The Obama Administration Exploring the Nationalization of 401ks

by Sal on February 22, 2010

in Economy,Politics

We all know that the Obama administration and the Democrats in Congress are spending this country to insolvency.  With the record deficit of the last year, the increase in programs in this year’s whopping $3.9 trillion budget, and the lack of growth in the private sector to produce revenues, the government is going deeper and deeper into debt.  It is also running out of ways to finance that debt.  Debt is not some magic IOU that the government can just write.  It has to finance the debt through treasury bills.  Up to this point, foreign nations such as China and Japan have been the biggest financiers of our debt.  Now, their demand for U.S. Treasuries seems to be waning.  The government must come up with an alternative plan if it is to finance all of the Democrat initiatives.

Enter the idea to confiscate your 401k.  The Departments of Treasury and Labor are soliciting comments on a plan to turn 401ks into annuities composed of U.S. Treasuries.  This plan would take an existing 401k and transition it dollar-for-dollar with the new annuity.  This would give the government hundreds of billions of dollars in which to finance its debt, and would represent the biggest confiscation of wealth in our nation’s history.  The outrage from such a move would be harsh and fierce, and I doubt that it could be implemented.  Then again, if you asked me two years ago if we’d see the wholesale bailout of the financial sector and the government takeover of the auto industry, I would have said that it couldn’t happen.  Yet here we are.

{ 1 comment… read it below or add one }

Eric Lindholm February 22, 2010 at 9:43 pm

You know, I have an old 401(k) with not a lot in it that I’m seriously thinking about taking the tax hit and converting to gold, or rare books, or Rolex watches. Somewhere down the road, the pile of money in private accounts will be just too tempting for the government.

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