White House: Some of you are trying to save more than you need, and we’re not going to have that
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This is a reblogged from http://canadafreepress.com.
posted by Dan Calabrese
Via Dave Ramsey: I will quote the White House directly.
“Under current rules, some wealthy individuals are able to accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.”
According to advance reports, the administration’s budget due out on Wednesday will propose a cap limiting the amount of annual return a retirement account can create to $205,000. If that proposal were enacted today, that would mean retirement accounts would be limited to $3 million in assets. The White House estimates that caps on the tax-preferred accounts would generate $9 billion over 10 years.
The argument for this, of course, is that it will only affect the super-rich. That might be true if you only consider who will be among the affected account-holders. But what the Obama Administration and the media never understand is that changing economic behavior on the part of Party A always affects Parties B through Z. The U.S. News story offers one example of how this could happen:
Based on past annuity prices, EPRI projects that the account threshold could fall as low as $2.2 million, and even lower if and when interest rates grow.
Of course, a threshold of $2.2 million would still only take into account a small sliver of Americans. But depending on how such a plan is administered, it could discourage employers from providing retirement plans, fears one expert.
“I think a lot of what people are missing about this is this is most likely going to be very, very difficult from an administrative complexity standpoint for employers to deal with this,” says Jack VanDerhei, research director at EPRI.
Exactly how such a plan would be implemented is impossible to know right now, as the details are still sketchy. But the difficulty of keeping track of an employee’s retirement account—particularly if that employee has multiple accounts held over from last jobs, for example—could cause some employers to throw up their hands, says VanDerhei.
But beyond all this, there is a far more fundamental question that needs to be considered. Who the hell is Barack Obama to decide what constitutes a “reasonable” retirement nest egg? And even if I don’t need $3 million, what do you think entitles you to it? I’d be willing to bet that the average private individual who has earned $3 million and “doesn’t need it” will still do more with it to benefit society than the government would.
Why do these people think that every dollar people “don’t need” should consequently be handed over to the government? What is the basis for thinking the government will do anything good with it?