Right now there is a problem which really needs to be addressed, which lies behind the major difficulty we will have in settling the massive debt that our government has accumulated. And it is a problem that will occur especially if libertarian solutions are attempted to just about any of our strains on the relationship of government to populace. I will elucidate this problem by firsty describing my own personal history in the 1980s and 1990s.
In the late 1970s and 1980s, and even into the very early 1990s, I was, perhaps not rich, but financially comfortable. Not in the league of a Mitt Romney; not even in the league of your typical corporate executive; but doing well enough that I could travel to Europe, Australia, and Japan for nice vacations. I could still, too, save money for future needs, and I did. But when they invented the concept of the Individual Retirement Account, the IRAs you still hear banks and such institutions pushing, I did a calculation. You could not (still cannot today) withdraw money from such an account before age 59½ and that was, for me, a long way off in the 1970s and 1980s; I would not turn 59½ until 2002!
So during this period, I opted for the flexibility of investing my money in more normal investments — it meant I had to pay taxes, but I could take the money out without the early withdrawal penalties that IRAs involved. I figured that when I turned 50, more or less, would be the time to think about opening up an IRA.
But a funny thing happened on the way to age 50 — or really, just after I had my 50th birthday — in 1992, Bill Clinton was elected President. You have to understand: the reason I was doing well financially in the 1970s, 1980s, and into the early 1990s was that I was working for companies that were contractors with Government — mostly space and defense-related contracts (not exclusively, but overwhelmingly more than anything else). And in particular, the job I had in 1992 was funded out of the Strategic Defense Initiative program (nicknamed “Star Wars”). It wasn't really military, but it was funded by the military on the premise that the scientific instruments we were supporting could be used to search for such threats as incoming missiles. Bill Clinton had campaigned on a promise to end the SDI program — and though he didn't immediately do so, by 1994 I was unemployed.
And I was still unemployed four years later, in 1998. And I could scarcely think of starting an IRA; I was drawing on all the money I'd invested before that, and when my mother died in 1996, on the inheritance as well. I am glad I had not put the money into a form where I could not take it out until 2002; I needed it then and there.
From 1998 to 2006, I managed to do some work, though some of the time I was unemployed, and even when I was employed, a lot of it was part-time work, that would not have paid for an apartment in this county. From 2000 to 2006, I was living in homeless shelters. In 2006, the job that I had then closed its office. Rather than look for work then, at age 64, I realized that I could make more money in Social Security retirement benefits than I was making on that job — actually, quite a lot more — so I retired. I was able to move out of the shelter only then.
Now, I depend on my Social Security benefits. Perhaps, if I had put the money that was withheld for Social Security into a different investment, I might be making more money from that investment. I don't know; I was not given that opportunity. But the point is that at any point in time, such as now, there are people who have paid money into Social Security, and don't have that money in any investment account. Any plan to phase out Social Security is going to hurt these people. And nobody has presented a plan that addresses this difficulty. Even when they say that everyone over age 55, say, will be guaranteed a Social Security benefit comparable to what the status quo provides, what about someone who is 54?
And it's not just Social Security. People have made economic decisions based on the Government providing certain benefits. They have not put aside their own money to provide for these contingencies, because it has been reasonable to plan that the Government will continue to provide what it has provided. And it's not being foolish to do this: nobody knows the future, but these people have been sold on the promise that these benefits will come to them. Now what?
I admit I have questions, but not answers. But what are the answers to these questions?
In the late 1970s and 1980s, and even into the very early 1990s, I was, perhaps not rich, but financially comfortable. Not in the league of a Mitt Romney; not even in the league of your typical corporate executive; but doing well enough that I could travel to Europe, Australia, and Japan for nice vacations. I could still, too, save money for future needs, and I did. But when they invented the concept of the Individual Retirement Account, the IRAs you still hear banks and such institutions pushing, I did a calculation. You could not (still cannot today) withdraw money from such an account before age 59½ and that was, for me, a long way off in the 1970s and 1980s; I would not turn 59½ until 2002!
So during this period, I opted for the flexibility of investing my money in more normal investments — it meant I had to pay taxes, but I could take the money out without the early withdrawal penalties that IRAs involved. I figured that when I turned 50, more or less, would be the time to think about opening up an IRA.
But a funny thing happened on the way to age 50 — or really, just after I had my 50th birthday — in 1992, Bill Clinton was elected President. You have to understand: the reason I was doing well financially in the 1970s, 1980s, and into the early 1990s was that I was working for companies that were contractors with Government — mostly space and defense-related contracts (not exclusively, but overwhelmingly more than anything else). And in particular, the job I had in 1992 was funded out of the Strategic Defense Initiative program (nicknamed “Star Wars”). It wasn't really military, but it was funded by the military on the premise that the scientific instruments we were supporting could be used to search for such threats as incoming missiles. Bill Clinton had campaigned on a promise to end the SDI program — and though he didn't immediately do so, by 1994 I was unemployed.
And I was still unemployed four years later, in 1998. And I could scarcely think of starting an IRA; I was drawing on all the money I'd invested before that, and when my mother died in 1996, on the inheritance as well. I am glad I had not put the money into a form where I could not take it out until 2002; I needed it then and there.
From 1998 to 2006, I managed to do some work, though some of the time I was unemployed, and even when I was employed, a lot of it was part-time work, that would not have paid for an apartment in this county. From 2000 to 2006, I was living in homeless shelters. In 2006, the job that I had then closed its office. Rather than look for work then, at age 64, I realized that I could make more money in Social Security retirement benefits than I was making on that job — actually, quite a lot more — so I retired. I was able to move out of the shelter only then.
Now, I depend on my Social Security benefits. Perhaps, if I had put the money that was withheld for Social Security into a different investment, I might be making more money from that investment. I don't know; I was not given that opportunity. But the point is that at any point in time, such as now, there are people who have paid money into Social Security, and don't have that money in any investment account. Any plan to phase out Social Security is going to hurt these people. And nobody has presented a plan that addresses this difficulty. Even when they say that everyone over age 55, say, will be guaranteed a Social Security benefit comparable to what the status quo provides, what about someone who is 54?
And it's not just Social Security. People have made economic decisions based on the Government providing certain benefits. They have not put aside their own money to provide for these contingencies, because it has been reasonable to plan that the Government will continue to provide what it has provided. And it's not being foolish to do this: nobody knows the future, but these people have been sold on the promise that these benefits will come to them. Now what?
I admit I have questions, but not answers. But what are the answers to these questions?
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