Clinton-GRAP: The Flaws

With Hillary Clinton losing the Guaranteed Retirement Account Proposal (GRAP) likely went down with her.

Here is why that’s a good thing…

  • GRAP is essentially Social Security were it to operate as a pension plan (rather than the income transfer mechanism it morphed into) and it is likely to be similarly compromised.
  • Investment advisers and insurance companies selected by a political bureaucracy for a captive market will not make the market efficient thought they will create an attractive campaign donor base.
  • Ending tax breaks for 401(k)s and IRAs would drive a lot of other investment advisers and TPA firms out of business.

Admittedly the private retirement system is failing.  Whereas many retirees used to count on dependable defined benefit pensions to retire on where substantial benefits had to be provided to rank-and-file employees if the principals wanted big benefits for themselves we now have perverted rules of fairness institutionalized where vast armies of younger, lower-paid workers are being grudgingly ceded only token benefits.

The solution is not to add onto the pile but to understand what is going on out there now and honestly represent it to the people you are supposed to be looking out for or else you get more of this.

10 responses to this post.

  1. Posted by skip3house on November 9, 2016 at 7:37 am

    @realDonaldTrump Many want BACK funded pensions borrowed, jobs sent overseas at slave labor cost, profit sharing/Unions,health, less gov $$

    Reply

  2. Posted by steve on November 9, 2016 at 7:50 am

    She will have to reintroduce it from a prison cell –mein kauf style (wishful thinking??)

    Reply

    • Voters never liked corruption (except in this state) ..Trump has a great opportunity to turn this country around ,from bed wetters to a country that wants to take care of it self if given that chance . I’m cautiously opptimistic

      Reply

      • Posted by Anonymous on November 9, 2016 at 1:16 pm

        Bwahaha ha welcome to fantasyland

        Reply

        • Posted by dentss dunnigan on November 9, 2016 at 3:02 pm

          With the voters rejecting Obama/Clinton it shows just who was “peddling fiction” while ‘rome’ burned….

          Reply

          • Posted by George on November 9, 2016 at 6:21 pm

            Clinton won the popular vote.

          • Posted by dentss dunnigan on November 10, 2016 at 8:26 am

            …Geographically speaking, Trump won at least 80% of the Nation. Hillary only carried about 3 or 4 states .I saw last night the California votes putting her over by 200K ,she could have received another 1 million from CA. and it wouldn’t have made any difference .We are a constitutional republic not a democracy

  3. Posted by George on November 9, 2016 at 3:44 pm

    One curiosity is where the 3% will come from.

    If you work for the government, it will come from taxpayers.

    If you have modest wealth, your employer will keep your salary constant on a total compensation basis. So the 3% will come from reducing other pay and benefits. You will also end up paying the 3% of the government workers.

    If you are low income it is hard to say. Since many low income people are paid the minimum required to get them to be able to work, the employer will have to pay the extra 3% or terminate that position/employee.

    I read about these schemes in other countries. Russia raided the funds to pay for the Crimea annexation. I think Poland also raided the funds. Argentina too? So don’t take ownership promises as solid.

    Ending tax breaks for 401(k)s and IRAs – I personally think IRAs should be ended and just allow people to deduct a certain amount of investment income. I personally know people who had to empty their IRAs to pay for health or other life events, they ended up paying taxes plus a penalty of 10%. So I don’t think it is working.

    Traditionally the only retirement options for poorer people have been, real estate, children, or a small business. The 3% will amount to not very much after 50 years.

    Reply

    • Posted by George on November 9, 2016 at 3:45 pm

      One nice thing about IRAs is certain immunity during bankruptcy and other events like a pension, so that would have to be preserved if IRAs were eliminated.

      Reply

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