Continuing this review of R. Eden Martin’s two-in-one-day essays about the public pension problem, this column turns to his piece published in the Wall Street Journal.
Here is how R. Eden Martin begins his article: “Unfunded Public Pensions-the Next Quagmire”:
The next big issue on the national political horizon may be whether the federal government should bail out the many budget-strapped states and municipalities across the country, especially their overly generous and badly underfunded pension plans.
My home state of Illinois is in the deepest quagmire of all. We are essentially broke and getting by in the near term by borrowing and not paying our bills. Our longer-term problem is even more serious, as some of our pension plans may run out of money within about 10 years. Our unfunded pension obligations approach $80 billion, and our unfunded retiree health obligations add approximately $40 billion more.
His numbers are low, but that’s a discussion for a later time. Let’s define what a federal bailout is: It is borrowing money future generations will have to pay back.
Martin suggests there are three options available (I put them into bullet points):
- The first is to do nothing-in which case some pension plans will go bankrupt, retirees will suffer, and many local governments will face emergency cost-cutting and taxing scenarios that will drive out businesses and jobs.
- The second option is to yield to the pressures, especially from state officials and organized labor, for condition-free bailouts and loans.
- Finally, the feds could choose to pressure (“incentivize”) states and cities to straighten out their own affairs through loans to which they attach stringent conditions.
Martin writes, “Bailing out state pensions would be astronomically expensive.”
Uh, yes, and we don’t have the money. Taxpayers are already facing the burden of massive government debt and only irresponsible people talk about bailouts using mild language. Don’t get me wrong, the points R. Eden Martin makes in this article are fine. But a rise in pitch is required for two reasons.
One is that the immoral and irresponsible taxeaters will only be encouraged if our side uses only highbrow and “reasonable sounding” talk and a calm demeanor to discuss this latest effort to steal from future taxpayers.
Two is that the public is swimming in an era of informational flood-tide. If some loud noises aren’t made or some bright flares aren’t fired off, not enough people will see the seriousness of the crime attempting to be perpetuated.
Not enough people take in the big picture when it comes to the political and governmental arena. When you do, what you see is an oft-repeated tragedy that goes like this:
- The tax eaters, through sheer political power, amass things like high pay, big pensions, and generous benefit packages for themselves.
- The fact that paying for all of it is unsustainable and eventually makes the news.
- The political left calls on taxpayers, who don’t share in that pay, those pension or benefit plans, to ante up more money.
- The political right — or at minimum the would-be reform contingent, cedes ground in the debate before the negotiations even begin.
Friends, this is why local (especially school districts), state, and federal spending is out of control and the debt current and future taxpayers face is at the sort of levels usually seen in the Third World.
Up next: The conclusion.