New plan to make US savings more negative.

[Jim Nickerson]

If it is possible to make US savings more negative, perhaps Obama's plan, if enacted, will do that.

http://blogs.wsj.com/washwire/2008/1...googlenews_wsj

October 13, 2008, 11:53 am
Excerpts From Obama’s Plan for the Middle Class

1. Job Creation: A New American Jobs Tax Credit. Obama is calling for a temporary tax credit for firms that create new jobs in the United States over the next two years.

2. Relief to Families: Penalty-Free Withdrawals from IRAs and 401(k)s in 2008 and 2009. Obama is calling for new legislation to allow families to withdraw 15% of their retirement savings – up to a maximum of $10,000 – without facing a tax-penalty this year (including retroactively) and next year.

3. Relief to Homeowners: Ninety-day foreclosure moratorium for homeowners that are acting in good faith. Financial institutions that participate in the Treasury’s financial rescue plan should be required to adhere to a homeowners code of conduct, including a 90-day foreclosure moratorium for any homeowners living in their homes that are making good faith efforts pay their mortgages.

4. Responding to the Financial Crisis: A Lending Facility to Address the Credit Crisis for States and Localities. Obama is calling on the Federal Reserve and the Treasury to work to establish a facility to lend to state and municipal governments, similar to the steps the Fed recently took to provide liquidity to the commercial paper market.

I think I am apolitical regarding US politics, harboring the opinion that it doesn't make a rat-fuck who gets elected (with one exception): things will not change, and if Sen. Obama's plan to raid IRA's gets passed, it will certainly aid the cause of there being no savings in the US.

To anyone naive enough to believe that with this election, or perhaps the next five or so presidential elections, will change anything, just make sure you keep registered and find the time to go to the polls every four years; hope you stay alive for 40 more years, and then look back on the time you wasted listening to the bullshit these dudes spout as well as the time it took you to vote.

The exception above is that if the real idiots of this country elect McCain, a guy with 1/6 of his face chopped off for melanoma, and he dies from that disease or any other natural cause, then it will mark one monumental day in history of the US for a girl with Palin's background and qualifications to become POTUS. The Republican's are unfuckingbelieveable in their belief that most Americans are idiots and all the Republicans need to do is put someone on the ticket that will attract the most idiots: that would be Palin.

[GRG55]

Re: New plan to make US savings more negative.

If it is possible to make US savings more negative, perhaps Obama's plan, if enacted, will do that.

http://blogs.wsj.com/washwire/2008/1...googlenews_wsj

October 13, 2008, 11:53 am
Excerpts From Obama’s Plan for the Middle Class


I think I am apolitical regarding US politics, harboring the opinion that it doesn't make a rat-fuck who gets elected (with one exception): things will not change, and if Sen. Obama's plan to raid IRA's gets passed, it will certainly aid the cause of there being no savings in the US.

To anyone naive enough to believe that with this election, or perhaps the next five or so presidential elections, will change anything, just make sure you keep registered and find the time to go to the polls every four years; hope you stay alive for 40 more years, and then look back on the time you wasted listening to the bullshit these dudes spout as well as the time it took you to vote.

The exception above is that if the real idiots of this country elect McCain, a guy with 1/6 of his face chopped off for melanoma, and he dies from that disease or any other natural cause, then it will mark one monumental day in history of the US for a girl with Palin's background and qualifications to become POTUS. The Republican's are unfuckingbelieveable in their belief that most Americans are idiots and all the Republicans need to do is put someone on the ticket that will attract the most idiots: that would be Palin.

You hit it dead centre Jim. The relentless "raiding" of savings continues. Giving the poor taxpayer the opportunity to withdraw from their tax sheltered private savings is a time honoured tradition up here in Canada. Up here they are called Registered Retirement Savings Plans. The really popular scheme that government uses to dupe the people goes like this:

• Economy slows, spending declines, house prices stop increasing;
• Government declares moratorium on taxes payable on withdrawals from RRSPs;
• Government puts conditions on use of the funds withdrawn, usually along the lines of "first time homebuyers", etc. thus forcing these savings out of other sectors of the economy and into "investment" in housing;
• Government requires that withdrawals be treated as "loans" and must be repaid back into RRSP within a certain period of time, or in progress payments each tax year.
• Failure to meet repayment schedule triggers tax liability;
• Government wins [at least] 3 ways...1) Goose housing; 2) Collect tax on RRSP savings much earlier than plan holders retirement years as large numbers of people fail to make the repayment obligations; 3) people lacking private savings and having foregone the years of compounding on withdrawals are more dependent than ever on Government retirement programs [Social Security, Old Age Pension, etc.] making them a useful voting block for socialist oriented political parties...which includes EVERY Canadian political party.

