Obama Turns America’s Retirement Dreams into Nightmares

12

Keith | moneymorning

If you think the U.S. government will not – or cannot – seize your money the way the government in Cyprus is doing, check out page 18 of the President’s Proposed Fiscal Year 2014 Budget of the U.S. Government.

That’s exactly what he intends to do.

Not years from now. Not decades from now.

Today.

This is organized crime on an incomprehensible scale and, if it passes, it will be legal, too.

Obama Turns America's Retirement Dreams into Nightmares

Robbing Your Nest Egg

Anxious to raise more than $9 billion dollars over the next 10 years, President Obama has proposed a $3.4 million limit on individual retirement accounts (IRAs), 401ks and other tax-advantaged accounts as part of his 2014 budget.

In theory, this is going to generate a lot of cash by capping the amount of money that could be contributed tax free to tax-advantaged accounts like 401ks and IRAs.

In reality, it’s going to backfire spectacularly by creating a huge disincentive to save, while also penalizing those who desperately need to build wealth as a defense against their spendthrift government.

Proponents of this plan say the proposal only affects an estimated 100,000 households – give or take – and a mere 0.3% of the 20 million IRAs in this country, and an infinitesimal 0.0041% of 401k plans according to Employee Benefit Research Institute data.

I think they’re dead wrong. When it backfires, it will steamroll the entrepreneurial backbone of this country – small businesses and their employees – much the same way the Patient Protection and Affordable Care Act (PPACA), better known as “Obamacare,” has.

Here’s why:

  • The Government is the poster child for the Law of Unintended Consequences. Since when has any government plan ever functioned as intended? This initiative is going to creep backwards into Middle America faster than you can spell barbecue. It’s almost axiomatic that once a tax or fee is targeted on a small population of individuals, it slowly and inexorably expands. It never shrinks or disappears. Ever.
  • Money is mobile. It will leave the country just as it leaves any punitive jurisdiction and go where it’s treated best. Ask Germany why its millionaires are shifting money to Singapore. Why has there been capital flight out of France in the face of higher taxes? Why is Italian money headed for Luxembourg? Closer to home, why is California hemorrhaging? Why do newly minted IPO millionaires become Nevada citizens? You get the point…history is filled with examples of how money moves when it is targeted.
  • Mission Creep. When it leaves, the government will face a revenue shortfall so the plan will be expanded and the cap balance will be lowered to sweep in still more Americans at far lower balances.

This is a joke…$9 billion over 10 years?! The government is going to stick it to people to raise $900 million a year – an amount of money that’s completely inconsequential in the scheme of things.

It doesn’t matter which side of the aisle you sit on, nor does it matter how much money you have or haven’t saved. This is a direct attack on our financial liberties and our assets.

It’s immoral and it’s no different than what happened in Cyprus recently when that nation levied taxes on depositors in an effort to shore up decades of bad government decision making and profligate spending.

Another Financial Shell Game with Political Payoffs

I’ve often joked that the reason we have such terrible economic problems at the moment is because nobody in Washington actually understands how real money works, let alone what it’s actually worth.

Now I’m not joking.

But that’s not even the worst part of it – guess who’s got their fingers right in the middle of the proverbial pie? Yup… Wall Street and big business. If this cockamamie idea actually passes, the cap will “encourage” the wealthy to put more money into insurance products, including annuities and life insurance – both of which generate tens of billions in management fees a year… on your money.

This is like being “voluntold” to do something.

We’re going to have another JPMorgan food stamp situation on our hands, only this one will be a lot bigger over time.

I bring this up not to dump on JPMorgan, but to make a point about the incestuous relationship between big business and government programs.

Most people are outraged to learn that the financial behemoth (which received a $94.7 billion taxpayer funded bailout in 2008) receives a fee of between $0.31 and $2.30 for each food stamp recipient in 23 states. They’re positively gob-fobbed when they understand that since 2004 the company has collected more than $560 million in fees for processing government benefits.

It’s not by coincidence that JPMorgan’s political donations to members of the House and Senate Agricultural Committees have gone from only $82,000 in 2002 to more than $325,000 in 2010. Kinda takes corporate “welfare” to an entirely new level.

This time around the players aren’t the big banks but their financial services “cousins” like MetLife Inc., Prudential Financial Inc., Allianz and Lincoln National Corp, all of whom are heavy hitters in the insurance and annuities markets.

Not surprisingly, many of those same companies are also involved in providing retirement plans which, of course, also require tremendous oversight and generate huge fees…soon to be ginormous fees, if Obama’s scheme passes.

I realize that all of this is hard to imagine and even harder to get behind, particularly if you are not one of the 100,000 being targeted at the moment.

So let me tell you why you should care no matter how much wealth you have today or want to have in the future.

Here’s the real game and what I believe is ultimately the end game.

Robbing Peter to Pay…Peter

Government spending is so bad and so out of control that “we” already owe ourselves more than $222 trillion dollars. That’s the true “fiscal gap” between America’s assets and its liabilities, according to Boston University Professor of Economics Lawrence Kotlikoff, who reviewed CBO numbers to arrive at such a stunning figure.

You’d think the government would simply stop spending; that’s what any responsible individual or company does when the amount of money they owe exceeds what they make.

But Congress can’t…they’ve socialized risk. The only way to keep the Ponzi scheme going is to keep handing out freebies. “They” just hope the bluff is called on the next guy’s watch.

And that brings me back to President Obama’s proposal.

The government has to sell debt to fund its operations. Right now it relies on an international network of buyers who are growing weary of the United States’ fiscal policies and leery of its ability to pay back those obligations. What better way to ensure you have buyers than to create a captive monetary pool?

President Obama’s plan, or at least some version of it, will pass in the next few years. Then, when it doesn’t work, the government will step in to save the day by allowing exemptions and special tax-advantaged contributions under the guise of offering better financial security if – ta da- they are in the form of Treasury purchases. Chances are they’ll play the “patriotic” card too while they’re at it.

This would not only maintain the cap the president seeks but also ensure that even higher levels of debt are effectively monetized without resistance.

You’d think I’m describing something from George Orwell’s “1984” but I’m not.

Japan has done this for years. Few people understand that one of the primary reasons that nation has not totally collapsed as a result of their financial crisis is that an estimated 95% of workers and retirees own Japanese government bonds. Therefore the combined public, private and corporate debt that’s nearly 500% of GDP is almost irrelevant.

Bernanke and the president could only dream of having that kind of spending power.

Then again, perhaps they already do…

I’ll be monitoring this situation closely in the weeks ahead – as you might imagine, everybody literally has something to lose.

But you know what?

Savvy investors have something to gain, too, which is why I’ll be back in touch with information on where to stash your cash and what structures you can use to protect your assets. I’ll also have more on specific investments that are going to benefit from this.

Somebody, as the old saying goes, is gonna make a pile of money.

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12 Responses

  1. doesntmatter says:

    5 War Veteran
    In SC it is a Castle Doctrine state. My simple rule is if you knock I will as always be nice. If you kick in the door or enter without permission I will feel threatened and woe forbid that anyone makes that mistake.
    I caught someone taking pictures of my vehicles after dark. I chased them off with a baseball bat. They were “checking tag registrations” for the homeowners committee. My vehicles are all always legal and snoopers are not welcome uninvited.
    You see my vehicles have also been broken into and items stolen, police reports filed and as usual nothing ever came of it.
    I have posted no trespassing signs around the property because we have had items stolen from our fenced in yard numerous times. Now if I see them they have been warned and they will be shot because of proper warning, the Police have NEVER recovered anything.
    Of course they always ask when making the report if I know who did it. In each instance they close the report the same day.
    In one case I provided the criminal and the evidence and 14 months later they null processed the case.
    So after having close to $70 thousand stolen am I expected to sit quietly and wait for it to happen again? I think not.
    I have a big dog alarm system and beware of dog signs are posted as well.

    the burglarers arent going to be your problem, sir.

