Need an example? How about a bankrupt public pension system that amounts to about 150 Enrons.............
The pension tsunami - aka the incessant need for liberal-run unions to force governments to make promises that cannot possibly be met - is on its way. Just this morning I wrote a post regarding the pension problem in Michigan (Michigan Pension System $50 Billion In The Hole, Healthcare Liablity Only 1.9% Funded. Detroit Free Press Finds Silver Lining: "On the bright side, it's worse elsewhere"). On the heels of that came this article about other states being in similar dire straits. From Reuters via memeorandum (based on results from a Pew research via Instapundit): U.S. state pension funds have $1 trillion shortfall: PewU.S. states face a total shortfall of at least $1 trillion in their funds for employees' pensions and retirement benefits, and their financial problems are quickly mounting, according to a report released by the Pew Center on the States on Thursday.Ouch!
Illinois is in the worst shape, with only 54 percent of its pension obligations funded, according to the report, which looked at fiscal year 2008.
Because the analysis did not encompass the final six months of calendar year 2008 -- most states' fiscal year's end during the summer -- it does not include the market downturn that devastated many funds' investment portfolios.It's not the underfunding that was irresponsible, but rather the fact that such dinosaur programs such as pensions exist at all in this day and age. All public employees need to be on defined contribution plans like 401 (k)s which the private sector has switched over to."The funding gap will likely increase when the more than 25 percent loss states took in calendar year 2008 is factored in," the report said.
Regardless of stock market fluctuations, pension funds were destined to fall down a budget hole, the non-profit research center found.
"Over the last 10 years, many states have shortchanged pension plans in good times and bad," said Susan Urahn, the center's managing director, who called the beginning of the century a "decade of irresponsibility."States did not save for the future and manage costs well, said Urahn. She also cautioned that the 8 percent return on investments most states typically expect may need to be lowered.Gee - ya think? How about don't make promises you cannot keep? These programs are inherently unsustainable. Promising people a salary when they no longer work for the taxpayers was always a disaster in the making.
If these people were in the private sector they'd be facing federal corruption and/or fraud charges. Because they work in government, we get to call them governors, representatives, senators, etc.
More at blogprof..........
1 comment:
Look at any government in trouble (fed,city,state) and you will see a public pension program that is under funded.
In almost every case these funds must be sustained with borrowed money. If a private pension were funded this way, the manager of the fund would be sent to jail for 30 years (or 150 years in Madoff's case).
The public plans are paying benefits out of future receipts, not past receipts (like our 401K). Had Social Security and other public funds benefits been paid solely out of prior contributions, we would have no public debt! But politicians who have died long ago made promises in that day to be made good on by children who had not been born yet. Politicians of today are now making bigger promises that must be kept by my children's children.
And we can see the writing on the wall. The answer that the politicians will come up with will be what they always come up with: Curtail spending? NO. Become more efficient? NO. Raise tax rates? Absolutely!
Notice I said rates, not revenue. That's because the politicians are not even creative enough to see that an oppessive rate will ultimately reduce revenue. But then to to leftist freaks in charge now, revenue is not the issue. Taking down the private sector is the goal; much like cancer takes down the body it lives in; resulting in it's own death.
At some point there will be a breakdown. Will the public pension beneficiaries think that their retirment pension ponzi scheme is a great idea when their monthy benefit check bounces? It will happen; The sooner the better because the longer it takes, the harder the fall.
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