Illinois public pensions: No pension plan is too big to fail

As I’ve mentioned the past few days, the more you learn about the Illinois pension systems the more you realize the time for compromise has past. The price for the willful ignorance on the part of current and future pensioners about how the system has been managed must be paid only by themselves.

However, R. Eden Martin writes in the Wall Street Journal:

A better approach would be for Washington to offer states support coupled with sustained pressure over the next decade. Participation by each state would be voluntary.

Martin goes on to detail ways he thinks this could work — and this is why I decided to spend four columns addressing his two essays. Friends, it’s not easy to be gentle when addressing talk like this. With all due respect, people making suggestions like this still don’t quite grasp that our local, state and federal governments went out of control. This kind of idea-positing from a would-be reformer is Exhibit A of such misunderstanding.

I stress what I said in the previous installments: Government needs to get out of the pension business for government employees. Taxpayers have had enough.

Martin writes:

Saddling states with billions in pension-fund debt is unattractive, but so is leaving retirees who are not under Social Security (like Illinois teachers and most Chicago workers) with busted pensions and no relief.

I would encourage Martin’s organization to hire Bill Zettler and pay him at least double whatever the highest person is currently being paid so their group can start to be a part of a solution based on good mathematics and honesty.

Taxpayers should be left out of the equation. They’ve got better things to do with their money. The over-paid and over-pensioned public sector employees need to work out their problems on their own. Calculators are inexpensive. I don’t even need to turn mine on to outline a few of the necessary solutions (Bill Zettler has already done the work):

  • Tax dollar paid employees need to contribute a lot more to their own fund.
  • The pay of these government employees needs to be controlled.
  • And no pension payment should ever be made to a retiree if the actuaries can’t justify it by being honest about how much money is in the fund and what it will require to make the fund sustainable.

Martin criticizes the bankruptcy path. I think he’s wrong to do so. The bankruptcy laws were established originally as a way to get out of difficult circumstances. If something can’t be saved, it shouldn’t be saved. If a bill can’t be paid, other forms of punishment or restitution are in order.

The state pension debacle belongs solely to state employees. State taxpayers have done enough — in fact, they’ve already done too much.

I would encourage all Illinois voters, taxpayers and would-be “reformers” to read Mr. Bill Zettler’s work on the topic. It’s time to get to a solution, not dilly-dally around by suggesting taxpayers need to do more.

No public pension plan is too big to fail.