Political Football

Targeting Your 401(k)

Congress has an eye on the tax break for your retirement.

You may have heard about Argentina’s plan to nationalize private retirement accounts. Some Democrats on Capitol Hill are inspired, and with their big election victory they may get the chance to test Peronist ideas in America.

Meet Congressmen George Miller and Jim McDermott, who are eager to change the way Americans save for their golden years. They’ll also be powerbrokers in the next Congress. Mr. Miller, who came in with the Class of 1974 from California, chairs the House Education and Labor Committee. Mr. McDermott, who has represented Seattle the past two decades, runs a House Ways and Means subcommittee on income security and family support.

Before Election Day, the Congressmen began to target the $3 trillion in 401(k) accounts held by about 60% of Americans. Mr. Miller called the system “an inadequate vehicle” that “has not been terribly successful” in encouraging retirement savings. He wants a “wholesale re-examination” of pensions.

Just what alternative these Democrats support is unclear, and nothing has been formally proposed beyond Mr. Miller’s plan to make the system “more transparent,” reduce fees charged by the money managers, and suspend the tax penalty for seniors over 70 who don’t take the “required minimum” withdrawal from their account, regardless of the market situation.

But the Chairman has also signaled greater ambitions. At a hearing last month, Mr. Miller put the 401(k) system into play. Under the current system, employers match employee contributions that aren’t taxed until redeemed, an indirect subsidy worth some $80 billion today. “We have to start to think about in Congress . . . whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should,” [we?  WE??!#!??] Mr. Miller said. “For a taxpayer investment of this size, we must ensure that the structure of 401(k)s adequately protects the nest eggs of participating workers.”

His committee listened to possible reform proposals. Most eye-catching was an idea from Teresa Ghilarducci at New York’s New School for Social Research. Her plan would end the tax breaks for 401(k)s; she proposes instead to give all workers an annual $600 inflation-adjusted tax credit for retirement and force them to invest 5% of their pay into a government-run retirement account managed by the Social Security Administration. She called the 401(k) “a failed experiment.” A McDermott spokesman called her proposals “intriguing” and “part of the discussion.” Mr. Miller hasn’t so far endorsed the plan.

The main liberal objection to 401(k)s seems to be that they let average Americans control their own investment decisions for retirement. As Shlomo Benartzi, a professor at UCLA’s Anderson business school, told Mr. Miller’s committee, “Individuals have a tendency to buy at the peak, and then panic when the markets drop and sell at the bottom.” Better to have the government do this instead.

It is certainly true that retirement plans have lost, on paper, some $4 trillion in the past 15 months — half in 401(k) and IRAs and half in company defined-benefit plans. Average 401(k)s are down a quarter this year. But assuming sensible policies and a normal economic recovery, those asset values should rise again over time. In any case, investment returns on stocks and bonds over extended periods far exceed the paltry returns on Social Security that for some workers are a mere 1% to 2%.

Tax breaks alone hardly explain the popularity of 401(k)s. Over the past 30 years, the number of individuals covered by them nearly trebled, up to 65 million accounts, while the number under defined-benefit pension fell 30%. People are attached to their 401(k)s because it is their property, which they can carry with them to new jobs (unlike traditional pensions), manage as they see fit and bequeath to heirs.

Before entertaining dreams of state-managed retirement accounts, Congressional Democrats might ask why Europe and Latin America have tried so hard in recent years to move in the opposite direction. Their pension systems are debt-ridden, can’t easily adjust for demographic shifts and show a historically lower return.

If Democrats want to improve the prospects for American retirees, their first priority should be removing barriers to economic growth. Anger over the drop in 401(k) balances is one reason that voters who belong to the “investor class” swung to Democrats in greater than usual numbers this year. Their mandate is for policies that improve those returns, not strip them of tax benefits.

Read  Teresa Ghilarducci’s full testimony here  2008-10-07-teresa-ghilarducci.pdf

from a Canadian Newspaper 

Obama fools us: Whole world will pay for America’s electoral mistake (A Canadian View)

A young student friend e-mailed me on Tuesday night.

“Have locked myself in my room because the place is full of little idiots — who cannot spell Barack Obama’s name and could not name one of his foreign or domestic policies — running around screaming obscenities about George Bush, conservatives and how Sarah Palin is a bitch. I love democracy!”

Even so, the people spoke. A victory for the hysterical Oprah Winfrey, the mad racist preacher Jeremiah Wright, the mainstream media who abandoned any sense of objectivity long ago, Europeans who despise America largely because they depend on her, comics who claim to be dangerous and fearless but would not dare attack genuinely powerful special interest groups. A victory for Obama-worshippers everywhere.

A victory for the cult of the cult. A man who has done little with his life but has written about his achievements as if he had found the cure for cancer in between winning a marathon and building a nuclear reactor with his teeth. Victory for style over substance, hyperbole over history, rabble-raising over reality.

