Posted on 01/28/2011 2:40:57 PM PST by 92nina
As Baby Boomers begin to enter retirement, the reality of the threat that an estimated $3 trillion in underfunded pension liabilities poses to states’ financial futures and taxpayers is starting to set in with lawmakers and the public. An American Enterprise Institute study found states claim to be underreporting their unfunded public-employee pension liabilities by more than $2 trillion. In fact, more realistic estimates show that the unfunded pension liability in California alone exceeds that figure. A more recent study by Northwestern found the collective unfunded liability to be even higher at $5 trillion.
With that said, Public Sector Inc. recently released a timely evaluation of how governors are approaching the ticking pension time bomb in their states. Issues addressed include employee compensation, collective bargaining, and pension reform. Eight states have been evaluated thus far: Maryland, Massachusetts, Michigan, New Jersey, New York, Pennsylvania, Virginia, and Washington. Interestingly enough, of those eight states, not a single one received an ‘A’ grade—NJ Gov. Chris Christie led the way with a ‘B.’ The following are summaries of the reports:
Maryland: Governor Martin O’Malley received a ‘D’ grade. Gov. O’Malley will be asking current state employees to increase their contribution to the pension system from 5 to 7 percent or to reduce benefits in the future. According to Gov. O’Malley’s budget proposal, this would save $104 million. Maryland reports an unfunded pension liability of $19 billion but it is actually several times larger and will run out of assets by 2024...
Read more: http://www.atr.org/evaluating-governors-handling-state-pensions-a5802#ixzz1CN7dvozp
(Excerpt) Read more at atr.org ...
The problem is that public employees should never have been allowed to unionize. Their power to go on strike poses a public danger, as opposed to the unions of private industries. Also, they lack the natural counterbalance that unions in private industry have — if those unions demand more than the business can sustain, the business will fail and the employees lose their jobs. Without that check on their power, public employee unions have ruined the finances of the states and municipalities. Even FDR wrote that Public Employees should not be allowed to unionize: http://www.laborunionreport.com/portal/2010/10/unions-patron-saint-fdr-rejected-public-sector-unions/
Even closing the pension plans to new employees will not save them at this point. Actual clawback of promised pension benefits is the only solution at this point. If the unions will not agree to renegotiate the pension amounts to half of what was promised, then the people will have to step in and pass a special surtax on public employee pensions that exceed a certain amount, like $30K/yr. A surtax of 50% on public employee pension payouts exceeding $30K/yr would restore financial sustainability to these pensions and send a clear message to public employees that the taxpayers will no longer accept such excesses in their public servants. Combine this with a ten year hiring, pay, and promotions freeze and allow the local governments to shrink through retirement and career change attrition.
We can thank that mythical hero, JFK for that. He did more long term damage than most people, of any party, realize.
Executive Order created the problem, Executive Order can repeal it...
Even back then, our legislature was often incompetent.
Yes, although it was apparently a NYC mayor who got the ball rolling a couple of years earlier. He was a Dem that realized unionizing the city workers would guarantee him a large enough voting block to win re-election. I think it is the local level employees that are the bigger problem, don’t you ? I’ve read almost nothing about Federal employee pensions being out of control, but maybe that story just hasn’t gotten the same play as the State and Municipal abuses.
Well said, unions for government employees allows employees to exploit taxpayers.
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