AMAC: The myRA is Illegal, Illogical, and will add to our Debt
Once again President Obama has passed legislation without Congressional approval. He simply issued a Presidential Memorandum directing the Treasury Secretary to issue a new regulation without the need for a law authorizing his action.
How could he justify doing that? By claiming that the myRA is really just a Roth IRA with investment in a new form of retirement bonds. Hidden inside the Regulation is a very dangerous section (think Obamacare death panels), section 347.5. This section permits a designee of the Secretary to “waive or modify any provision” of the Regulation subject to certain vague clauses. So not only do we have what could arguably be considered a new law, we have a law that can be completely waived or changed at the whim of the President.
While it appears the myRA was created to help people start saving more, it does not seem logical that the only investment permitted is to purchase Federal bonds paying a current interest rate of 1.5%. This is especially problematic when the present rate of inflation is 1.7%. That means the investor is being suckered into buying something that will lose value over time! Does someone in the administration still think the public is stupid? Is it so important to make sure the ever increasing government must be in control of the money that the well-being of the investor is not the primary consideration?
Lastly, where is the interest to be paid to the investor coming from? Investment companies and banks are able to pay investors with the gain they achieve from loaning money to others at a higher rate than they are obligated pay to their investors and depositors. Or, they make investments of their own that make a profit over the cost of the funds used in the investment.
The only way the government takes money in is to collect taxes or borrow money. If the taxes are not able to cover the cost of operation then government must borrow. Since the present financial condition of the U.S. Government is poor, we need to borrow money to pay our obligations. That means the U.S. Government will have to borrow the money to pay the interest on the myRAs, and that will increase our national debt.
Yes, there is a need for more savings, but the myRA is not the answer.