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Government Seizure of 401(k) / Pensions To “Fix” Social Security?

18 August 2009 2 Comments

I listened to a long explanation by Neal Boortz on his radio show today on why he thinks that in the name of saving Social Security, politicians could easily seize outstanding pension funds including money in IRAs and 401(k) plans.  Interestingly, I also had a spike in my search traffic for my previous article: Should Government Take Over Your 401(k) [October 28, 2008].

Whatever your political stance, it is a fact that there are some politicians with some level of power in Washington that want to either tax these funds (that are supposed to be off limits from government officials) or potentially even seize them in the name of the “public good”.

Obama has made it known that after tackling health care, he wants to “fix” Social Security.  The push back from the public on his health care reform agenda may delay or even prevent Obama from moving forward with plans to shore up Social Security.  If seizing retirement funds and accounts is in any way a part of a future plan to shore up Social Security, well, I sure hope that his plan never sees the light of day.

Remember, the Social Security trust fund is not a trust fund.  It has no money in it.  It’s merely IOUs from the government.  Why?  Because the government spends the money collected by social security taxes in order to fund government programs and buy votes.  Make no mistake about it, if anybody in the government proposes seizing private retirement funds, it’s not to shore up Social Security, rather, it is to find money that government previously cannot touch and use it to buy more votes.

A good article over at WSJ discussing scary death panel scenarios with government health care has a great quote:

Free people can treat each other justly, but they can’t make life fair. To get rid of the unfairness among individuals, you have to exercise power over them. The more fairness you want, the more power you need. Thus, all dreams of fairness become dreams of tyranny in the end.


  • Roger, TAF said:

    I sincerely doubt that seizing private was (or will ever be) considered as a way to 'shore up' Social Security. The political price paid for such an action would be tremendous, as just about every middle class American has one (or more) retirement accounts at this point, and full government seizure would lead to a hue and cry even among liberal bloggers/commentators (myself included).

    Now, if the argument is that the government might (or will) decrease the tax benefits of retirement plans (say by taxing the proceeds from Roth accounts) as a method of increasing tax revenue, that I could see; but a wholesale seizure of privately held funds? Only if all the politicians involved have no desire to be re-elected, or our democracy has already been toppled, at which point losing your retirement fund is probably the least of your worries. (Also, speaking for myself, I kind of doubt we'll see such a thing in the foreseeable future.)