THE RICH GET RICHER:

How Democrats plan to beef up your 401(k) (Ross Kerber, November 19, 2006, Boston Globe)

After beating back Republican attempts to privatize Social Security, Democrats are pushing a private-sector savings idea of their own.

Democratic leaders in the House are floating plans to contribute billions of federal dollars to the individual 401(k) plans and similar accounts that corporate America has already made widely popular.

Part of a Democratic proposal known as AmeriSave could match up to the first $1,000 put into new and existing retirement accounts annually by low-income and middle-class workers, funded partly by reducing a current tax credit.

Though still in its early stages, the proposal amounts to a response to the Bush administration's efforts to divert some Social Security savings into private accounts, an idea that fell flat. [...]

[T]he Bush administration has increased funding to help the poorest save for education and housing with matching grants of federal money in "individual development accounts."

The question now is whether a bigger matching grant program could take the pressure off the Social Security system, which faces funding shortfalls.

Traditionally American retirees counted on Social Security payments coupled with private savings and company pension benefits. But lately large firms have dialed back significantly on their obligations, often by freezing pension plans or not offering them to new employees.

The hope is that private savings in tax-advantaged 401(k) plans and Individual Retirement Accounts will pull workers through. The median 401(k) account balance rose to $54,591 in 2005 from $24,371 in 1999, according to the Employee Benefit Research Institute in Washington.

The President would sign such a no-brainer faster than you can write "W," but why would Democrats pass a plan that bypasses people who don't already have individual accounts, otherwise known as "their base."

Posted by Orrin Judd at November 19, 2006 7:20 PM