RUSH: We have a couple of sound bites from the New School professor of economics, the New School for Social Research professor of economics Teresa Ghilarducci, who explains the theft — uh, the purchase — of your 401(k) by the government. TIME Magazine now has a big story out saying that this must happen. It must have to happen to save us all.
RUSH: By the way, TIME Magazine is not the only one floating this idea for the regime to claim your 401(k). And coming up in a moment, we’ll go back and play the sound bites from October 27, 2008, Teresa Ghilarducci at the New Skrool for Social Research, professor of economics. It was her idea to basically take away your 401(k) and compensate you for it in a kind of screwy way ’cause the government needs the money. It was a mistake to allow people to contribute to an IRA and deduct that from their gross taxable income. It’s costing the government too much money now. Back in 2008, it was costing the government $80 billion. Do you believe that? That’s so much, and they have to get that back now. And TIME Magazine, seven hours ago now, with a headline and a story about the advisability of this.
But they’re not the only one. From November 26th, a story from the Atlantic Monthly with the headline: “The 401(k) Is a $240 Billion Waste.” The Atlantic piece is about the same study, a Danish study, that TIME Magazine mentions. They think it’s a great idea to do away with the tax deduction because it’s basically only the rich. Anybody over $150 grand this matters. They’re rich. It’s not right, it’s not fair that those people should have a tax deduction, that the poor don’t. Everything’s been done on the backs of the poor since this country was founded. Do you realize the poor used to have homes on the beach and everything, but they got taken away from ’em.
Do you realize before the Founding Fathers founded this country, the poor had everything, and then the country was founded, and those guys took everything, and the poor became poor and they’ve been poor ever since. And then all the immigrants that came here, if they weren’t white they got lumped into the poverty stricken poor and they’ve been given the shaft for the last 236 years, and now it’s payback. And a majority of people who voted, voted for that.
It’s not the way it happened? Well, let me tell you something. If the number one television show in this country is Two and a Half Men, then you can make them think that’s the way it happened. Okay? If you can run ads, picture of a station wagon, a mom and day and 2.8 kids in it and a dog in a cage on the roof and claim that Mitt Romney hates dogs, then you can portray that story of America and get away with it. If you can put some loco weed on television, “Mitt Romney killed my wife,” and a majority of Americans believe it, then you can convince them that the poor used to own all the beachfront property.
Now, The Atlantic piece about that Danish study, here’s the final paragraph: “A system of forced, or nudged, saving wouldn’t replace this social insurance, but rather the wasteful dinosaur that is the 401(k). It’s mostly the well-off, who have retirement savings to move around, who move their savings to where the subsidies are. The 401(k) doesn’t do much if your goal is to get people who don’t save much to save more, and it doesn’t do this at quite the cost.” We need to tell Congress we can’t afford this anymore.
Folks, there is an all-out assault — forget the word “rich.” There’s an all-out assault on successful people. There is an all-out assault on prosperity and the future is that government will determine prosperity and will assign it, and they’ll also punish it. Because there’s been a lot of people who have been prosperous who really haven’t deserved it because they were mean or they stole it or whatever the allegation will be. But The Atlantic piece, “The 401(k) Is a $240 Billion Waste.” Do you realize, $240 billion compared to our national debt of $16 trillion is not even a rounding error. It is so insignificant, the amount of money we’re talking about here saving is so insignificant that it isn’t about the money. It is about transforming this country and penalizing success.
This is why, in the first hour of the program, I said I simply do not buy this belief that Obama’s worried about a recession leading to unemployment and causing a bad legacy for his second term. I just don’t believe he cares about that. Looking at Obama through the conventional prism of presidential politics is to totally misunderstand who he is. But that’s just me. The vast majority of people who vote in this country don’t think that, see that, comprehend that at all. But I’m telling you what, if a vast majority of college students, students at institutions of higher learning think The Daily Show is the real news, and if the rest of them think that Two and a Half Men is worth their time, then you can make them believe anything about Republicans.
Notice both TIME Magazine and The Atlantic are calling the 401(k) tax deduction now a subsidy. It’s a government subsidy. That’s important because that means it’s the government’s money. You didn’t earn it, the government allowed you to have it, and calling it a “subsidy” is a dog whistle term for people. “Why are we subsidizing the rich?” is the shout from middle America and central California. “Why are we subsidizing the rich, Mabel?” So a tax deduction is now a subsidy.
