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Obama’s National Retirement System

When President Obama’s election coincided with the Great Recession’s initial onslaught, many conservative voters feared a large-scale government take-over of almost everything imaginable. Their fears seemed justified as Obama took control of General Motors after they cut 15% of their workforce and reported a $15 billion loss.

Having been elected at the same time, I quickly learned that part of my duties was acting as a type of political therapist where people could voice their fears in a safe environment. People would call, vent and thank me for listening to many complaints that I had no elected authority to address. Much like Harry Potter uttering Voldemort, each person seemed better as if naming the fear out loud rendered it powerless.

We know better now having seen the havoc Obama has played with our healthcare system. We vocalized our fear of Obamacare early on. We elected a Republican majority to Congress in 2014 to repeal it but to no avail. The ill effects of Obamacare continue to swell and have even emboldened the trustees of Greenville’s own public county hospital system into open revolt against government oversight.

One particular fear from that time period was Obama’s intention to move 401(k) accounts and IRAs into a “National Retirement System” under federal government control. Liberals cried foul and insisted that these rumors were false. Obama had talked about requiring employers to offer automatic IRAs to employees but the funds would be held in the private financial sector and not by the government. The idea was forgotten until now.

This past November, the Department of Labor issued Interpretive Bulletin 2015-2 to facilitate state-based retirements systems for private employers. This bulletin was issued as directed by the White House in July and outlines examples of how state laws could be changed to allow individual states to compete directly with or replace private pension providers.

The bulletin discusses how states could require employers to offer automatic IRAs (Obama’s original idea) that are administered by the state. Other options include offering a state-run marketplace to connect employers with retirement plan providers that the government deems suitable.

States could offer their own proto-type retirement plan document that individual employers could adopt and the state would administer their plan. States could form a multiple-employer plan open to all employers in the state. The state would act as plan sponsor, plan fiduciary and plan administrator. Under this directive, states could establish most anything associated with retirement accounts including mandating employer participation and directing the money into state managed accounts.

This bulletin brings to mind a quote from Cormac McCarthy about the creative pitfalls of humans that could as easily be applied to laws and governments. He said man is “a creature that can do anything. Make a machine. And a machine to make the machine. And evil that can run itself a thousand years, no need to tend it.” Politics is full of such men.

Obama learned a valuable lesson from his healthcare fight. Instead of launching a “national retirement system” initiative that would surely be defeated in Congress, he made it a state level option. As more liberal states vote some variation of these options into place, privately controlled retirement funds become state controlled funds. No one knows what legal precedent or judicial activism will set the stage for a future federal takeover. Obama’s legacy seems set to run for a thousand years and no need to tend it.