October 10, 2007

Isn't This Privatization?

Does anyone get the idea that Hillary Clinton has decided to toss out entitlements like sugared almonds at a Sicilian wedding as a campaign strategy? Fresh off the laugher "baby bonds" program she endorsed without much thought, she announced a new plan yesterday to boost American savings -- through more government spending. Hillary proposed spending even more money annually to open and fund 401K plans for every American:

Senator Hillary Rodham Clinton of New York unveiled the second biggest domestic policy idea of her Democratic presidential campaign today, proposing to spend $20 billion to $25 billion a year to create 401(k)-style retirement accounts for all Americans and provide federal matching money of up to $1,000 to middle-income people.

Under the plan, the government would give a dollar-to-dollar match for the first $1,000 saved by Americans who earn up to $60,000 annually. For those who earn $60,000 to $100,000, the government would provide a 50 percent match, or $500 for the first $1,000 saved.

Mrs. Clinton said she would pay for the program by freezing the estate tax at its 2009 level of $7 million per couple. A campaign analysis of the plan said that the freeze would affect about 10,000 of “the wealthiest estates” in the United States and provide a new retirement savings systems for an estimated tens of millions of families. ...

As with her biggest policy plan for universal health insurance, Mrs. Clinton cast her savings proposal in terms of choice: If Americans like their 401(k) plans and other retirement accounts, they can keep those, while those who lack any savings plan will have a chance to start one with government help and save $5,000 a year on a tax-deferred basis.

“Saving in the accounts will be easy — it should not require a Ph.D. to save for retirement,” Mrs. Clinton said.

First, let's note that the Democrats finally ran out of smokers. Instead of using sin taxes to pay for this new entitlement, as with the S-CHIP expansion, the money will come from freezing the indexing on estate taxes. The death tax has been under the Republican gun for years, and their reasoning is that government should not tax earnings twice. The estate tax disappears in 2010 and reappears the next year, but Republicans have fought to eliminate it permanently. Hillary wants to keep it, and she wants to give the middle class a reason to oppose the GOP.

However, this attempt is really threadbare. In the first place, Hillary fought against privatization when the Bush administration applied the concept to retirement in 2005. Bush proposed allowing Social Security taxes to partially go into private accounts similar to 401Ks, and the Democrats still campaign against it. Hillary has said a month ago that "privatization never works," and now she's reversing herself in order to hand out subsidies for savings account. At least Bush's plan addressed in a long-term sense the problems with an existing entitlement without adding another entitlement burden to an already-overburdened budget.

Besides, if Hillary wanted to give everyone money, she should vote for tax cuts. We don't need to run more money into the federal government just to have it returned to us -- plus costs. We could do the same thing by simply having a tax credit of an additional $2,000 per year for 401K plans. We could do more if the government simply lowered the tax rates and allowed us to keep the money in the first place, and both of these solutions would avoid having to create a brand-new bureaucracy to manage Hillary401Ks.

Whose money does she think she's giving away? How many saps will forget that when they hear, "Free money"? I'm betting many, but fewer than she hopes.

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Comments (24)

Posted by John Wilson | October 10, 2007 6:51 AM

Keep her talking. The more she throws against the wall looking for voters, the more she has to answer for in the race this fall. I hope someone is keeping score.

Posted by quickjustice | October 10, 2007 7:00 AM

I'll repeat what I've said before: the current government welfare system isn't sustainable. Hillary's various proposals hasten the collapse of the system by burdening it (and taxpayers) to the breaking point.

We'd be better off with Charles Murray's libertarian proposal ("In Our Hands"): abolish the current welfare system, and replace it with an annual payment of $10,000 to all adult Americans. Such a system eliminates most government bureaucracy, while completely changing the incentive structure for the better.

Example: For two married adults making $40,000 per year, Murray's proposal gives them another $20,000, a huge increase in their standard of living.

For an unemployed, indigent person, the money ensures basic sustenance. If that person teams up with two other indigent people, they have $30,000 per year, enough for adequate housing, food, and health care.