And these "temporary" withdrawal tax holidays are always greeted with great enthusiasm by the voters, so what's not to love. :rolleyes:

[WDCRob]

Re: New plan to make US savings more negative.

As far as I can tell this plan would give you access today to assets that will otherwise be worthless when you finally retire (at least given my 401(k) options). If I can get my $$ out without paying taxes I certainly will.

btw... I'll take a lump sum distribution on my SS payments today too. I'll even let them discount it at the current CPI.

Then I'll exchange all those dollars for something that'll have at least some real value in 20 years.

[Jim Nickerson]

Re: New plan to make US savings more negative.

As far as I can tell this plan would give you access today to assets that will otherwise be worthless when you finally retire (at least given my 401(k) options). If I can get my $$ out without paying taxes I certainly will.

btw... I'll take a lump sum distribution on my SS payments today too. I'll even let them discount it at the current CPI.

Then I'll exchange all those dollars for something that'll have at least some real value in 20 years.

So, Rob, do you think such a plan would be aimed at guys like yourself, and how many average people are thinking as you do?

[ASH]

Re: New plan to make US savings more negative.

As far as I can tell this plan would give you access today to assets that will otherwise be worthless when you finally retire (at least given my 401(k) options). If I can get my $$ out without paying taxes I certainly will.

btw... I'll take a lump sum distribution on my SS payments today too. I'll even let them discount it at the current CPI.

Then I'll exchange all those dollars for something that'll have at least some real value in 20 years.

I have the unparalleled luxury of a self-directed Roth 401(k), so gambling on the supposition that the rules won't change on the tax-free growth/redemption of those assets, I wouldn't choose to pull my money out today. However, if my only 401(k) options were the standard menu of high-fee managed funds that most companies offer -- in a traditional 401(k) vehicle, no less -- I'd be right there with you.

Not only would I take a lump sum distribution on my Social Security payments, I would forfeit that lump sum and all future Social Security and Medicare benefits simply to get out of paying any more into the system. (Of course, letting me out of the system would defeat the point of SS/MC...)

That said, I'm right there with Jim and GRG55, because Obama's plan is obviously about spending tomorrow's savings today. A very few individuals might take the opportunity to move retirement money into savings vehicles that will hold purchasing power better, but the vast majority will use the money to temporarily bridge a gap in their household budget, at the expense of making themselves even more dependent upon the state down the road.

[don]

Re: New plan to make US savings more negative.

They gave him his orders at Treasury,

Saying, "Hank, you're way behind time.

This is not 29, it's Old Ought-8,
Put her into Wall Street on time."

He looked 'round and said to his black greasy fireman,
"Just shovel in a little more dough,
And when I cross that White House Lawn
You can just watch Old Ought-8 roll."

He was going down the grade making 90 miles an hour,
When the economy broke into a scream,
He was found in the wreck with his hand in our pockets,
Scalded to death by the steam.

Poor Hank.

Scalded to death by the steam.

[zoog]

Re: New plan to make US savings more negative.

As far as I can tell this plan would give you access today to assets that will otherwise be worthless when you finally retire (at least given my 401(k) options). If I can get my $$ out without paying taxes I certainly will.

btw... I'll take a lump sum distribution on my SS payments today too. I'll even let them discount it at the current CPI.

Then I'll exchange all those dollars for something that'll have at least some real value in 20 years.

As it says:

without facing a tax-penalty this year (including retroactively) and next year.

I take that to mean that in the third year you will be responsible for the taxes normally incurred when you make an early withdrawal / "loan" from your 401k. It says nothing about whether you will be required to repay the money taken out, which probably means that you will indeed be required to do so or face further penalties.

What are the chances that you take your maximum $10,000 and invest it in something that performs well enough in two years to more-than-cover the taxes and whatever other fees, and then you put the $10,000 back in your 401k and, what, hope this bear market economic fiasco is all over by then?

It reminds me of the first-time home buyer tax credit that was part of the Housing and Economic Recovery Act. $7500 tax credit on homes purchased between April 9, 2008 and July 1, 2009. Then you have 15 years to pay it back.

