I wrote yesterday about the feds coming for your 401(k)s using Theresa Ghilarducci’s ‘Guaranteed Retirement Account‘ plan. I just did a little tiny bit of digging on Theresa and I have to admit that although I should not be shocked anymore, I was left breathless by just one page from one website. The depth of the collapsing progressivism is just heinously out-of-control, but this post is not about that research. I will do another article subsequently after I re-introduce my readers to John Willoughby who is making a run at unseating Autocrat Mazie Hirono here in my home state, Hawaii, District 2.
John is the Tea Party endorsed candidate who just picked up an endorsement from Sarah Palin. John is a true ‘small government’ Constitutional conservative, a former navy pilot, and current commercial airline pilot, and our best hope of sending Mazie packing. Please consider donating to his campaign here, as when we last communicated he stated, “I have not received, nor have I been told I can expect, any support from the RNC.”
John has written an article on this very issue of the government seizing Americans’ 401(k)s, with his personal experience of losing his retirement when United Airlines filed Chapter 11. It may help us average moos understand exactly what the social wealth redistributionists are up to.
By John W.Willoughby
Psych! The government hasn’t taken the first step… Whether you know it or not, they’re already on, like, step 10.
After the attacks of 9/11 on the World Trade Center and Pentagon, the airline industry was thrown into turmoil. The Bush administration sprang into action and in just eleven short days established the Air Transportation Stabilization Board, a U.S. Treasury Department office designed to stabilize an airline industry that was already in dire straits prior to 9/11. The ATSB was to issue federal loan guarantees to viable airlines unable to acquire conventional credit. An amount that seems now like a paltry sum of $10 billion in loan guarantees (not bailouts) was appropriated by U.S. Congress to assist the airlines.
In essence, establishment of the ATSB provided the means by which airlines (including my employer, United Airlines) could continue to operate while meeting their financial obligations, including the funding of the employees defined benefit pension plans.
Instead of immediately applying for the loan guarantee, United Airlines — hemorrhaging money and suffering from self-inflicted wounds including a flawed business plan, an expensive, outdated, and fuel guzzling fleet of aircraft, inefficient work rules, bloated payroll, and unpaid pension obligations — opted to choose protection under Chapter 11 bankruptcy as a means to stop paying leases on aircraft, slash payrolls, layoff nearly half its work force and abrogate its contracts with its labor unions to include defaulting on pension obligations. This effectively ended the defined benefit pension plan.
Under bankruptcy protection, UAL then applied for the ATSB loan guarantee. They touted elimination of the pension plans and other draconian cost saving measures to prove to the ATSB that they were serious about staying viable and thus worthy of the loan guarantee. After a lengthy application process including a rare reapplication after initial denial, it was determined by the three-member ATSB that UAL was perfectly capable of establishing credit withoutthe government guarantee and denied the second application.
This is significant in two ways. First and most important, the market, not government determined whether UAL would survive (which it did). Secondly, by not taking government funds, UAL CEO Glenn Tilton was able to parley some $40 million in executive compensation for himself and tens of millions more for his immediate staff with nary an objection from the public, media, or Representative BarneyFrank.
But it was after this process that I first realized how little control (whether a result of government intrusion or other external forces) we the people actually have over our future, our financial security and the legacy we will be allowed to pass on to our children and grandchildren. With the stroke of a pen, we employees lost our hard earned retirements.
You see, in the past UAL and its labor unions negotiated a comfortable defined benefit pension plan that promised to pay a specific monthly payment at retirement (just as federal, state and local government agencies do now). Unlike government pension plans, that are funded by taxpayers, UAL (and other private and publically held companies that provide a defined benefit pension plan) was responsible to make regular contributions to the plan in addition to insurance premiums it was required to pay to the Pension Benefit Guarantee Corporation, an independent agency of the federal government designed to assume pension obligations in case of pension plan failure.
When UAL filed for Chapter 11 protection, its pension obligations and all monies in the plan were turned over to the PBGC. This was a windfall for the PBGC who developed a formula to continue making current pension payments at a drastically reduced amount and establish a schedule for paying future obligations — my and other’s retirements — at pennies on the dollar.
This is what my Hawaii public and private Union brothers and sisters have in store for them in the immediate future (when it is realized that there is no money to pay the $39 Trillion in unfunded pension obligations) and the rest of working Americans have to look forward to if Democrat Congressional Representative Mazie Hirono and “that San Francisco crowd” have their way.
There is method to their madness. Despite the majority party in Congress’s absolutely unconscionable gargantuan spending spree and outlandish promise to pay down their $13 Trillion plus obligation without the means to do it, they know they have a yet untapped resource from which to draw and plan to follow.
Our Union benefactors (and recipients of millions in union campaign contributions) Hirono and her fellow House Democrats including Speaker NancyPelosi, House Education and Labor Committee Chairman George Miller, D-California, House Ways and Means Committee’s Subcommittee on Income Security and Family Support Chairman James McDermott, D-Washington, invited Teresa Ghilarducci, Professor of Economic Policy Analysis at the New School of Social Research in New York to testify at McDermott’s committee. Professor Ghilarducci provided a plan to nationalize America’s private pension system and allow Congress to get their hands on $8 trillion of our money. (What’s especiallystinging is that my local Air Line Pilots Association council recently presented Representative Miller with an award for support of our Union. We lost our retirement once, and now he’s going to pick the bones.)
First,they will nationalize (steal) our hard-earned 401K and IRA accounts — every penny.
Second, they will issue each family an account (with a starting balance of zero) administered by the Social Security Administration (oh, I feel better already). We will be required to contribute to the account, 5% of our annual income (non tax deductable).
Third, the government will contribute up to $600 indexed for inflation (or it would actually be a negative sum gain) annually. Fourth, the government would guarantee a 3% rate of return (not indexed for inflation).
So, if you have a job that pays around $50,000 a year, over a 30-year career you will have built a retirement account worth around $150,000. Now, let me see… That will yield a monthly retirement stipend that is less than the present Social Security payment alone. The upside is that this will be guaranteed, hence the title “Guaranteed Retirement Account.” Oh by the way, only 50% can be passed to your heirs upon your death. Questions???
Yes. Are they out of their freaking minds! Who is speaking out against this? Who thinks the Democrat majority in both the House and Senate and the White House can’t get away with this? They have been preparing their “spread the wealth” strategy since early last election. They don’t actually believe they are helping Americans plan for their retirements… They simply want to get their hands on the $80 billion in annual 401K tax breaks millions of Americans currently receive and the crown jewel — the $7 trillion currently in Americans retirement accounts to pay for their socialist agenda.
What support can we expect this ill-conceived scheme to receive from our Hawaii Representatives? As for Mrs. Hirono, she has blindly voted with her Democrat majority nearly 100% of the time. We can also count on socialist Gubernatorial Candidate Abercrombie to be a chief drumbeater for this effort, then “bring the same change from Washington to Washington Place.” The rest is up to us.