The president should leave 401(k)s alone
PRESIDENT Obama, in his proposed budget for fiscal year 2014, proposes to cap how much Americans can save in their 401(k) and Individual Retirement Account plans.
The Democrat-in-chief explains that some people have accumulated "substantially more than is needed to fund reasonable levels of retirement saving," reports The Wall Street Journal.
This proposal rests on the assertion that government should decide how much people "need" of the money they make, and what it is "reasonable" for them to spend in retirement.
Obama proposes - for starters - to limit the amount of money an individual can have in such tax-deferred retirement accounts to enough to cover an annuity of not more than $205,000 per year in retirement, which would take a nest egg of about $3 million for someone retiring in 2013.
The limit is arbitrary and it defies logic. Why would Obama want to limit savings or limit investments into private enterprise, which 401(k) and IRA plans do?
And the $3 million Obama touted only sounds big.
In an editorial, the Wall Street Journal pointed out that $3 million tucked away toward retirement "is roughly the value of a California police sergeant's pension if she works for 30 years, retires at age 50 and lives to normal life expectancy."
In other words, Obama is calling for only fair-to-middling pensions for civilians, while supervisors and higher ranked government officials collect pensions that cost far more than $3 million.
Indeed, taxpayers spent $3.7 million last year alone on the pensions and benefits for the four living former presidents. That includes staff and security.
The amount of tax revenues that would result from such a limit would be negligible, and redistribution of wealth is only part of the overall goal.
For many on the left, "it's also about reducing the ability of individuals to make themselves independent of the state," the Journal pointed out.
"They have always disliked IRAs, just as they oppose health-savings accounts, because over time they make Americans less dependent on federal entitlements or transfer payments."
Democrats just can't have that. During Obama's presidency, the number of Americans receiving food stamps has shot up by more than 50 percent, growing from 29 million in 2008 to more than 46 million today.
The federal government should be encouraging self-reliance, not punishing it as if it were undesirable behavior.