Finally, Murray's proposal positively impacts charitable giving. If an indigent person approaches a church for charity, both the church and the indigent person know about the $10,000. They also know that the indigent person's lack of cash flow is temporary. With that in mind, charitable efforts can be restructured as "gap fillers" and social fabric repair efforts, rather than as permanent welfare bureaucracies supporting indigent people.

Posted by onlineanalyst | October 10, 2007 7:06 AM

I, for one, am keeping score. I will never forget Madame Hillary's sour expression when President Bush in his State of the Union address referred to the failure of his attempts to offer a solution to the Social Security time bomb through partially privatized accounts.

Hillary Clinton abhors the freedom that privatization allows. Her proposals always presuppose that the State offers the best solutions for our personal welfare. As a self-annointed godmother of the Nanny State, she truly mistrusts the judgment of the people in determining the direction of their own lives.

Posted by Richard Aubrey | October 10, 2007 7:17 AM

I wonder what would happen if a high school American Government teacher started out each class period--or at least weekly--with the statement that the government has no money except what it takes from "your parents and you."

Posted by docjim505 | October 10, 2007 7:21 AM

Hmmm... Can you imagine the outcry from the left if Bush or another Republican suggested such a thing?

(choking with outrage) "This is CORPORATE WELFARE! You want to give away taxpayers' money to (snarl) CORPORATIONS! You just want an excuse to give more money to Wall Street."

Perhaps somebody should ask her if the 401k money can be invested in Halliburton stocks...

To some extent, however, we've got to give the Hilldabeast credit: she's on the right track. Investing (prudently) in the stock market is far better for retirement in the long run that simply handing over money to the bureaucrats and bunglers in Congress and hoping that they'll give it back when you retire and not squander it now on free medical care to people living in $300k houses, bridges to nowhere, or other waste. Hopefully, the Evil One will make the next logical step and realize that (gasp) letting people keep their own money and making them responsible for their own future is a far wiser course of action than leaving it in the incompetent hands of the government.

Posted by rbj | October 10, 2007 7:28 AM

Let's see. To encourage saving, Hillary wants to take money from those who have worked hard and been the most successful and have saved.

Moral: be successful, just not soo successful.

Posted by MarkD | October 10, 2007 7:30 AM

Let's just rob Bill Gates. He has more money than he needs.

Posted by Larry J | October 10, 2007 7:38 AM

I wonder what would happen if a high school American Government teacher started out each class period--or at least weekly--with the statement that the government has no money except what it takes from "your parents and you."

I'd also like each school day to start with the refrain from that old Rolling Stones tune, "You can't always get what you want."

You can't always get what you want
You can't always get what you want
You can't always get what you want
But if you try sometimes,
You might just find
You get what you need.

Posted by Jeff | October 10, 2007 7:54 AM

None of this would be possible without a populace that sees no shame in taking someone else's money in exchange for doing absolutely nothing.

Well, I guess there's a primitive sort of quid pro quo. You draw a little X next to the D on your ballot and you get a reward. Like a trained animal.

Its degrading. It's beneath the dignity of a human being to be treated this way. Come on, folks, you're worth more than this.

Posted by Rose | October 10, 2007 7:56 AM

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship."
- Sir Alex Fraser Tytler (1742-1813)

Hillary is just trying to work from off the Old Formula.

Posted by Rovin | October 10, 2007 8:02 AM

Anti-capitalist socialist vs. a free market economy---where ideologys collide

We already have a government sponsered 401k retirement program. It's called Social Security, and it has not been solvent for years. If the democrats want the people of this nation to mimmick the socialist policys of communist Russia a generation ago where dependency on the government failed, why don't they just come out and say it.

This nation was founded on independence and self-reliance of the individual and the framers saw how important it was to limit government intrusion. Every time we accept a new government "entitlement" we shackle and bind the next generation to a government controlled dependency. This is all about POWER AND CONTROL of our hard earned dollars to re-introduce the welfare state of the Carter administration that thought it was easier to feed the lazy who found it was more convenient to rely on the government than to get off their ass's and go to work every day.

