However, these countries are not repeating the mistake made by the German people in 1933 when they elected Hitler, a man who promised “change”. Nor are they ready to overthrow the system as the Russians did in 1917 when they gave the Bolsheviks the reins of power.
it isn’t that Americans are stupid. Well, at least those who pay taxes and save aren’t stupid. It’s that they have turned inward so much.
By Roger Burger on Nov 16, 2008 | Reply
If they want to redistribute wealth….how about the oil companies who made zillions of dollars profits in the gas gouging scheme….have them give some of that $$$$ to the ailing automakers.