The notion of a “universal” savings account is tantalizing. It suggests two possibilities: Giving everyone, no matter how large their employer, an easy way to save some money when they receive a paycheck, and eliminating the alphabet soup of 401(k)’s, I.R.A.’s, 529s and other accounts that we all have strewn about our financial lives.
Presumably, Social Security is one of those "other accounts".
So Mr. Obama’s plan would piggyback on existing payroll direct-deposit systems, siphoning off 3 percent or so of everyone’s salaries and funneling it directly to an individual retirement account...There would be a standardized default investment, probably some kind of mutual fund with a mix of stocks and bonds that gets more conservative over time. The key to making this truly widespread, however, is something called auto-enrollment. That means that unless workers opt out of the plan, the money will come out of their paychecks automatically.Automatically, you mean like FICA deductions? Let us see what the Times had to say about this plan when Bush proposed it in 2003:
The change, which would primarily benefit the affluent who can afford to save more of their income, is aimed at encouraging an increase in the lagging personal savings rate and at simplifying the maze of retirement savings choices and other tax-deferred accounts for things like college education and medical expenses.
That's correct: they pitched it as a benefit for the wealthy. They also said it was fiscally irresponsible: There may be some compelling economic logic to cutting taxes on dividends, or subsidizing savings, but this should be done in a fiscally responsible manner -- by identifying a specific revenue cut or tax increase to balance the books. Have you seen any NYTimes calls for balancing anything Obama wants to do?
Why is the Times now so gung ho on the Obama version of this plan? I mean besides they just Love Obama. Let's see...
For households that earn under $65,000, the federal government will match savings up to $1,000 a year with a 50 percent tax credit. So if you saved $500, you would get $250 dropped directly into your I.R.A. This tax credit is refundable, which means you would get it regardless of how much you pay in federal taxes each year. The credit would phase out between $65,000 and $85,000 of household income, or half of that if you are single.That's right -- Whether or not you pay taxes, you get this freebie. Obama is proposing additional transfer of wealth. Surprised?
You can't swing a dead cat anywhere in this town without hitting another proposal for wealth transfer.