Will the government outlaw your 401(k) plan? It seems like an absurd possibility, yet earlier this month two Democratic senators, Sen. Tom Harkin, D-Iowa, and Sen. Bernie Sanders, I-Vt., held a hearing on Capitol Hill exploring the possibility of doing exactly that.
On Oct. 8, the two senators from the Health, Education, Labor and Pensions (HELP) Committee held a hearing on "Retirement (In)security in America." Among the proposals discussed was "Guaranteed Retirement Accounts," or GRAs.
The purpose of the GRA proposal is simple: To force Americans to stop putting their retirement savings money into private 401(k) accounts and send their money to the government instead.
GRAs would "eliminate the favorable tax treatment currently afforded to 401(k) plans, and instead use those dollars to fund government-invested GRAs into which all employees would be required to contribute a portion of their salary," according to a letter signed by House Minority Leader John Boehner and 12 other Republican representatives.
The letter urged opposition to the proposal and was sent to Treasury Secretary Timothy Geithner and Labor Secretary Hilda Solis in May. The Harkin-Sanders HELP committee hearing shows Democrats are ignoring critics of the GRA proposal.
Testifying at the hearing in favor of GRAs was Ross Eisbrey, vice president of the Economic Policy Institute, a liberal economic think tank located in the same building as the liberal Center for American Progress. (Both organizations have been funded by left-wing billionaire George Soros.)
In February, President Obama released the "Annual Report of the White House Task Force on the Middle Class." GRAs are among the proposals recommended in the report "for further study." The task force's executive director is Jared Bernstein, EPI's former head.
EPI's work on retirement security issues also has some suspect backing. The think tank has teamed up with two of the most powerful unions in the country -- the AFL-CIO and Service Employees International Union -- to push a public campaign for a "Retirement USA" initiative (see Retirement-USA.org).
One of the proposals being touted on Retirement USA's Web site is, you guessed it, GRAs. At the hearing, Eisbrey noted that Retirement USA had not specifically endorsed GRAs, but did "affirm that it meets all of the 12 principles the coalition set out as essential to deliver retirement income that is universal, secure, and adequate."
But why are unions pushing this? The average union pension plan is only 62 percent funded, far below the point at which the government considers a pension plan "endangered." Estimates suggest unions' multi-employer pension plans are underfunded by $165 billion and could be on the verge of collapse.
Union leaders see these "retirement security" ideas like GRAs as vehicles to a back-door pension bailout, where union leaders will no longer have to worry about the fact they've underfunded their rank and file members' pension plans. Just let Uncle Sucker take care of it.
Labor is the biggest source of campaign cash for Democrats (Retirement USA backers AFL-CIO and SEIU are spending $88 million this election), and Harkin also wants to pass "card check" -- the proposal to do away with secret ballots in workplace representation elections -- during post-election lame duck session.
Regardless, forcing everybody into a government retirement system that pays out equally to Americans who have scrimped and saved and to those in organized labor who have grossly mismanaged their pension plans seems almost too crazy to contemplate.
But unions are desperate, and Democrats are in hock to Big Labor in a big way. And the lame duck could be their last chance for a very long time.
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