This is the cruel and harsh reality of the programs that the new Mrs. Bill Clinton intends to craft for the sake of the "needy". The tax relief programs that Reagan and Bush intoduced is what has provided real growth for this nation by putting the money back into the hands of the individual. The democrats believe it's their money to re-distribute as they see fit.

Posted by Anna Puna | October 10, 2007 8:05 AM

Supposed to only cost $25billion? Now think if this is compounded annually with judicious investment in the stock market along with yearly additions of another $25billion. Soon we are talking about a serious investment force in the markets. Then just imagine someone like Rep. Nancy Pelosi, on her Armenian Genocide high horse, slipping in an amendment ordering this government mandated 401k to divest itself of all stocks related to Turkey.

Sounds good, but like all Democrat ideas, the long term downside is not pretty to think about.

And Sen. Clinton wants to be President.

Posted by Larry J | October 10, 2007 8:21 AM

Supposed to only cost $25billion? Now think if this is compounded annually with judicious investment in the stock market along with yearly additions of another $25billion. Soon we are talking about a serious investment force in the markets. Then just imagine someone like Rep. Nancy Pelosi, on her Armenian Genocide high horse, slipping in an amendment ordering this government mandated 401k to divest itself of all stocks related to Turkey.

Sounds good, but like all Democrat ideas, the long term downside is not pretty to think about.

This is an excellent point. In what kinds of investments will Clinton's plan allow people to invest? Will a government panel control the investments (and thereby have a huge impact on the market and be open to even more bribes, er, "campaign contributions")? Will she want to guarantee the investment should they go down in value? This whole idea is a big can of worms.

Posted by RD | October 10, 2007 8:50 AM

It seems to me that Hillary has strong-armed her way through life (see Sweetness and Light for how she got herself appointed as her college graduation speaker) and now she is pandering and bribing her way (not with her own money of course, heaven forbid). Should Hillary be elected here is my outline of what I think Hillary's reign will entail (past is prologue):
1) After taking office she will first consolidate her power by not only filling all slots with her coherts (no leftovers from previous administration in her reign) but she will have her husband appointed to fill her vacant Senate seat where he will strong arm her agenda through. (Use Google to find comments floated by members of her team on this possibility.) She will also work to abolish the electoral college (see her comments on this)
2) She will silence criticism by forcing new rules on the internet and broadcast media (fairness doctrine etc.)
3) She will reward her friends, supporters and donors with taxpayer paid privileges such as parties, overnight stays in the Lincoln bedroom and trips abroad (Remember those trips she took during her husband's administration)
4) She will use her power to punish her enemies (she is a vindictive person and will not hesitate to use the IRS or whatever she can to get back at them...Barrett report anyone?)
5) She will abuse her power in any way she can in order to get her agenda through (ends justify the means)such as blackmail (new FBI reports?)etc.
6) She will cleanse her husband's and her records (clean sweep the Archives,etc)
7) She will raid the treasury (trips etc)and appropriate any and all gifts for her own personal property.
8)She will ruin America financially with her socialistic programs ( "take from the few to give to the many")and to fulfill her pandering promises
9) She will work with her husband to negate his impeachment.

Posted by RD | October 10, 2007 9:16 AM

Agree with all comments above but in agreement with Jeff I say that Hillary herself has no shame in asking for and using other people's money both to support herself,her dreams, her agenda, her campaign and her lifestyle. Her whole adult life she has lived off of contributions and tax payer money and has salted a good amount of it away and still keeps begging for more. There is an account that after her husband lost his election to be governor of Ark she contacted friends asking them for money. After she left the White House with a truckload of taxpayer furnishings she registered at high end stores so her friends could furnish her new home which they also helped subsidize. She is shameless in this way (in fact, in all ways,IMO).

Posted by always right | October 10, 2007 9:23 AM

Hillary never said anything about privatization, did she? All she said was "the 401(k)-style plan", heavy emphasis on "style".

