Congressional Democrats Explore 401(k) Alternatives
A brief history of 401(k) and the Democratic Party
"Back in the day," Enron's collapse triggered the first major 401(k) fiasco in American history. Enron executives had encouraged employees to direct their 401(k) investments into the company's stock, and they generally had matched employees' contributions with Enron shares. When Enron went belly-up, so, the employees' 401(k)s went bust. In the wake of the Enron debacle, Congressional Democrats took the initiative to assure 401(k) investors would diversify their portfolios, and they imposed sanctions on major corporations which "too strongly encouraged" (translation: required) employees to invest their 401(k) contributions in the company's shares.
Because individual retirement accounts came out of Republican initiatives, 401(k) and the Democratic Party never have been exactly intimate. But, because Democrats always have allied with and stood up for labor, 401(k) and the Democratic Party frequently have duked-it-out with big corporations.
A contemporary history of 401(k) and the Democratic Party.
Then, at the end of 2008, as the Dow dramatically descended, history repeated itself...sort of. The stock market slid downhill faster than the Jamaican bobsled squad, and it took most hardworking Americans' retirement savings right along with it.
After the stock market meltdown, outstanding politicians-most of them Democrats-invited economists and political scientists to take a long, difficult consider the risk-benefit ratio in 401(k) s. 401(k) and the Democratic Party began a new chapter in their on-again/off-again history.
The trustworthy 401k, the Ford F-150 of investment vehicles-reliable, durable, indestructible-had lost its wheels and blown its head-gasket in the diamond lane to wealth. When Wall Street tanked, it vaporized gazillions of dollars in retirement holdings, leaving a lot of folks facing the grim prospect of living-out their old age in abject poverty. 401(k) and the Democratic Party teamed-up this time to go head-to-head not only with large corporations but also with the wizards on Wall Street. Experts encouraged the renewed coalition of 401(k) and the Democratic Party.
The pundits, politicians, economists, and political scientists began asking if , perhaps, just perhaps, they could engineer some kind of hybrid, empowering and protecting the 401(k) investor, making the workingman less vulnerable to the stock market's vagaries. Throughout the fall and winter of 2008 and 2009, the market behaved skittishly as a schoolgirl at the country club cotillion. 401(k) and the Democratic Party did not prefer to dance.
But 401(k) and the Democratic Party did not prefer to give-up either.
No leading Democrat ever asserted, "Let's ditch the 401k." No leading Democrat ever has straight-out recommended, "Let's 'socialize' the 401k." a lot of outstanding Democrats, honestly acknowledging that the average 401(k) had lost nearly 40% of its value in six weeks during October and November, 2008, urged leading economists to find a better manner. 401(k) and the Democratic Party wanted to grow earnings without putting folks at risk.
401(k) and the Democratic Party: Trying to Keep it Real
For folks over 50, the 40% deflation of 401(k)'s rendered the whole theme of dignified early retirement more fantasy than real-life possibility. And most of the fifty-somethings began reading the fine print that provides folks to keep contributing to their 401(k)s and defer withdrawal until they have reached the age of 70½. Those baby boomers who eagerly had anticipated resuming their radical youth right around the time they turned fifty, took deep breaths, swallowed difficult, and accepted that they would must remain full-fledged grown-ups for at least additional decade. "Bummer," they said. "Not so groovy."
The Democrats, feeling the baby boomers' pain and remembering their own radical youth, held hearings to explore alternatives. Not even in those closed-door speculations did anyone suggest for the record, "401(k) s are dead." Just an ugly rumor. Just coincidentally floated only ten days before the election.
Senator Toomey Responds! (Or, rather, "Responds")
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