Posted on 05/12/2008 6:53:08 AM PDT by BGHater
The funds that pay pension and health benefits to police officers, teachers and millions of other public employees across the country are facing a shortfall that could soon run into trillions of dollars.
But the accounting techniques used by state and local governments to balance their pension books disguise the extent of the crisis facing these retirees and the taxpayers who may ultimately be called on to pay the freight, according to a growing number of leading financial analysts.
State governments alone have reported they are already confronting a deficit of at least $750 billion to cover the cost of the retirement benefits they have promised. But that figure likely underestimates the actual shortfall because of the range of methods they use to make their calculations, including practices that have been barred in the private sector for decades.
Local governments use these same techniques for their pension funds and face deficits that further contribute to what some investors and analysts say may be shaping up to be a massive breach of faith with a generation of public employees.
This gap is growing more yawning with the years. It has already presented taxpayers with a whopping bill that is eating up a vast portion of government budgets at the cost of other services. In Montgomery County, for instance, pension and retiree health care costs are already higher than the combined budgets for the departments of transportation and health and human services. Eventually, officials responsible for the funds will have to choose whether to continue paying out or renege on benefits promised to retirees.
(Excerpt) Read more at washingtonpost.com ...
There’s reasons citizens build jails ...
I suppose the Washington Post failed to look at these govts’ CAFRs (if they even know about them). . .just a smokescreen to put it on the backs of the taxpayers and pensioners.
Big Government produces absolutely NOTHING, yet consumes EVERYTHING.
Start selling off some of the county’s or state’s property then. Here in PA the state owns nearly 50% of the land as state parks and forests, etc.
Nah. The citizens will bail them out. At the point of a gun, of course.
Go to this site, scroll down till you see the radio broadcasts...listen to the one dated April 11, 2008.
It’s long, but will answer the question: ‘you know something is wrong, but you just can’t figure out what or why.’
This is “the rest of the story” as Paul Harvey puts it.
Ping to myself
“Big Government produces absolutely NOTHING, yet consumes EVERYTHING.”
Sadly, it will take Public Pensioners seeing smaller paychecks before the masses realize it’s too late to do anything about it.
The politicians will be the last to have their pensions reduced.
The only answer to this is reduction in benefits. Contractually, that will put the municipality or state in court generating legal fees.
A clever answer not often thought of is very narrowly targeted taxes, withheld from the pension check.
bookmark
Yes - and I don't mind "bailing" them out. The teachers and police officers and fire fighters are not the problem. The problem is the city officials - and they should be put in jail.
Pretty soon it'll be the teachers unions fighting it out with the employees unions for all the tax money. There'll be nothing left for any other services.
It is difficult for me to imagine that massive government default is not on the horizon. Prior to that serious inflation is probable.
Those who preach deflation may be right, but debt holders (government) gain from inflation. So those who “control” the inflation rate also hold the debt. What incentive is there for them to deflate?
schu
How many of these are “invested” in sub-prime mortgage backed obligations, commercial paper without a buyer and other dubious package deals like CDOs and CDSs?
The more companies that do this the less sympathy for the poor bureaucrats.
Just as a side note most bureaucrats w/ 30 years service can retire at 80% of the last four years average salary, ergo, jobs that allow OT have people nearing retirement "working" extreme hours their final 4 years to boost their average salary.
Its a beautiful thing.
Put the government workers into the social security plan like the rest of the country and then see how fast it gets privatized.
You do not understand the compensation hidden in these pension plans. These pension plans have dramatically changed over the years because of increased benefit levels (benefit rates, retirement age, and computation of highest average salary). These pension plans are just hidden forms of deferred compensation. Through increased benefit levels, compensation of public employees is much higher than private sector employees.
The problem is clearly the high benefit levels. The remedy is to reduce benefit levels to match private sector retirement benefit levels. The normal retirement age should be set to 65 (or 67 to match Social Security). Early retirement should not be subsidized resulting in substantial benefit reductions for early retirement. In private sector plans and social security, early retirement is only possible with benefit reductions. I believe that early retirement in Social Security at age 62 reduces benefit levels by 25%. Public employees in many plans can retire at age 50 to 55 with no benefit level reductions.
My study about deferred compensation and public employee pensions demonstrates the large amount of deferred compensation hidden in public employee pensions. In my study, the typical retiree received hidden deferred compensation of $521,000, equivalent to additional compensation of 26% to 36% per year.
Here is a link to my study. I was recently on talk radio (Mike Rosen show) in Denver to talk about my study.
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