Audacity: Democrats Want to Destroy Your 401K

They're going to make changes that will very likely mean that your employer will not be offering a 401K plan. And that have the audacity to start forming the plan even before their elected.

If you're hung up and worried about the "Audacity of Hope", you're falling way behind the fast moving liberal Democrats. They have already moved on to the "Audacity of Audacity". Their latest target is the savings and investments of hard working Americans. They have developed the basis of a plan that will destroy the best opportunity that middle class America has for financial wealth and security in retirement; tax deferred, employer assisted 401K plans.

House Democrats Contemplate Abolishing 401k Tax Breaks

Participation in 401K and IRA plans is voluntary. However, financial common sense would indicate that it is foolish to opt out of such a plan -- but Republicans are for freedom, even the freedom to pass up a good deal. Hey, if you don't believe me, remember . . . 401K participation is voluntary . . . you're free to not participate.

But the Demonrats want to do away with the current 401K plan which gives you the choice to participate, and which produces a savings account that you own. They instead are proposing a mandatory "contribution" plan where your money will be thrown in the Social Security pool, owned and operated by the government.

Sounds like more taxes to me. Gee, who would have thought that the Demonrats were for higher taxes?

Here's what an employer assisted 401K plan means for an average hard working American:

• A volunatary contribution of 5%, matched by 2.5% employer, for 7.5% of $50K which means $3,750 per year.
  


• If you work from age 20 to age 65, for 45 years, then contributions total $168,750.


• Assuming very conservative investing strategy and very conservative return figures

50% stocks, 50% bonds

stocks return 8% per year, bonds return 3% per year

net return is 5.5% per year

• . . . the value of your account at age 65 is $690,447
  


• At age 65, your hard work and savings is generating nearly $38,000 per year

Here's what the new Democratic plan means for the average hard working American:

• A mandatory contribution (ie taxes) 5% contribution of your $50K income, plus the $600 subsidy comes to $3,100 each year.


• If you work from age 20 to age 65, that is for 45 years, then total contributions and interest from the 3% bonds comes to $287,432.


• At 3% yield, on $287,432 -- your hard work and mandatory savings is now generating $8,623 per year.


• Do you get the $8,623 per year during your retirment years? You might hope so, but the plan doesn't make any statement with regard to payout. This isn't a private account -- so quite possibly you'll get a fixed amount determined to be "fair" by some liberal bureaucrat somewhere.


• Who knows what your payout will be? Social Security may not even be solvent.


• Do you get to pass the $8,623 in principal onto your children? Are you kidding? This is a Democrat's plan. You don't have any right at all to the money that you earned.

Do you work hard and wish to retire someday on your hard earned savings?

Vote Democrat if you want to work hard all your life just so that you can hope to receive your share of $8,623 per year from the US government.

Vote Republican if you would like to live on $38,000 a year -- $38,000 directly from your private 401K account -- $38,000 that you have every right to, because you did the work to earn it. And, by the way, $38,000 without touching the $690K principal amount, which you could leave to your children -- if it weren't for the Democrat's Death Tax.

Informed Citizens Make Better Voters

Informed citizens make better voters. Uninformed citizens will get the government that they deserve. There is no free lunch.

More citizens should take the time to do their own research. It's easy. And you can find websites that are not biased in either direction . . . if you really want to. Here's one . . . .

Library of Congress www.thomas.gov

I have stated in an earlier post that Senator McCain attempted to push regulatory reform for Fannie Mae and Freddie Mac through Congress. As part of this effort, he warned that Fannie and Freddie posed a serious threat to our financial systems. But don't read about it here -- take the time to use the Library of Congress link and go read it for yourself. Become involved.

If you want to verify my claim, go to the LoC "Thomas" website.

In the section titled "Find More Legislation", click the link "Search Multiple, Previous Congresses"

When the new page is displayed, enter these search words, "GSE Freddie Mortgage".

To reduce the number of hits, make sure that the only box selected is the one to search the 109th congressional session. [x] 109 109th Congress

When you get the list of results, look for:
Federal Housing Enterprise Regulatory Reform Act of 2005 (Introduced in Senate)[S.190.IS]



If you continue to look, you will find additional proof that Republicans tried to push through regulation of Fannie and Freddie. Here are some hints.

2/29/2000
H.R.3703 Sponsor: Rep Baker, Richard H.

7/31/2003
S.1508 Sponsor: Sen Hagel, Chuck [NE] Title: A bill to address regulation of secondary mortgage market enterprises, and for other purposes. TITLE I--REFORM OF REGULATION OF FANNIE MAE AND FREDDIE MACRelated Bills: S.1656

[109th Congress]
**HOUSE**Federal Housing Finance Reform Act of 2005 (Introduced in House)[H.R.1461.IH ]H.R.1461 Title: To reform the regulation of certain housing-related Government-sponsored enterprises, and for other purposes. House Sponsor: Rep Baker, Richard H. [LA-6] (introduced 4/5/2005) Cosponsors (19) Related Bills: H.RES.509 Latest Major Action: 10/31/2005 Referred to Senate committee. Status: Received in the Senate and Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.