Here is Teresa Ghilarducci. We got this sound bite from the Seattle affiliate at the time, and the host there said, “Your plan, as I understand it very briefly, I’ll let you fill in the details, it would end the tax deferral status of 401(k)s. That is, I have a 401(k), and I put in a certain amount every month, and that’s deducted from my gross so I don’t pay taxes on it until I pull it out when I retire. And so it would end that and it would bring about a new government retirement plan. Is that correct?”
GHILARDUCCI: Whatever you have in your 401(k) now will keep its tax break. So everybody who has their 401(k) plan will be grandfathered in. But what I propose, instead of getting a tax deduction, like a decrease in your taxes by whatever your tax rate is, so if you’re at the very high income, your tax rate is 39%, and if you’re at the very low, you’re at 15%. And 40 million people make so little they don’t pay any taxes at all. Instead of the deduction coming from your tax rate. So whatever you put in your 401(k,) like a dollar, let’s say, or a hundred dollars, you get back 39 cents, or $39, if you’re at the high rate, $15 or 15 cents if you’re at the low rate, or nothing if you’re at the row rate. I propose that we just transfer the deduction to a credit so that everybody gets $600. So I’m not taking away the tax break. I’m actually giving everybody a flat amount so that it’s more equal.
RUSH: Everybody will get $600 a year that will accrue under her plan. Right. It’ll be equal. We’re gonna take yours and give it to somebody else to equalize it all, so everybody gets the same amount. And so then the host said, “There would be a new plan where all of us who bring in a paycheck would put 5% of our income into a retirement plan administered by the Social Security system, but guided by the pension folks who do Congress and the Federal Reserve, investing that money into, as I understand, government bonds guaranteeing at least a 3% return, and the government would supplement that with a $600 annual payment to that plan?”
GHILARDUCCI: The government would guarantee 3% plus inflation.
WILBUR: Okay, 3%, okay, plus inflation.
WILBUR: So the bonds would be adjusted — as I understand, the $600 would be adjusted as well, right?
GHILARDUCCI: It would. It would.
GHILARDUCCI: And what’s amazing about this is that it’s actually — doesn’t cost the government anybody. I’m just rearranging the tax breaks that are available now for 401(k)s and spreading the wealth.
RUSH: Where have we heard that before? Where have we heard that? Joe the Plumber heard that, and then the state of Ohio began an in-depth investigation. It’s a wonder he’s not in jail with the video guy. Joe the Plumber. Okay, so to review this, these two sound bites, I just wanted to get them out there, Teresa Ghilarducci. Here is the plan. What she wants to do is take your 401(k) at the August 2008 level, whatever it was worth then, that’s what you are going to be given the equivalent of. That will be put in your Social Security account, and then the government, not you, is going to invest that money, your Social Security plus whatever the amount of your 401(k) is, they’re gonna invest that money that they take from your retirement account.
“We’re gonna buy a government bond with what we take, that will guarantee you 3% plus inflation, and then we will require that you put 5% of your pay into your 401(k) every year, although it’s not yours anymore, it’s the government’s.” So the government is getting all of the money up front. What they’re doing is eliminating the deduction. You don’t get a tax break anymore. The government is taking all the money and holding it at a promised 3% plus inflation return for your retirement. And so whatever the amount of your Social Security was in August of 2008, added to your Social Security trust fund account, whatever the hell that is when you retire, divided by whatever monthly is what you will end up with.
The reason they’re doing this is because the tax deduction is costing the government $240 billion a year. All the 401(k) holders combined are contributing $240 billion total to the 401(k), government doesn’t get that, and they need it now, see. Government needs it. I mean, we got a real problem. We got a fiscal cliff. They need the money, not you. So the original rule that you started your 401(k) is now being yanked out from underneath you. And, see, whatever you have in your 401(k) now, you will keep. It’s a tax break. Everybody that has their 401(k) plan will be grandfathered in, but instead of getting a tax deduction like a decrease in your taxes by whatever your tax rate is, then you’re gonna get $600 a year.
This was four years ago, folks, and now today two magazines have revised this, and, by the way, the magazines just didn’t out of thin air say, “You know what? Let’s do a 401(k) story.” Somebody at the regime calls ’em and leaks it.