Going forward, public sector pensions should be defined contribution. So should Social Security. How states and cities with massive unfunded liabilities deal with the legacy problem is a separate question. I would agree with you that there should be no bailouts. That implies bankruptcies and forced writedowns if the unions won't come to the table and bargain constructively before hitting the ditch. Right now, the unions still seem to be banking on an eventual bailout. There will probably have to be some painful failures to sober them up. Trump is likely to face a similar point of decision on a major municipality or state. He will need to stand tough.
“How states and cities with massive unfunded liabilities deal with the legacy problem is a separate question.”
That is the main problem. And it’s obviously gotten so bad it’s reached ‘jumped the shark’ proportions.
The proper solution will look akin to what I suggested however extremely painful it is to those affected gov workers.
Public servants need to learn their place.