Government

State fiscal problems at the national level. Is there a difference?

For years I have been writing about the state of public pensions among the states. Over those years the situation has only gotten worse and the unfunded liabilities have grown. Fixing it should anyone seriously try requires cutting benefit promises and/or raising taxes or cutting many other state services. This is mostly a blue state problem. Today the three worst states are California, Illinois and NJ. Guess what they have in common?

No, it’s not empathy for public servants. It’s politicians in bed with public unions following irresponsible fiscal policies for votes. It’s making grand promises with no way to pay for them and not telling taxpayers the truth about the long-term costs.

I‘m tempted to extend this sceanario to a national level so I will.

Consider all the new proposals being made by the American political left and then consider the state of several government trust funds including SS and Medicare which have been allowed to decline to dangerous levels and to accumulate hundreds of trillions of dollars in unfunded liabilities. Do we have any reason to believe it will be different with new and expanded programs?

Is this issue unique to one political party No, there are surely irresponsible politicians on all sides. But to be honest there are those who have a unique ability to appear sympathetic, to appear fighting for the underdog, to make their ideas necessary for social justice, to create the impression only other people will carry the cost.

In reality being dishonest about costs and funding merely shifts the burden to the next generation which is what is happening now… and still we have those who want to expand SS benefits even before making it solvent let alone sustainable.

“The Illi­nois cri­sis is so se­vere that pay­ing the promised pen­sions would re­quire a 30-year prop­erty-tax in­crease that would cost the me­dian Chicago home-owner $2,000 a year,ac­cord­ing to a study from three econ­o­mists at the Chicago Fed. Not a penny of that added tax money would pay for bet­ter schools, po­lice, roads, hos­pi­tals or li­braries. Al­ready, Illi­nois’s prop­erty taxes are among the country’s high­est. Siurce: WSJ 7-11-18”

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4 replies »

  1. How did I end up living in California during my senior year’s and why have two of my good friends who were born in California end up moving to the Philippines and Guatemala in their senior years?
    How did my sister who also grew up with me and Missouri end up moving across the state line to Illinois in her senior year’s and end up with what looks like a higher standard of living ?

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  2. The politicians have sold us out for the vote. Now all the NJ Lottery money is going to go to paying the pensions. I worked almost 40 years to earn my pension which is half of the pension my friends son received as a New Brunswick policemen after 25 years. Forget the health insurance that is the best in the country. I’m envious. In Bonita Springs Florida the firemen retire at 110% of their last salary. The reason it is so high is they said they will not take COLA every year. In Cape Coral they added a charge onto everyone’s electric bill to pay for fire services. (salary-pensions)
    Dick keep up the good work its not falling on deaf ears.

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  3. I read an article in the Wall Street Journal at least 10 years ago about a small town somewhere in New England. They had a lot of older workers who were ready to retire and they weren’t sure they could pay the benefits that had been promised.

    They hired a consulting group to assess the situation and were shocked at the result. They were told that they either needed to lay off 50% of their workers or double their taxes in order to pay the benefits that had been promised to workers and their spouses.

    The article went on to say that there was not a single government entity in the ENTIRE COUNTRY; federal, state, county, city, town, etc. that was NOT in a similar situation. That article was OVER 10 YEARS AGO and still today almost no one is saying anything about it and even worse, doing anyrting about it..

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  4. Something has just happen in New Jersey with the Police & Firemen’s Pension. The State gave some or all of the control to the unions in June. I do not know the details or the facts of exactly what the law did to the pension but I can already predict the results.

    My retired neighbor is excited that maybe he will get a COLA raise in his pension. He told me that he has not gotten a COLA in three years but then again his old co-workers haven’t gotten a raise either. I told him that in my private pension plan, I’ll never a get a COLA and I have to live on the same monthly amount until I die so I planned for that before retiring.

    He is hoping that the $700 million that the State gave to Wall Street for managing the fund can now be given to them.

    My predictions are:
    1) The unions pension managers will vote themselves pension increases.
    2) The unions will mismanage the funds and find new Wall Street managers to steal their money.
    3) The pension will remain underfunded because the unions will not cut benefits or raise contribution from members.
    4) When the fund fails, the State will say not our problem, you have control. The State will blame the unions until the Democrats bail them out and cost the taxpayers more money.

    I can see this happening in other states and at the federal level. Make the union happy by giving them control and then having to bail them out to retain the union votes. It not a union thing but a human nature thing. Look at AARP wanting to increase Medicare benefits and Social Security benefits instead of asking to cut benefits to save the system for today’s children.

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