Is This the Worst McCain Statement Ever?

An emailer sends:

Under the emergency measure I propose, we will also cut the tax rate for withdrawals from tax-preferred retirement accounts to ten percent.... It is essential that we avoid an exodus of capital from the market. Obama yesterday offered up a proposal that would have the effect of encouraging early withdrawal of funds from 401(k) accounts, by suspending penalties through 2009. This is an invitation to capital flight, and therefore to continued instability in the market, at a moment when exactly the opposite is needed...

Is this the worst McCain statement ever? What does it mean? What could it mean?

Comments

[john]

I made several attempts at a comment, but all of them fell far short of what that statement deserved, so I gave up.

[Phil]

What?

[max]

"Under the emergency measure I propose, we will also cut the tax rate for withdrawals from tax-preferred retirement accounts to ten percent...."

So... old people can get their money out?

"It is essential that we avoid an exodus of capital from the market."

Unless the capital exiting is controlled by old people?

"Obama yesterday offered up a proposal that would have the effect of encouraging early withdrawal of funds from 401(k) accounts, by suspending penalties through 2009. This is an invitation to capital flight, and therefore to continued instability in the market,

I take it instability is a synonym for lower prices, yes?

"at a moment when exactly the opposite is needed..."

I would take it you mean you want higher stock prices, yes?

"Is this the worst McCain statement ever? What does it mean? What could it mean?"

I think translates as: 'You whippersnappers keep your damn money in the market while my old person self gets my money out. You little creeps won't going to vote for me anyways... I mean, you were going to vote for the you-know-what. Traitors!'

max
['Gimme my money, I'm OLD!']

[MouseJunior]

But ... but ... but ...

*blam*

Excuse me, I need to go find a replacement brain. This one just exploded.

[Cathy]

I did question the wisdom of Obama's proposal (and I say that as an Obama supporter) for the same reason McCain cites: that it encourages liquidity to leave the market. But then (being an Obama supporter) I tried to rationalize it: in the big scheme of things it may not be that much money. $10k over a little over a year isn't that much, but it may help struggling people get by. Or at least feel like they're going to get by, which may be as important as anything.

I also wonder how much money would really come out of the stock market if people pulled that kind of sum out. How many would bother? And would it really amount to enough to register on the markets?

I don't pose that question rhetorically -- I'm curious, and I think the answer may bear on which candidate is right about it.

[rea]

Ha Palin converted McCain to the Pentacostal Church, or something? Because he's talking in tongues . . .

[David Margolies]

I took it as people over 59 get a tax cut but (maybe) won't take more than planned and perhaps may take less (since taxes are lower) while Obama's plan allows all holders (not just over 59) to remove capital. But weak, since only 10K per person.

[PaulC]

I'm not entirely sure what to make of the statement, though it seems contradictory.

But what I don't understand is that most people can already move their 401(k) funds out of stocks. Every 401(k) I ever had included a bond fund, and some have money market funds. While I don't see the wisdom of allowing early withdrawals right now, that doesn't have a lot to do with capital flight, which is easily achieved under existing 401(k) rules.

[David]

Doesn't McCain propose a temporary reduction of the capital gains tax? I'm not even asking for good policy from him anymore, just some consistency would be nice.

[bigTom]

PaulC is of course correct, that one can lower or eliminate his exposure to stocks without taking money out of most 401K plans. Anecdotal evidence (blog comments) suggests that a significant part of the population doesn't understand this, and feel compelled to withdraw all their money now, while they still have some.

Don't both candidates proposals make it easier for some/all of the population to take investment money (401K) and spend it? Both would increase capital flight. Some who don't need the money immediately, but have only stocks in their 401Ks, might want the flexibility to not take out a planned distribution, as it would entail selling stock at the current depressed price. Allowing deferral -or rescheduling of the rate of 401Ks, might be slightly capital flight negative.

[Ken Houghton]

What you're ignoring is that all of the people who take money out of their 401(k)s will move it to Canada, the UK, or some other solvent country.

Someone needs to check all of Cindy McCain's tax returns for the past few years as see how much of this SHE has already done.