In today’s world, the pursuit of disgrace knows no bounds. Everyone has the chance to behave foolishly, regardless of their status. It’s a rare individual who reaches the pinnacle of public office and manages to retain their dignity. More often than not, they take center stage only to act like complete fools.
For instance, in California, the revelations about the former Governor Schwarzenegger’s secret love child with the family maid made headlines in the Los Angeles Times this week. It’s a rather amusing situation, to say the least.
Even more entertaining were the front-page images of the scruffy Dominique Strauss-Kahn, the former head of the International Monetary Fund and presumed next President of France, being escorted into a New York courthouse for alleged sexual crimes against a hotel maid. What a remarkable week! You’d be hard-pressed to find a Hollywood script more outrageous than this.
While we can’t dismiss the comedic potential of this situation, nothing could cause as much uproar in Paris as seeing France’s beloved figure in handcuffs. For this reason alone, it’s been nothing short of priceless entertainment.
A Laugh That Carries a Deeper Message
We mention these scandals not solely for comedic relief but to highlight an important lesson. In the whimsical arena where finance and politics collide, there’s no shortage of unscrupulous individuals who ruin the landscape while pretending to serve the public interest. How else can we explain the blatant appropriations happening within the U.S. Treasury?
This past Monday, as we’ve long anticipated, the government surpassed the debt ceiling. The United States officially faces insolvency and is unable to borrow money. Rather than tackling the deficit head-on and reducing the national debt, however, the government is intent on continuing its extravagant spending.
To finance this, they are undertaking measures that could make even the most corrupt blush and would infuriate any honest citizen. The Treasury Department has decided to withdraw funds from public sector workers’ retirement accounts in order to maintain its lavish expenditures.
As reported by the Washington Post, “The Obama administration will begin to tap federal retiree programs to help fund operations after the government lost its ability Monday to borrow more money from the public, adding urgency to efforts in Washington to craft a compromise over the debt.”
Treasury Secretary Timothy Geithner stated, “Federal retirees and employees will be unaffected by these actions.” He assures that the funds will be replenished once the debt ceiling is raised.
The Illusion of Guaranteed Retirement Accounts
Clearly, Geithner’s actions are questionable at best. He’s treating public sector retirement accounts much like Congress did with Social Security years ago, effectively creating a government piggy bank. And this is just the beginning.
If you think your 401(k) is yours, think again. It’s a target for Uncle Sam, who’s eager to dip into it to finance more spending. In fact, your money will be spent for what the government deems is your own good. What do we mean by that?
We’re referring to Guaranteed Retirement Accounts (GRAs). No joke—Vice President Joe Biden and the White House Task Force on the Middle Class released a report in February titled the Annual Report on the Middle Class. In Chapter 3, “Safe Investment Choices,” it discusses the concept of GRAs, which would allow workers a straightforward way to invest a portion of their retirement savings in a government-controlled account that is insulated from inflation and market risk, promising a guaranteed real return above inflation in some proposed versions.
An account free from inflation and market risk is one that the federal government entirely controls. Essentially, your retirement savings would be nationalized, and your paycheck contributions would find their way to Washington, much like with Social Security.
This is the troubling terrain of GRAs in a compromised republic—a place where irrational financial seizures rob industrious individuals of their hard-earned savings while unscrupulous leaders masquerade as saviors.
Sincerely,
MN Gordon
for Economic Prism
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