The Next Target

A good illusionist is a master of keeping your attention on one hand while he performs the secret of the trick with the other. I’m afraid that the Obama administration is a fairly decent illusionist in its own right. While all of our attention was on the aftermath of the Blair House Health Care Summit, there was something going on behind the scenes.

Even before Obama has finished ramming through Obamacare in order to destroy your private health insurance, he has picked his next target; your private retirement accounts. Using classic Saul Alinsky tactics, the first step is to find an “enemy” to demonize. For the health care takeover it is the insurance companies. For the retirement takeover, it appears the enemy is financial advisors.

During a meeting of the Middle Class Task Force, the Obama administration announced new proposed regulations to protect workers’ retirement savings from unscrupulous financial advisors. The regulations would require financial advisors not steer clients into funds for which they receive commissions or are affiliated and base their investment advice on “objective computer models certified by independent experts.”

However, a couple of questions come to mind. First, who’s to say that a fund that pays the financial advisor a commission is not the best fund for that particular client? Second, with regard to the certified computer models, who’s going to certify that the “experts” are independent? But I bet I can answer that one; your friendly neighborhood Federal government bureaucrat.

Biden’s reasoning for the proposed regulations was, “A lot of folks are not getting the best treatment, the best advice and the most help in figuring out how to deal with their retirement plans.” Let’s give the federal government the benefit of a doubt and assume they just care so much about the American worker and want to make sure they don’t get ripped off. It still shows an incredible lack of faith in the American people. I believe people are smart enough to study the performance of their retirement funds and then go to their financial advisor and demand that changes be made.

However, I’m afraid that my experience with our Federal government has made me a bit more suspicious. There is no reason not to believe that these proposed regulations are the first tentative, baby steps in a much larger process. Next would come the cries that these financial advisors are so evil and the problem so massive that there is no solution other than intense government oversight and regulation of the industry. The administration would not use the word “takeover.” In the health care debate, the administration has been careful not to call it a takeover but it sets the stage for government control of health care.

Americans hold some $15 trillion in private retirement funds. It is the largest, untapped source of money left. Washington is broke; it covets cash. Democrats, as well as some Republicans, would love nothing better than to get their hands on this vast pool of money. Unfortunately, because of the tax incentives that are in place to encourage Americans to save for retirement, the ultimate ownership of the funds is a matter of some debate.

In fact the idea of the government taking over 401(k) accounts is not new. In October of 2008, there was a proposal before Congress that would allow Americans to use their 401(k) funds to purchase government bonds. In turn, the government would use the funds to set up a “guaranteed retirement account.” At retirement, this guaranteed retirement account would pay an inflation adjusted annuity. You might call it the “government option” retirement plan. You’ll recall that at the time 401(k) accounts were losing massive amounts of value due to the plunging stock market. This proposal was seen as a way to secure workers retirement accounts from such losses.

However, history teaches us these accounts would never remain individual retirement accounts. As with Social Security, the government would take those funds to spend them as part of the general fund. Our spending mad government would soon exhaust this fresh supply of cash as well. That would make two bankrupt government “guaranteed” retirement plans instead of one. Good luck choosing.

These people never stop. Even after tea parties, town halls, polling and elections, they are still hammer down on Obamacare. After that, win or lose, this beast of a Federal government will still be inventing new and better ways to extract our liberty and property.