Forced Loans
Every year, the government forced nearly every working American to give it an interest-free loan. Each person pays his taxes (via legally required withholding) as much as 16 months early, with not a cent of interest from the government for this loan of funds. Several states have been toying of late (and California actually implemented) schemes in which the required withholding rates are jacked far above any conceivable level of tax liability. These are desperate financing approaches from entities who are no longer able to borrow (or afford the interest of) money at arms length, and so much use the coercive power of the government to force its citizens to fork over interest free loans.
Apparently, the Obama administration is looking at such a scheme, but on steriods:
The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.
Whatever their stated justification (I am sure it is somehow for the children), I think Dale Franks gets at the actual motivation:
There literally isn't enough money in the world to float the T-notes the Treasury must issue in order to prop up our unsustainable spending path. There are, however, about $3.6 trillion in funds just sitting in 401(k) accounts. If the government can urge"“or force"“you to convert your 401(k) into T-note funded annuities, the Treasury can continue to issue those notes to float the government's deficit. Essentially, you'll be converting your retirement funds into an IOU from the government"¦just like your social security account has already done.
This will allow the Treasury to keep borrowing money"“from your retirement"“in order to keep issuing more debt that they may or may not be able to pay back to you