A victory for Hollywood, the most dysfunctional community in the world. Victory for Streisand, Spielberg, Soros and Sarandon.

Victory for those who prefer welfare to will and interference to independence. For those who settle for group think and herd mentality rather than those who fight for individual initiative and the right to be out of step with meagre political fashion.

Victory for a man who is no friend of freedom. He and his people have already stated that media has to be controlled so as to be balanced, without realizing the extraordinary irony within that statement. Like most liberal zealots, the Obama worshippers constantly speak of Fox and Limbaugh, when the vast bulk of television stations and newspapers are drastically liberal and anti-conservative.

Senior Democrat Chuck Schumer said that just as pornography should be censored, so should talk radio. In other words, one of the few free and open means of popular expression may well be cornered and beaten by bullies who even in triumph cannot tolerate any criticism and opposition.

WEAK TOWARD ENEMIES

A victory for those who believe the state is better qualified to raise children than the family, for those who prefer teachers’ unions to teaching and for those who are naively convinced that if the West is sufficiently weak towards its enemies, war and terror will dissolve as quickly as the tears on the face of a leftist celebrity.

A victory for social democracy even after most of Europe has come to the painful conclusion that social democracy leads to mediocrity, failure, unemployment, inflation, higher taxes and economic stagnation. A victory for intrusive lawyers, banal sentimentalists, social extremists and urban snobs.

Also a defeat for one of the weakest presidential candidates in living memory.

Why would anyone vote for a man who seemed incapable of outlining his policies and instead repeatedly emphasized a noble but, if we are candid, largely irrelevant war record?

He was joined by a woman who was defended so vehemently by her supporters when it was cuttingly evident that she is years away from being and perhaps never will be a serious candidate for senior national office.

Most of all it was a terrible defeat for democracy and the United States. A politician of nothing defeated a nothing politician and a credulous electorate screamed in adoration. I fear we will all suffer very much indeed.

An Open Letter to Senator Obama

Link

Dear Senator Obama:

I have now read and reread your speech, understanding you take this to be a “teaching moment,” I have applied myself to its lessons. But some questions have arisen and I need a little more clarification.

You tell me Reverend Jeremiah Wright’s horrendous remarks will take on a different meaning if I will but contextualize them and understand he has seen terrible things in his time, a burden shared by all African-Americans. A fair proposition; from Kant to Auden and beyond we learn we define by comparison and only by internalizing can we grasp true meaning. So I have done precisely that: looked inside myself to understand how hatred might need to be contextualized.

I did not have to look far. I remembered how, as a boy, I sat at the Passover Seder with my sister’s Polish-born husband and the remnants of his family. The remnants of five families to be precise, for the 12 weary souls around that table were all that remained of what had once been 300. The others – their loved ones, their sons, their daughters, their hopes and dreams – were gone, their lives consumed by zyklon-b gas, their mortal remains wisps of smoke from a Büchenwald chimney. These people, who had seen and suffered so much, read of my ancestor’s deliverance from Egypt exactly as the Bible instructed: in the present tense, as if it happened to them. “For with a mighty hand the Lord thy God raised thee out of Egypt and brought you from slavery to freedom.” But as they spoke – or really whispered such was the fear and holiness of the moment – they were not conjuring up Egyptian slavery as a present experience but recalling the horrors they themselves had witnessed, murder on a scope once unimaginable and only made possible by perverted technology. Though their Yiddish was foreign to me, I picked up the odd word. When they spoke of the Concentration Camp guards, they called them the Ukrainians. When they remembered the betrayal of their neighbors, I could distinguish the word Pole. But above all, it was the Germans, the hated Germans. The Hun. The Devil’s Scourge. And I was filled with a righteous hatred. Had I, in that moment, the power to end the life of every German on earth, I might have well done so. That is a shameful thought. I am humiliated by the memory. But perhaps, in context, you can understand my homicidal rage and forgive me, and should I have chosen to preach that doctrine in a place of worship and stir an audience to its feet as it cheered my righteous fury, I trust you would offer me the fig leaf of “context.”

As the Seder ended, my brother-in-law, seeing my rage, put his arm around my shoulder and asked what troubled me. I stammered the best explanation I could. He smiled, “Don’t be a fool,” he said, “the Germans left so many of us dead and stole the joy from so many that remain. So now you want to give them the final victory by allowing your own life to be consumed and twisted and deformed by the same hatred? Leave it to them. That’s why we, at this table, forgive. Not forget, but forgive. You just heard how Moses told the Israelites not to celebrate the death of the Egyptians in the Reed Sea. Learn.”

But his words were empty to me.