The only thing she promised was to skim the top to give to the "poor, who had no choice of participating 401k". In the transaction, of course, minus the layers of "handling fees".

So in order to hand out the promised 25 billions a year, the plan will have to take in 'a lot' more than the handout. Also in order to handle such huge undertaking, she will have to create a whole new department of bureaucrats (hence the handling fees), voila, job creation. How can she go wrong on all these counts for her party?

Posted by Troll Feeder | October 10, 2007 10:00 AM

My first thought was, "Isn't that theft?"

My second was, "Well, at least I have a new name for her out of this: Robin Hill. As in steals from the rich ..."

Posted by RD | October 10, 2007 10:33 AM

"Robin Hill" I like that. Gives me this mental picture of Hillary in green pointed hat (pointed for a reason) saying to her merry bunch of hoods, "pst gangstas, I know an easy way to get you a bunch of money, but first, you have to elect me your leader"

Posted by patrick neid | October 10, 2007 10:34 AM

Further proof of what is coming in the cozy relationship between newsrooms, that vote 90% democrat, and Hillary for president.

We have already discussed how it will impact what will become a very successful war in terms of the glowing stories they will write about success on the battlefield and the larger slice of life stories about new schools, hospitals, water treatment plants etc.

Now we get to see it on the domestic side. Easily forgotten was the stupidity of the $5000 for children fund first touted by columnists and editorials nationwide. Every conservative/repub initiative of these last 15 years will be recycled as grand "Hillary care".
While previously such proposals had dark secret intentions now they will be recast as meaningful self help "it takes a village(idiot)" approach that only a compassionate Hillary can bring.

Buried deep in every proposal, however, will be a socialist hook. Somewhere, well down the road, will be an exploding government entitlement. This is the sole intent of most democrat bills--enlargement of government. Their M.O. is always the same. A short term boost sold via an emotional plea that ultimately bankrupts us through taxation making us dependent on the state. This grand design started with the New Deal.

Sadly we are in this plight because of repubs wanton disregard for their mandate these last 10 years---controlling spending. Bush and company were a disgrace.

Posted by Del Dolemonte | October 10, 2007 11:00 AM

Gee, our pro-Hillary friends here must be waiting for their Wednesday talking points to arrive from Begala. The silence is deafening.

Posted by Jason L | October 10, 2007 11:51 AM

Bread and Circuses...that's all the Democrats are anymore. Hopefully, Americans are still above such tactics.

Posted by fester | October 10, 2007 2:20 PM

Ed ---- Over the the Newshoggers I wrote up a very brief policy response to your statement

"Hillary fought against privatization when the Bush administration applied the concept to retirement in 2005. Bush proposed allowing Social Security taxes to partially go into private accounts similar to 401Ks, and the Democrats still campaign against it. Hillary has said a month ago that "privatization never works," and now she's reversing herself in order to hand out subsidies for savings account."

The big SS ideological difference is the size of the defined benefit income replacement from ~40% status quo to roughly 20% under the 2005 Bush plan, and who bears the risk. Bush's plan was to carve money out of current OASDI contributions to fund private accounts by reducing the defined benefits. Clinton's plan is fairly standard Dem. wonkery to have the 401(K) option be an add-on to Social Security defined benefits. The cost, as you note is borne by increasing another tax above current baseline projections. Two very different plans and conceptions of how risk should be borne.

More at the Newshoggers.

Posted by Rachel | October 10, 2007 3:15 PM

Does anyone get the idea that Hillary Clinton has decided to toss out entitlements like sugared almonds at a Sicilian wedding as a campaign strategy?

I didn't know the Sicilians did that. Thanks for the wedding idea ;) (I'm not kidding)

Posted by Troll Feeder | October 10, 2007 5:09 PM

RD:

What accent do you think she'll use with her gangstas? Cockney or Compton? So hard to choose....

Anyway, I thought maybe a "Robin Hill 2008: Four years of stealing from us all" bumper sticker might be a winner.

Maybe on a t-shirt, too, with Robin Hill in your green pointy hat?

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