**SENATE**Federal Housing Enterprise Regulatory Reform Act of 2005 (Introduced in Senate)[S.190.IS]

How Do I Make a Budget?

I suddenly have a problem that I never seemed to have before. I have no idea how to determine if I can afford to make a major purchase of any kind.

It used to be, that I could look at my income, then look at my required monthly expenditures, and determine how much disposable income I had. Then, my wife and I would look at the things we wanted, decide which we wanted the most, check that the price was fair, . . . and then I would argue that we should save or invest the money instead of spending it. Heck, sometimes I even won out on that issue.

But now, it seems, Senator Harry Reid tells me that there's some salesman guy out in the midwest somewhere who has come upon hard times. It seems that his income has dropped (35% ?), and his house value has dropped more than $100,000 in value since he bought it.

Senator Reid assured me, several times, that the saleman's problems were "no fault of his own". So I feel quite confident that this guy must be the best salesman ever, but his employer is a jerk and refuses to pay him what he is worth. Although I can't figure out then, why a good salesman doesn't sell his services to a new employer who will pay for his salesman services. But I'm not supposed to ask, just fork over the taxes.

And I guess that I am also not allowed to ask how much the salesman paid for his house. I'm not allowed to ask if he was smart and got a fixed rate loan so that he was sure he could afford it, or if he got an ARM. Could he have managed with a smaller, less expensive house, so that he could be sure to make the payments, or did he go for the larger more luxurious house? Did he, and the bank, calculate how much house he could afford based on his salary plus (variable) commission? Or did they use a more, uh hem, conservative approach and base his purchase on what he could afford should his income decline somewhat? And what is the big deal anyhow --- the home price goes down, the home price goes up --- what does it matter as long as you can make the payments? Does this salesman want to move, and now he won't get "enough" money for his house??

Now normally, in a polite and civilized society, I wouldn't have any right or business to ask those questions. But now, . . . well, Senator Reid and 73 other US Senators have passed a measure that states that it is I (and you) who must make up for the shortfall between what salesman can afford, and what he actually purchased.

Now, my dilemma only gets worse. My neighbor just bought a shiny new car. Normally, I would be very happy for her. I would say how nice it looked, and ask her how much she likes it, is she excited, those kind of things. Things nice neighbors say to each other.

But now, . . . well, what if she can't make the payments? Then Senator Reid's gonna show up and tell me to cough up some more money. So instead of being happy for her, I am very angry that she bought much more car than she really needed. How dare she. What right does she have to a new car, when her old car ran just fine.

I don't like being angry with my neighbor. But you see, my wife and I haven't been on an actual go-away-from-home vacation in over 10 years. We would dearly like to spend a few thousand and get away for a week. But, how am I supposed to know if I can *afford* to go on vacation???

I am very good at math, but my math skills fail me. You see, the money I earn isn't mine anymore, to spend at my discretion. Instead that money belongs to Senator Reid, to dispose of in the way he best sees fit to save the country.

The only way that I can hope to get my money back from Harry Reid is to come up with a sob story that is sorrier than the salesman's. I must then apply to Harry Reid to see if he agrees that I am a needy case, and that my story is the saddest in all the land. If I had known, I wouldn't have studied to be an electrical engineer. Instead, an actor, a writer, -- somebody who can really tell a sad story and tell it well.

I'm gonna start working on my sob story soon. But right now, I gotta go let the air of my neighbors tires. Otherwise, she's going to drive to the mall and buy more stuff using a credit card. And I have to cut the lines for her cable modem so that her kid can't go online and apply for a college loan. I hate to do these things, but I just don't know if I can afford to spend my, er I mean Senator Reid's, money on those things.

Fannie, Freddie, and Revolving Door Politics

Unorganized Draft Number 1.  Hopefully I can improve on this...

OK, right up front, I consider myself part of the "vast right wing conspiracy".  I watch Fox News.  And this morning I drank my coffee from a "McCain Palin" mug.  If any of that turns your stomach, you might as well find another blog to read now, because you're not likely to believe anything written here.

Still here?  . . . OK.  Let's move on.

I believe that Democrats are more responsible for the current economic crisis than Republicans, but I have no doubt that there is corruption on both sides of the aisle.  I would love it if we could oust every congressional member whose motives with regard to Freddie_&_Fannie (F&F)
are not pure.  If you can find a talking head on television who isn't completely biased, you just might hear them say that an underlying problem with the whole F&F bail out is the proverbial fox  guarding the hen house.

I have read articles arguing that Obama, Dodd, Kerry, Frank, and other Democrats are the root of the problem.  The proof that is offered is a list of Fannie-Freddie contributions to the various congressmen.  Fannie & Freddie Money List

As I see it, there is conflict of interest in at least 3 areas:

1. Fannie & Freddie are permitted to spend money on congressional lobbyists.
2. Some members of F&F board of directors are made by presidential appointment, with approval by congress. Which only makes it easier for . . .
   
