Monty Pelerin
American Thinker
7/25/2011
The notion of government raiding personal retirement accounts for funds may seem extreme. Perhaps it shouldn’t. Other governments have done it. Argentina did in 2008. Ireland has indicated it might. The worsening financial crisis may eventually move other countries in that direction.
Surely the US would never do so.
Actually, there is little basis for assuming they would not and factual evidence they would. Here are three good reasons to believe they would:
- Financial Ratios The US financial ratios are arguably as bad as the weakest countries in Europe. Unlike Europe, the US government has shown no willingness to meaningfully cut government spending and/or balance the budget. Europe has signaled austerity programs, although time will determine whether they adhere to such programs.
- Rule of Law All modern governments believe they are above the law. They justify violation of the law on the grounds it is necessary for the “good of the nation.” The US government has frequently demonstrated that property rights should not stand in the way of public policy. Abuses of eminent domain are numerous. The automotive bailout was a flagrant example. Not only was the bailout without legal precedent, but US bankruptcy law was violated in order to reward unions at the expense of bondholders.
- Behavior Pattern The US government has a despicable record with regard to honoring retirement obligations. The government raided the Social Security trust fund so that politicians could spend at higher levels. That continuing raid put Social Security in a liquidity crisis that should not have occurred for another couple of decades. President Clinton and Congress reneged on the promise that Social Security benefits would never be taxed. Now Treasury Secretary Geithner routinely raids public pension plans in order to allow government to continue spending…
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