Estimated to be at a cost of $20 - $25 Billion dollars a year Hillary Clinton is proposing to fund up to $1000 into a 401K account for every American. Clinton has given up her plan to give every child $5000 at birth. From the Associated Press:

Clinton would create “American Retirement Accounts” in which everyone could put up to $5,000 annually in a 401(k) plan. The federal government would provide a tax cut to match 100 percent of the first $1,000 for anyone who makes less than $60,000 a year and 50 percent of the first $1,000 for those who make $60,000-$100,000.

Honestly? The $5000 account idea was probably the first major mistake of the Clinton campaign policy wise. I didn’t quite understand it when I first read about it and it seemed to gain no traction. Though I will say it is nice that she recognized it and moved on it is a sign that as Clinton moves to court more of the liberal wing of the party she is entering territory that is leaving her open.

This new plan, I have no idea what in the world is going on here. The tax incentive of a 401k plan is the 401k plan. You shouldn’t need to add an extra $1000 free for people. They are already getting a tax break on the 401k and in addition they receive Social Security.

Frankly this is a step in the moderate direction masked as a more liberal agenda. It is the first step into privatizing social security, it just isn’t called that and its just not seen as that. It is doubtful this will gain much traction but it introduces people into the idea of savings. However it would make MORE economic sense as far as I can tell to just allow a percentage of what people already pay into social security to be put into private accounts.

Why? Because this plan results in people shelling out more federal government money that will have to come from somewhere. Either spending less or taxing more. Guess what which will happen under a Clinton presidency. That’s right, taxing more. So we give a tax break to some people by taxing others with the idea that we will encourage savings. BUT we already give a tax break for saving into a 401k so the likelihood that this will result in more savings, well, its silly in my humble opinion.

All in all, this is just a silly and weird plan that I don’t quite understand.