  2. 5 War Veteran says:

    Invest in real property and live in it. Own your home and land, hold the title/deed and make many copies. When the shit hits the fan at least you will have proof and no bank can come and steal it.
    My retirement and disability is government funded. When the government defaults on their contracts to US Veterans how long will it be until the banks who own the government decide to exile veterans from their homes for non payment? Where is my security?
    I do not make enough to pay it off before it is due and I rely on that retirement and disability pension to survive. How many Veterans are going to be screwed because the US Government defaults on its contracts?
    Yes I am worried. Why else would the DHS list Veterans as ‘terrorists”?

    • doesntmatter says:

      i so thought you were gona say something lke “siiiiiike!!” after the first one or two sentences lol…but you didnt and you totally believe what you said. im SO confused right now…i thought you were wiser than that 🙁

      • doesntmatter says:

        veterans arent the only ones that will be getting exiled…if you dont know by now that you own NOTHING in this country, not even clean water that falls from the freakin sky….you never will.

  3. Leo says:

    Is this not how a Communist state operates ? and Yet the American people set there on their lazy asses and do nothing . Americans deserve what their getting . Freedom is to be fought for instead they are like sheep led to the slaughter . bums ….

    • Regina Igors says:

      Leo… some of us are fighting and spreading the word. Not ALL Americans are sheep or sit on their lazy asses! Informed Americans cannot be responsible for the masses who don’t even pay attention. Plus, our Country has been ruined by the influx of recent immigrants from other countries. My Grandparents came to Ellis Island in 3 piece suits. They got inoculated and learned the American language. They came here legally, from Europe and worked very hard. What do we have now?

      • 5 War Veteran says:

        doesntmatter
        veterans arent the only ones that will be getting exiled…if you dont know by now that you own NOTHING in this country, not even clean water that falls from the freakin sky….you never will.

        You are absolutely correct. We cannot forget that there are those millions who own nothing other than the handouts the lefties have provided on our tax dollars. (Yes I still pay taxes.) The government pig’s teats are going to dry up. THEY will come knocking on your door and if you do not give them something in short order they will take it. Taking is all many of them know. The criminal element does not care about law. They never have.
        As for titles deeds and land ownership I can only hope that those will be honored as they were in the Great depression.

        • doesntmatter says:

          the government no longer honors anything…not even themselves. yes they will take, slaughter, and burn whatever they feel like when SHTF…make sure youre not trying to hold on to, defend, or protect anything but yourself….sadly.

          • 5 War Veteran says:

            In SC it is a Castle Doctrine state. My simple rule is if you knock I will as always be nice. If you kick in the door or enter without permission I will feel threatened and woe forbid that anyone makes that mistake.
            I caught someone taking pictures of my vehicles after dark. I chased them off with a baseball bat. They were “checking tag registrations” for the homeowners committee. My vehicles are all always legal and snoopers are not welcome uninvited.
            You see my vehicles have also been broken into and items stolen, police reports filed and as usual nothing ever came of it.
            I have posted no trespassing signs around the property because we have had items stolen from our fenced in yard numerous times. Now if I see them they have been warned and they will be shot because of proper warning, the Police have NEVER recovered anything.
            Of course they always ask when making the report if I know who did it. In each instance they close the report the same day.
            In one case I provided the criminal and the evidence and 14 months later they null processed the case.
            So after having close to $70 thousand stolen am I expected to sit quietly and wait for it to happen again? I think not.
            I have a big dog alarm system and beware of dog signs are posted as well.

      • Leo says:

        Yes, That is why there is this immigration problem, it is deliberate in the fact to destroy the country, if the Federal Government really wanted to secure the borders they could, but the federal government dose not wish to they want the country ruined . like free health care and pushing food stamps to illegals as well and the hard working people in this country are flipping the bill . that is why this country is divided half who work and pay taxes and the other half living on entitlement programs and welfare . We are beyond repair .

        http://www.youtube.com/watch?v=NzhjB1iL_LQ&feature=share&list=LLFiPLn7tDoaumbZaABcEXFQ

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