Big government seeks to replace private retirement industry

Sen Doug Whitsett

by Sen. Doug Whitsett

The recent Democratic presidential debate confirmed long-held suspicions regarding that Party’s apparent antipathy towards the free market principles upon which this great nation was founded. Regrettably, Oregon’s self-styled “progressive” leadership has been all too eager to be at the forefront of many of these failed big government policies. They appear to particularly favor programs that attempt to eliminate the private sector and impose government-sanctioned monopolies by force and edict.

Perhaps the most salient example of this interference with private sector industry was the 2010 passage of the controversial Patient Protection and Affordable Care Act, commonly known as “Obamacare.” Democrats in the U.S. House and Senate eagerly voted to enact the 1000-plus page bill on a strict party-line vote.

Most Americans would consider it unconscionable for their elected representative to knowingly and deliberately vote to enact a law without learning how it will affect their constituents. Yet many Congressional Democrats voted to enact the law that affects roughly one-fifth of the country’s economy without reading it. Then-House Speaker Nancy Pelosi (D-San Francisco) famously stated that “we have to pass the bill so that you can see what is in it.”

Oregon was first in line for this grandiose experiment. It wasted a monstrous $300 million on a website for the state health care exchange that made our state a national laughingstock.

The website admittedly never signed-up a single person for private insurance coverage. The combined cost of replacing the failed website to sign-up private sector and Medicaid participants will cost in excess of $100 million more.

But the worst impacts of this folly are yet to be felt by our state’s taxpayers. When the Legislature convenes for its 2017 session, the Oregon Health Authority will face tremendous budgetary shortfalls in the cash needed to fund the enormous Medicaid expansion made possible through the Affordable Care Act. Although federal funds have thus far bolstered the system, that funding will be gradually phased out starting next year. Oregonians will be required to make up the difference, and to say the least, it will be costly.

Having already intruded into health care, progressive Democrats at the state and federal level are now hoping to do the same with regards to private retirement savings.

A recent Wall Street Journal editorial details a new rule being promoted by the U.S. Department of Labor that “could more than double the cost of investment advice for many savers.” Under the new rule, savers rolling money from a 401K system into an Individual Retirement Account could only be advised by people acting in their “best interests” as fiduciaries. The addition of seemingly simple words can create significant changes.

Brokers are currently paid on commission while fiduciaries receive a fixed percentage of their clients’ assets. The commission model generally costs consumers about 0.5 percent of their assets while the fee-based approach generally takes around 1.1 percent, in addition to other fund expenses. What this means in plain language is the model being sought by President Obama will cost investors more than twice as much and will also deprive them of many of the options they currently enjoy under the existing system.

Obama called on the Labor Department to propose the rules by the end of the year, in a speech made last July to the White House Conference of Aging. The rule is being created under the auspices of providing a clear path forward for states to create retirement savings programs. Several states, including Oregon, have passed legislation to do exactly that.

Oregon once again appears to have volunteered to be a testing ground for a risky federal concept that may have unintended consequences for the same people it purportedly is aimed at helping. Moreover, it appears to be overtly attempting to supplant the state’s private sector retirement savings industry with a state government-operated monopoly.

The Wall Street Journal editorial states that the proposed Labor Department rule will ultimately end up “harming a law-abiding industry, making services more costly to the consumers it claims to be helping, and then encouraging them to become dependent on government programs that create new risks for taxpayers.” It also states that the Department will place the newfound fiduciary burden created by its policy changes on private competitors, and that Obama is helping state governments “grab a share of this market.”

In a previous column, I warned about the potential pitfalls of this concept and shared concerns about the true motivations of its proponents. Having already placed the health care industry in the controlling clutches of big government, liberal Democrats are attempting to do the same with the nation’s energy sector, under the guise of saving the environment. They are now working to add private retirement to the list of industries that the State will regulate out of existence and replace with another government-sanctioned monopoly.

Our next presidential election is just over a year away. Americans will decide if the eight years of disastrous economic policies pursued by the Obama administration should continue, or be replaced with free market principles. My hope is that we choose wisely, before we run out of industries for “progressive” liberals to take over through more big government mandates.

Senator Doug Whitsett is the Republican state senator representing Senate District 28 – Klamath Falls