3. . . . "friends of" presidential and congressional to end up as CEO or other high $alary jobs at F&F (or other banking, mortgage, investment firms that wish to curry favor from congress or the White House.)
   

Yes, the money from PACs and other lobbying efforts is part of the problem.  I think that anybody higher on this list is more likely to be playing the quid pro quo game.  In particular, I cannot see how anybody can justify that members of the Senate and House committees responsible for oversight of F&F can be on this list at all.  In particular, Senator Chris Dodd, who as chairman of the Senate Banking Committee is number one on the list!  Fannie and Freddie is not the only instance where Dodd has a conflict of interest.  Check out the CountryWide scandal.
Republicans are fond of pointing out that the top 3 are all Democrats, and we Republicans are especially happy to point out that Obama captured the number 2 spot in a few short years.  For my part, I offer this instead.  There are 5 Democrats and 5 Republicans in the top 10.  Even though there is a small chance of persecuting an innocent congressman, I would be perfectly happy to oust the top 5 Republicans on the list as long as the top 5 Demonrats get the boot also.

But, the list is only a small indicator, a mere hint at where the corruption lies.  If you want to find the corruption, you need to follow the money.  And while $165,000 may seem like a lot to you or me, the really big money is made by the scoundrels who work at F&F.  Franklin Raines comes out of the Clinton White House, gets indicted and convicted for leading the fraudulent accounting practices at Fannie so that he gets bigger bonuses and walks away with $90 million in six years!

Hey Franklin! You get 90 million, and you can only afford to kick back a few thousand to Dodd?

Democrats often claim that the economic crisis is the fault of the Bush administration, usually made on the basis that "Bush did nothing" or was completely for "no regulation".  Not true.
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Bush adiministration tries to fix Fannie & Freddie in 2003.
Democrats oppose.
Barney Frank specifically says that Freddie & Fannie are fine.
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New York Times
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September 11, 2003
New Agency Proposed to Oversee Freddie Mac and Fannie Mae
http://query.nytimes.com/gst/fullpage.html?res=9E06E3D6123BF932A2575AC0A9659C8B63&sec=&spon=&pagewanted=print



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Bush administration warns in the budget in 2005
Note the following passage from the 2005 budget: Fannie, Freddie and other GSEs "are highly leveraged, holding much less capital in relation to their assets than similarly sized financial institutions. . . . A misjudgment or unexpected economic event could quickly deplete this capital, potentially making it difficult for a GSE to meet its debt obligations. Given the very large size of each enterprise, even a small mistake by a GSE could have consequences throughout the economy."
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/11/AR2008091102841.html

In 2005, Republican Mike Oxley, then chairman of the House Financial Services Committee, brought up a reform bill (H.R. 1461), and Fannie and Freddie's lobbyists set out to weaken it.
This op-ed misidentified a House bill to reform Fannie Mae and Freddie Mac that was pulled from consideration before a vote. It was H.R. 2575, in 2003. The bill mentioned in the column, H.R. 1461, passed the House in 2005 but was not voted on in the Senate.
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McCain’s attempt to fix Fannie Mae, Freddie Mac in 2006
FEDERAL HOUSING ENTERPRISE REGULATORY REFORM ACT OF 2005
Democrats block banking reform again.
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http://hotair.com/archives/2008/09/17/mccains-attempt-to-fix-fannie-mae-freddie-mac-in-2005/
The OFHEO report also states that Fannie Mae used its political power to lobby Congress in an effort to interfere with the regulator’s examination of the company’s accounting problems.

McCain saw it coming in 2006:

"I join as a cosponsor of the Federal Housing Enterprise Regulatory Reform Act of 2005, S. 190, to underscore my support for quick passage of GSE regulatory reform legislation. If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system, and the economy as a whole."

How did the 2 candidates and other congressmen vote on it?  They didn't, it never made it out
of the Senate banking committee controlled by Democrats lead by, now chairman, Chris Dodd.
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http://www.govtrack.us/congress/record.xpd?id=109-s20060525-16&bill=s109-190#sMonofilemx003Ammx002Fmmx002Fmmx002Fmhomemx002Fmgovtrackmx002Fmdatamx002Fmusmx002Fm109mx002Fmcrmx002Fms20060525-16.xmlElementm0m0m0m
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For anybody who claims that they don't trust a "right wing" website, here's a link to the copy
in the Library of Congress:
http://thomas.loc.gov/cgi-bin/query/D?r109:16:./temp/~r1095Vm6sc::
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Note that LoC does *not* list McCain as a consponsor, but does show that he is on the record
for the statments above.
Actually, if you read the entire agenda for the day, you will find that Hegle asked for McCain's name to be added as a cosponsor -- but for some reason it does not show in LoC archives.



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Where was Dodd?
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/11/AR2008091102841.html
Dodd plays politics when he asks "Where was the admintration over the last 8 years?"
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