Ben Franklin-3

"Teresa Ghillarducci has always had more interesting--and controversial--things to say than your average retirement-policy wonk. ... Still, as she sat at the witness table on Oct. 7 at a hearing on the House Committee on Education and Labor, running through the litany of what's wrong with the 401(k) and other defined contribution retirement plans--they have high fees, for one--Ghilarducci didn't think she was courting controversy. 'I was saying things that seemed completely milquetoast,' she recalls. Ghillarducci did bring up a bold proposal to replace the 401(k) with a mandatory, government-run pension plan and suggested that Congress immediately allow retirees to swap 401(k)s battered by the stock market's collapse for monthly payouts from the government. But she had floated both ideas before, to little effect. This time, all hell broke loose. Her proposal caught the attention of talk-radio juggernaut Rush Limbaugh, and over the next few weeks Limbaugh hammered on Ghilarducci's idea as a Democratic plot to kill the 401(k). 'McCain has gotta tie Obama to these people,' he said on the air. ... Limbaugh has since dropped the subject, but it is far from dead. While Limbaugh took care to describe Ghillarducci's proposals correctly even as he castigated them, word has since spread, and warped, in some conservative circles of a purported Democratic plan to confiscate 401(k)s. ... Ghilarducci wants more--a government-run plan, financed in part by the end of the 401(k) tax deduction, that would guarantee a 3% return above inflation. Don't think that's a good deal? Fine", my emphasis, Justin Fox (JF) at Time, 15 December 2008.

This is terrible reporting. JF, you should be ashamed of yourself. Ghillarducci's plan, which keeps morphing, would have done precisely what the "conservative circles" accused it of, seizing one's 401(k) assets and replacing it with a promise to pay 3% a year in real terms. Who will decide: the inflation rate and when you can withdraw your money? Etc., etc.. Welcome to Argentina. I previously speculated Obama killed this plan. JF's statement attributed to Limbaugh seems to confirm this. See my previous posts on Uncle Sam's contemplated 401(k) grab:

http://skepticaltexascpa.blogspot.com/2008/11/ben-franklin-was-right.html.
http://skepticaltexascpa.blogspot.com/2008/11/ben-franklin-2.html.