Some of us have been alerting people to the out of control public employee pensions for years. One byproduct of the recent economic implosions in Illinois and Washington, D.C., is that more attention is finally being given to this very serious problem.
As a public service, here are a few good articles I’ve come across recently (short excerpts included):
Pew Center: The cost of the trillion-dollar shortfall, which will be paid over the coming decades, is about $8,800 for each American household. The study did not include many city, county and municipal pension plans, which are thought to have similar underfunding…
“We have a significant problem now, but it’s a problem that can be solved by taking relatively modest steps,” said Susan K. Urahn, the center’s managing director. “If they don’t do anything, if they wait, eventually they will have an unmanageable crisis on their hands.”
While the Illinois Constitution protects vested pension benefits, that promise, like all the state’s obligations, is only as good as its ability to pay. The Civic Federation warned lawmakers last fall that “there is mounting evidence that a judge could find the state is already insolvent. If the state is found to be insolvent under the classical cash-flow definition of insolvency, which is ‘the inability to pay debts as they come due,’ it is not only the pension rights of non-vested employees that will be in jeopardy. All the obligations of the state, whether vested or not, will be competing for funding with the other essential responsibilities of state government. Even vested pension rights are jeopardized when a government is insolvent.”
“The private sector is now rethinking its unrealistic optimism. It has to, since its asset valuations have tumbled. Payrolls are shrinking. Benefits are being cut back. Both management and workers are accepting that they have to work harder for less. Government is upping the pressure by hiking taxes, requiring banks to raise more capital, and demanding more-objective risk reporting.
But the government is not applying these lessons to itself. On the contrary, the public sector’s tendency to discount the future too optimistically is growing. It is pledging ever more payoffs to its employees and wards and concealing more than ever their true costs, even as private-sector incomes fall.”
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“The mathematical impossibility of paying off the overly rich pensions of public sector employees is hitting home in state after state. The battle over dwindling financial resources will pit taxpayers against the unions; once the citizenry gets wind of the outrageous defined-benefit pension plans crafted by SEIU bosses, there will be no containing the rage.”
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“Yes, rank has its privileges, and it’s clear that government workers have a rank above the rest of us.”
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“Without an overhaul of the current, unsustainable pension system, Illinois taxpayers will continue to be burdened by substantially higher taxes to bail out legislators and special interests for their imprudent policies.”
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