The report that House Democrats, lead by the Chairmen of both the Ways and Means and Education and Labor Committees, are planning on abolishing tax breaks for 401(k) plans is another example of liberals who cannot resist being who they are. At an inopportune time, the Democrats have given McCain and Republicans an opportunity to further contrast their economic agendas.
Joe Biden has told us that it’s “time to be patriotic” and pay more taxes. Barney Frank, the Congressman who has had oversight of Fannie and Freddie, told CNBC we need more tax increases. Barack Obama told Joe the Plumber that he plans to “spread the wealth around.”
People don’t want to believe that Barack Obama and the Democrats, if elected, will take the country dramatically left. Many people want a change of direction, and want to believe that all these warning signals about Democrats raising taxes and increasing regulation are just Republican scare tactics. People should listen to who is saying these things: Democrat candidates. Voters will find out the hard way that their suspicions are correct if Barack Obama is elected with a Democrat majority.
What will happen to our 401(k)s under the liberal troika of Obama-Pelosi-Reid? With the tax breaks removed, employers won’t have an incentive to add matching contributions. We’ll be able to put money into such an account, but we’ll still pay taxes on the income we contribute. This means we’ll lose the two most beneficial reasons for using them. The government will then offer us a tax subsidy, but we’ll be forced to invest a portion of our wages into a government-controlled investment like Social Security. This is an example of what Obama means by “spreading the wealth around.”
What will happen at the macro level? Obviously, less investments in the market. This means less economic and business growth. With the economy likely in a recession, such a move would make things worse. Add to the loss of 401(k) tax breaks increases in dividends and capital gains taxes, and we can see where the Democrats want the economy to go.
Liberal Democrats are telling us who they are and what they want to do. Are we listening?