A few years later, work on a particular film took me to Munich, and as I drove past the road signs to Dachau, past Hitler’s favorite spot, “The English Gardens,” to my suite at the Bayerischof Hotel (where The Fuehrer himself once stayed) I was physically ill. I couldn’t stand to hear the German tongue, nor bear to see Germans smile, and when I noticed a man in traditional Bavarian dress I again felt my homicidal anger rise. I survived that trip, came back to the safety of my blessed America, promising never to return to part of the world that was home to alien races who had destroyed so many people just like me.

Sometime after that, I was invited to participate on a panel on “Hollywood and Stereotypes” sponsored by the American Jewish Committee and the Konrad Adenauer Foundation. It was against my instinct, but a good friend had asked I participate and so I did. It began with a clip from Hollywood movies picturing stereotypical Germans and ended with the famous moment in Casablanca where the French stand and sing “La Marseillaise”. What a crock, I thought, Senator! After all, the short story upon which the film was based was set in Marseilles where the French were happily arresting Jews for transport to their own concentration camp at Drancy. Besides France had yet to apologize for her diligent rounding up and deportation of Jews even after the successes of D-Day. And yet they considered themselves victims which meant never having to say they were sorry. My first co-panelist to speak was a young woman, a German filmmaker. She spoke of how growing up as a German she felt ashamed and humiliated whenever it was necessary to admit her lineage and how her life was about working to ease her shame. It was pure self-hatred. Senator, by some strange alchemy I heard myself explaining to her the mantle of guilt did not fall upon the shoulders of her generation. In fact, I found myself describing Germany’s honest attempt to come to terms with the horrors committed in its name. I spoke of all the things they had done from which the French, the Ukrainians, the Poles had run. How they taught in their schools the truth of their actions, how they policed their civil society and punished words or acts that had echoes of that time, how they worked tirelessly to make reparation to those survivors not stamped out by their hobnailed boots. They had sought atonement. That is not say anti-Semitism and anti-Semites did not persist in Germany. Of course they did, as they do everywhere. But they are no longer the soul or intent of the German nation, they are seen for the abhorrent aberration they truly are. Mind you, Senator, the “new” Germans did not ask for forgiveness; they knew this was not within the power of humankind and could only be given by the grace of God. They acted out their atonement from pure understanding of what had gone before.

And in that instant I realized my hatred was unjustified. The “context” was false. I was nursing the anger for my own psychic advantage and not because the current state of humanity or my own experience gave it justice. And I shed my anger. And when another film project took me to Germany, my journey was completely different. I’m not saying as I sat in the lobby of the Hotel Vier Jahreszeiten Kimpinski in Munich I couldn’t help but imagine it filled with SS Officers enjoying the fruits of their murdering conquest. Of course I did. But I also understood the young Germans around me could not be held to that account. When one of my colleagues, also Jewish, made a derogatory remark I engaged him, and with surprising ease found he agreed it was time to let go. I threw away the comfort of context, spoke the truth to him. And it freed me. Now, this is not true for all Jews, Senator; some still dwell on that bitterness, and you would say, understandable, given the “context.” Perhaps. But they are not our soul or intent. They are a past generation and we do not look to them for leadership. We teach redemption. We try to hold them to some form of account.

That is the teaching opportunity I hoped you would evoke: not explaining Wright’s outrage to me, but explaining his outrageousness to him. That’s how we’ll reach the postracial era: by no longer justifying ourselves with what was, instead speaking to what now exists. Not deny the past, but recognize that’s what it is: past.

You say you are devoted to Reverend Wright because he brought you to Christ. I can only imagine how powerful a relationship that forges. But, my imperfect understanding of the Christian Faith tells me you can do him an equally magnificent service: You can help bring him back to Christ. Show him redemption and salvation lie not in the satisfaction of doing little dances in a pulpit while you slander good and decent people. Teach him that great leadership and Christian love abjures the very filth – and I pick that word deliberately – that he spews on an apparently regular basis. After all, Senator, you know our government did not invent the HIV virus to kill African-Americans. You know, Senator, this is not the United States of KKK America. You know the truth of 9/11. At least you should. Both you and Michelle have benefited mightily from the new spirit that has come to America in the last two generations. I thought you were part of that. I thought you were post-racial.

But in your silence, in your justifications, in your facile instruction to contextualize, you seem just a more presentable version of those dreary self-promoters, Sharpton, Jackson, Bakewell and the rest. Surely this is not you. Please, Senator, be brave. Lead. From a position of honesty where context is our daily reality, not drawn from bitter memories, no matter how justified they once might have been. Deny Jeremiah Wright your comfort of “context”. Be Presidential. To all Americans.

Yours sincerely, and in prayer for the Grace of God,

Lionel Chetwynd

PS – I would like to discuss your stereotyping of “typical” white people whose only valid dissatisfaction is apparently the occasional irritation at the misuse of affirmative action. But enough for now. Perhaps another time.

Lionel Chetwynd is an Oscar and Emmy Award nominated filmmaker living in Los Angeles.