Courtesy of Pam Martens.
President Obama Delivers His 2014 State of the Union Address
There’s only three ways to think about President Obama’s new plan for offering workers retirement accounts as he disclosed in his State of the Union speech last night.
(1) President Obama and Treasury Secretary Jack Lew have decided to get into the financial services business as a front for Wall Street;
(2) Wall Street has conned the President into bypassing Congress and launch its decades-long push to establish private accounts in the hope that these could eventually replace Social Security;
(3) The reason we know so little about the details of this plan is that they’re not pretty.
The new account is to be called MyRA and would be structured as a Roth IRA where contributions go in after-tax but earnings compound untaxed over time. But Roth IRAs already exist and can be opened at any number of banks and discount brokers (or Wall Street firms where fees are much higher). Charles Schwab, for example, has no fees to open or maintain the account with as little as a $1,000 deposit or $100 automatic monthly deposits. Fees to make individual trades do apply but are quite reasonable. For example, one can buy 100 shares of a blue chip stock on line for a set fee of $8.95 at Schwab. Those shares can be put on dividend reinvest in the Schwab account, where quarterly dividend payments from the stock buy additional shares automatically in the account, without further cost.
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