Posted on 02/16/2011 3:28:11 PM PST by Kaslin
State bankruptcy would create more trouble than it is worth, but the proposal reflects the realization that several states are on pace to run out of money to pay their pensions in the near future.
Because they report pension obligations using erroneous return assumptions that do not fit the risk characteristics of their liabilities, state governments have been able to mask their financial shortfalls for a long time.
Thanks to analysis by the Mercatus Center, we know that in 2009 New Jersey's unfunded liability was approximately $173 billion rather than the $45 billion the state reported.
Likewise, Robert Novy-Marx of the University of Rochester and Joshua Rauh of Northwestern calculated that Illinois' deficit that year was $167 billion rather than $85 billion.
This has gotten the attention of Congress, where on Monday a House Judiciary Committee subcommittee held a hearing on "The Role of Public Employee Pensions in Contributing to State Insolvency and the Possibility of a State Bankruptcy Chapter" with Prof. Rauh as the star witness.
This was triggered in part by a recent Los Angeles Times op-ed by Jeb Bush and Newt Gingrich, who wrote that state bankruptcy would be "a fair, orderly, predictable and lawful approach to help struggling state governments address their financial challenges without resorting to wasteful bailouts."
(Excerpt) Read more at investors.com ...
I know several teachers here in California. Boy would they ever go ape-sh** if they lost their PERS. I’d feel bad for a few of them, but I’d laugh aloud at 90% of them.
The editorial headline was better than the contents.
What, they’d actually trim existing pensions rather then screwing over new hires?
Be still my heart.
“States will find it more worthwhile to accord themselves relief via pension reform than by throwing in the towel and declaring bankruptcy at the mercy of the federal government.” - from the article.
I thought it was a good one.
The pensioners were promised more than the government can provide, just like Social Security. What will it take for people to realize that the government can’t be trusted, and the answer isn’t more government?
The problem is GM...
Contract Law took it on the chin, all the way back to Magna Carta IMHO with the GM deal, and a whole new precident was set, of which the Obamatons may use as a new model.
So how and when does Obama get his SEIU minions out and begin civil unrest and force a Federal Solution like GM where the bond holders do not take it on the chin but another anatomical part, and the Unions remain "whole"...
Well, if SEIU or AFL/CIO or UAW or whatever union thug wants a war, they should be considered a target rich environment. The thugs are used to dishing it out, but they’re not used to having their heads handed back to them on a platter. Enjoy, y’all.
We cannot allow the federal government to borrow our money to bail out failed states..that would conclude ultimate power for them, what dies dies..
I know for a fact blood will flow if they f*%$ with my pension.
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