Is Jonathan Gruber — the MIT economist who seemingly dropped out of public view after he was caught on camera bragging about how he and other Obamacare architects misled the American public — now advising the Department of Labor?
No evidence indicates that he is, but the authors of DOL’s sweeping new seven-part group of regulations that would sharply curtail choices of assets and investment strategies in 401(k)s, IRAs, and other savings plans appear to share Gruber’s mindset on the “stupidity of the American voter” (a revelation that Rich Lowry aptly described as “an unvarnished look into the progressive mind, which . . . favors indirect taxes and impositions on the American public so their costs can be hidden, and has a dim view of the average American”).
Now President Obama and Secretary of Labor Tom Perez are advancing a new regulatory and hidden-tax scheme while claiming to protect average Americans’ retirement savings from unscrupulous financial professionals. The proposed “fiduciary rule” would restrict the investment choices of holders of 401(k)s, IRAs, health savings accounts, and Coverdell education accounts.
In a speech to AARP, Obama proclaimed:
If you are working hard, if you’re putting away money, if you’re sacrificing that new car or that vacation so that you can build a nest egg for later, you should have the peace of mind of knowing that the advice you’re getting for investing those dollars is sound, that your investments are protected.
Similarly, a DOL “fact sheet” describes the rule as “protecting investors from backdoor payments and hidden fees in retirement investment advice.” The sinister-sounding “backdoor payments” actually refers to a longstanding practice of compensation to brokers from many mutual funds and annuities. This practice is disclosed to investors and enables brokers to charge them less because of the additional compensation that brokers receive.
Yet upon further reading, the DOL rule seems premised on the Gruberite notion that American investors need protection from their own stupidity. According to page 4 of the rule:
[I]ndividual retirement investors have much greater responsibility for directing their own investments, but they seldom have the training or specialized expertise necessary to prudently manage retirement assets on their own.
Therefore, they “need guidance on how to manage their savings to achieve a secure retirement.”
Can’t savers who feel they need this guidance seek it out from a variety of investment professionals under a system with strong disclosure and anti-fraud rules? Absolutely not, says the Obama administration.