In October 2008, just 22 days before the presidential election, Barak Obama released his “Rescue Plan for the Middle Class.” The plan contained several promises designed to help middle-class workers weather the economic crisis.
One promise addressed the amounts that workers had saved in their 401(k) accounts. Obama proposed allowing workers to withdraw up to $10,000 from their 401(k) accounts without penalty. Note that current IRS rules demand a 10% penalty to be paid if the worker is under age 59 1/2. This penalty is in addition to federal income tax.
During a speech in Ohio, Obama said, “I want to give credit where credit is due, I welcome Sen. McCain’s proposal to waive the rules that currently force our seniors to withdraw from their 401(k)s even when the market is bad . . . I think that’s a good idea, but I think we need to do even more. Since so many Americans will be struggling to pay the bills over the next year, I propose that we allow every family to withdraw up to 15% from their IRA or 401(k) — up to a maximum of $10,000 — without any fine or penalty through 2009.”
After being elected, Obama’s campaign promise remained unfulfilled while millions of workers emptied out their 401(k) accounts to avoid foreclosure or pay their children’s college tuition during the economic collapse. It remained unfulfilled as the federal government extracted their pound of flesh in the form of an early withdrawal penalty on each transaction. It remained unfulfilled even though he had a Democrat majority in Congress willing to do his bidding. It remains unfulfilled today as Democrat activists claim that 401(k) accounts are better off now than four years ago.
The harm resulting from Obama’s unfulfilled campaign promise cannot be overstated. By refusing to use his Democrat majority in Congress to eliminate this 401(k) penalty, Obama increased the hardship on working Americans.
Even worse, he allowed the federal government to profit from that hardship.
Yet again, we have unfulfilled promises and cynical logic from a president that remains out of touch with the middle class.
For further detail on all of the promises: