Wednesday, October 29, 2008

The Ghilarducci Plan

They haven't taken over all three branches of the federal government yet but the idea merchants of the Democratic Party are contemplating ways to raise revenue. So much for the ownership society.
Under Ghilarducci’s plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation.

The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated.

“I want to stop the federal subsidy of 401(k)s,” Ghilarducci said in an interview. “401(k)s can continue to exist, but they won’t have the benefit of the subsidy of the tax break.”

Under the current 401(k) system, investors are charged relatively high retail fees, Ghilarducci said.

“I want to spend our nation’s dollar for retirement security better. Everybody would now be covered” if the plan were adopted, Ghilarducci said.
Government obviously doesn't like middle-men. Strip their business model away and you too can create a redundant social security system. How does the current Ponzi scheme known as Social Security work for you? Or to phrase it another way, given its potential insolvency, how will Social Security work out for you?

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