Hands Off My Retirement Fund
Posted on RightWisconsin, my column on what conservatives should be saying:
It’s a sign of just how out of touch conservatives are with average folks that they have not yet taken up the cry: "Don’t Touch My Retirement Accounts." President Obama has crossed what should be a red line when he proposed capping the size of IRAs, suggesting that the left is capable of making broader moves toward the trillions of dollars socked away in those private accounts.
Obama’s new budget imposes penalties on penalties retirement funds that exceed a "maximum permitted accumulation," an amount that could generate no more than $205,000a year in retirement income. At the moment, this would limit the size of the retirement fund to $3 million.
But, as Amity Shlaes notes,
"these lines should chill even citizens whose 401(k)s fall short of that amount. After all, authorities could lower the limit later, as happened with the erstwhile rich-man’s levy, the alternative minimum tax. "
While a flat-out raid on retirement funds remains merely a cloud on the horizon, the cash grab in Cyprus moved the notion from preposterous to possible. Out here in the real world, people are taking note.
It’s not hard to image the rhetoric of "fairness" that could be used to justify "spreading around the wealth" of those accounts. How might this happen short of Cyprus-like confiscation? Obama has already proposed capping accounts. How about other forms of means testing? Higher tax rates above a certain level? How about a straight wealth surcharge?
After watching the EU embrace such wealth raids, such ideas are no longer unthinkable and Obama has already made the first move.
For conservatives, this is a moment fraught with opportunity:
The left has long experience of exploiting such insecurities, but their answer is decidedly one-note and archaic. For the left retirement equals Social Security and other government entitlements. But the luster is off those promises and few Americans under the age of 45 have much expectation they will ever benefit from them.
For a growing number of Americans, retirement means the security of their own savings, such as IRAs and 401Ks. A threat to the security of those funds is an existential problem for the nation’s middle class.
Conservatives need to draw a line around those plans and defend them, while at the same time using the opportunity to talk about the importance of protecting private property rights against the encroachments of a ravenous public sector. They need to do this before the left figures out that it can use class envy to shape the debate by focusing on the accounts of the mega-rich. But my gut sense is that Americas will react very differently to a raid on accumulated wealth that they have to higher taxes on income.
"Hands Off My Retirement Funds," could be masterful act of political ju-jitsu, stealing some of the left’s language while turning the tables of their defense of retirement security.
It is also a natural issue for conservatives, because by protecting retirement savings, conservatives would be focusing on private resources amassed by prudent financial planning (in contrast to government profligacy), by self-sufficient Americans who relied on society’s promise that this kind of deferral would be respected and protected. (Possible other slogans: "Keep the Promise of Retirement.")
Making the protection of private accounts a wedge issue could also provide a new wrinkle on the tax issue (which has gotten a little tired.) The right can steal a march by defining the terms of the next battlefield: No new taxes on retirement. They could even up the ante by calling for the repeal of taxes on Social Security benefits, which democrats managed to impose in the 1990s. There might be even more creative ways of sweetening the tax treatment of retirement savings (I’ll leave that to the budget wonks.)
But the key is to put a human face on the danger of government over-reach and greed. Imagine the return of "Harry and Louise" to the nation’s televisions: "Did you see what the Democrats are doing to our retirement account?...."
You wanted bold? That would be bold.