Both of these ideas are, like pretty much everything else the government has either proposed or actually passed, merely delaying the inevitable. Buying time with bread and circuses.

[sadsack]

Re: New plan to make US savings more negative.

To anyone naive enough to believe that with this election, or perhaps the next five or so presidential elections, will change anything, just make sure you keep registered and find the time to go to the polls every four years; hope you stay alive for 40 more years, and then look back on the time you wasted listening to the bullshit these dudes spout as well as the time it took you to vote.

Agreed.

http://www.itulip.com/forums/showthr...2985#post52985

IMHO this election is (oh, the ironing!) best summed up by Marx:

"Hegel remarks somewhere that all great world-historic facts and personages appear, so to speak, twice. He forgot to add: the first time as tragedy, the second time as farce."

Admittedly, as a Gen-Xer, my experience of the national political process is necessarily more limited than the more august iTulip members, but I can't recall a more farcical election in the last 30+ years as the present one.

If "Deep Capture" is to be believed, I think this election, whatever the outcome, is simply an acknowledgement of the fait accompli.

It's as if we're stuck in steerage on the Titanic, and we're hoping that Captain Bligh can save the ship . . .

:eek:

Hey, it was, in the end, a nice ~100 year party . . .

[don]

Re: New plan to make US savings more negative.

Agreed.

http://www.itulip.com/forums/showthr...2985#post52985

That's Marx on the repeating history bit, no?

Bligh was much too good a sailor for this doomed vessel. He survived the mutiny in an epic voyage. No, we're captained by someone along Ahab's bloodlines I'm afraid, obsessed with not the White Whale but rather the ultimate Whale investors, the general public and their pensions, savings, etc.

Thar she blows....

[Yaowarat]

Re: New plan to make US savings more negative.

401Ks and Roth IRAs are scams.

I naively trusted the system when I put my hard earned money both in a Roth IRA and a 401K plan. I regret it now.

I would use any chance to remove any dollar from these scams operations and send the money out of the USA.

If such a provision is passed I'd expect capital controls so the money at least will be trapped in the borders of the USA.

[raja]

Re: New plan to make US savings more negative.

Then I'll exchange all those dollars for something that'll have at least some real value in 20 years.

And what would that be?

I'm struggling to find the answer for myself. :eek:

[GRG55]

Re: New plan to make US savings more negative.

And what would that be?

I'm struggling to find the answer for myself. :eek:

It can be found not far from where you are now...



...and I am only half jesting...

[tombat1913]

Re: New plan to make US savings more negative.

401Ks and Roth IRAs are scams.

I naively trusted the system when I put my hard earned money both in a Roth IRA and a 401K plan. I regret it now.

I would use any chance to remove any dollar from these scams operations and send the money out of the USA.

If such a provision is passed I'd expect capital controls so the money at least will be trapped in the borders of the USA.

It seems in the end our options all suck.

You can make an "honest" living and pay tax on all your earnings and save money for the future. Lose to taxes and inflation.

You can make an "honest" living and pay tax on all your earnings and invest money for the future. Still getting taxed more and more each year.

You can make an "honest" living and pay tax on some of your earnings and invest the rest in a tax sheltered entity. Investment options are limited and in no way protected from some future fascist financial takeover.

You can make your money "under the table" and pay no tax and risk the IRS, ATF, U.S. Marshalls etc. kicking down your door at 3am with automatic weapons.

[bpr]

Re: New plan to make US savings more negative.

...and I am only half jesting...

The other half?

[bpr]

Re: New plan to make US savings more negative.

A very few individuals might take the opportunity to move retirement money into savings vehicles that will hold purchasing power better, but the vast majority will use the money to temporarily bridge a gap in their household budget, at the expense of making themselves even more dependent upon the state down the road.

That's just it, there's a gap in household budgets that exceeds whatever paltry savings are locked up in these tax-deferred accounts.

You gloss over it here, because each gap is relatively small. But it's huge, when multiplied over a hundred million households.

If Mr. and Mrs. Blow have $12k in credit card debt and have 50/50 equity:debt on their mortgage, but they have $10k in a tax-deferred account, they should, by all means move those funds out of the tax-deferred account to pay off the bulk of their credit card debt.

Not so, if there's a penalty applied for early withdrawal. In that case, it's best to take a HELOC/MEW to pay off the credit cards, which does nothing to lower the debt-to-equity of the household balance sheet.

Cleaning up the household balance sheets is priority number one, IMO. Am I off base here?