It appears McCain is flipping the script on how the economy will affect the campaign (Weekly Standard Blog):
The Washington Post’s Michael D. Shear reports:
Seeking new ways to respond to the frightening economic collapse, Sen. John McCain proposed today that retirees should not be required to cash in the stocks from their retirement accounts when they reach 70-and-a-half years old.
Current rules require that liquidation of 401(k) plans begin when seniors reach that age. But with stocks collapsing, those accounts are worth far less than many of their owners expected them to be. Under the current rules, they would have to sell at a huge loss.
“To spare investors from being forced to sell their stocks at just the time when the market is hurting the most, those rules should be suspended,” McCain said at a rally here.
The Obama campaign just issued a statement that the Democratic ticket supports this plan as well.
This is exactly the kind of thing that will reassure older investors worried about their nest egg while at the same time keep capital in Wall Street where it is desperately needed. Add this to McCain’s corporate tax cut and it’s clear which candidate has a better bead on how to make Wall Street healthy again without sickening Main Street.
Obama, by contrast, is following along in a desperate need for lipstick on a pig.
Contrary to the conventional wisdom, I’ve always believed McCain could win the economic issue, in no small part because he had the better plan. It’s good to see the McCain campaign figure this out, too.
October 11, 2008 at 2:33 am |
McCain is only concerned because Cindy made him sign a pre-nup.
October 11, 2008 at 2:42 am |
And you people say we went neative and personal . . .
October 11, 2008 at 7:25 am |
Of course, if retirees wait until the market recovers to cash in their stock then the government’s tax revenue will be higher as well.
A nice idea, but hardly one that’s going to have an impact on the fundamental problems with the markets and the economy.
October 11, 2008 at 9:46 pm |
I strongly concur, and would love to see McCain take it to Obama regarding May and Mac.
Considering he sponsored legislation to reform them, stopped by the dem’s, while Barney Frank was sleeping with his gay lover at one of these GSE’s, and preventing any serious regulation thereof, and considering Obama has Johson and Raines on his economic team, it should be easy for McCain to make the obvious case that it is the Dem’s who created and then protected the problem form the very get- go.
Carter and Clinton and their “Housing Reforms” forcing lending institutions to extend loans to folks who could not repay them, and here we are today.
I want to see him really expose Obama as the second leading recipient of hush-hush money from M&M.
Do it, John, and win!!
October 12, 2008 at 12:51 pm |
Hi, rightwingliberal….McCain has a very good point and one that hadn’t occurred to me. This would be a horrible time to have to cash in a 401k.
MountainSage
October 13, 2008 at 8:25 am |
Who says that people close to the mandatory withdrawal age of 70 1/2 have the majority of their 401(k) money in stocks to begin with ?
October 13, 2008 at 11:24 am |
What most people do no realize is that the amount that someone over 70 1/2 is required to take out is based on December 31st of the previous year. We all know that the market was way higher then, so now the retiree is required to take out a much higher percentage of their total investment than the IRS charts specify. Some of us are using that money to live on and when we take it out we pay the tax right away from the money coming out. If you would be allowed to keep it in but have to pay the tax anyway, then you would have to use money from your other income to pay the tax. That is tough at a time like this when everything is getting so expensive. Some people only have social security and small pensions so this money is very important to make ends meet. Some seniors might be able to make it through on very little money until the end of the year when the market may go back up, but taking it out now is disaster. We can severely economize for a short time to try to help ourselves for the long term. The one thing we do not want to do is ever be a burden on the younger generation who are already having a difficult time. Younger people should understand this because they may be in the same position one day. Finally what the markets need now is as much money in the market as possible. We would not be in the fix we are in if people had not panicked and take out so much already. If you think this is only a “little money”, realize that every dollar counts now. That is why the talking heads are pleading for people to buy now and not take out a single dollar. They are also begging people not to stop putting money into their 401Ks for the same reason. It is silly to be asking young people to put money in their 401ks but telling the seniors that it’s no big deal if they take their money out! We are all in this together.
October 15, 2008 at 9:33 am |
Keep capital in Wall Street? Neither plan will do that! Making it easy to cash in 401(k)’s is a tax cut that’s clearly bad for the economy right now. Two words: capital flight.
Besides, changing the tax code on investments right now is a bad idea anyway, and nobody knows the situation after the panic is over. We would be much smarter not to change tax rules in-game, but instead focus of government stimulus until we know what the bottom is, and a rough idea of what the unemployment and negative growth will be because of the crash.
October 15, 2008 at 9:43 am |
Um, Pierce? Do you have trouble with the English language?
McCain’s plan would let seniors keep their money in the 401K’s; it prevents capital flight.
October 16, 2008 at 6:01 am |
Right on! The absolute worst thing for the market AND the people invested would be to encourage withdrawal from 401K’s. The best thing for the market AND the people invested would be to encourage elderly to hold off on withdrawal. This truly speaks to judgment. Has anybody considered that a soicialist might want capitalism to fall…it would certainly help push a soicialist agenda.
In socialistic countries there is no middle class……..nor upper class. I’m horrified.
October 16, 2008 at 6:06 am |
This couldn’t have worked better is they (socialists) had planned it. Think about it……Place quotas on banks to force them to hold risky mortgages/securities. When they get in trouble blaim capitalism (even though it was soicalism that caused it). Then only more socialism could fix it…….Proof that socialism works. Even better if socialism doesn’t fix the problem. Like I said it couldn’t have played better if they’d planned it……….think about it but most importantly, THINK.
November 3, 2008 at 11:20 am |
The 401k & IRA concepts have been promoted to the American worker for some 25 years now as the end-all for worker retirement. Perhaps now with the recent collapse of the equity markets, it is time for a sea-change in where 401k and IRA monies go to grow for retirement. The stock markets are far too volatile for such long term retirement nest eggs. What if the US government borrowed monies from its citizens rather than selling long term bonds to the Chinese and Saudis, to whom the US pays interest on those bonds. What if the American worker loaned its retirement funds to the US government for a fixed rate of return, say 6%. In this manner, the workers get a guaranteed return and the US pays interest to its own citizens. Workers could still have the choice to invest in equities at greater risk or choose the above option for the steady but sure growth.