Public pension crisis has tragic consequences

Washington Examiner ^ | 12-31-2010 | Mark Hemingway

[eagles]

Mark Hemingway: America's public pension crisis has tragic consequences

By: Mark Hemingway 12/26/10 8:05 PM

When the police found the body of the town's 58-year-old retired fire marshal, the lights had been turned off in his house and he had no running water. He had no money to pay his bills and he was too proud to accept help from his neighbors.

Perhaps because he was so proud, the New York Times was polite enough not to use the fire marshal's name in their account of his death.

Welcome to Pritchard, Ala., where the public employee pension checks just stopped coming. As the Times reported last week, leaders of the city on the outskirts of Mobile had known since 2004 the pension fund was scheduled to run dry last year.

The city tried to declare bankruptcy, but state law forbids the town from ducking its pension obligations and a judge wouldn't allow it. The city just stopped paying its pensions. Pritchard's 150 retired city employees are reduced to showing up at city council meetings begging for money to get through the Christmas season.

For some years now, there have been warnings that the public pension crisis would sooner or later reach critical mass. America's public pension plans are underfunded by an estimated $3.6 trillion.

And the pension problem might be worse than that eye-popping figure suggests. We don't have a good handle on the scale of the problem because so many cities and states are either ignoring it or cooking their books to conceal it.

But what happened in Pritchard should send a message to the rest of America: It can happen here. We are out of money, and our many of our public pensions are already on borrowed time.

The biggest obstacle to preventing what happened in Pritchard from happening nationwide might be the public employees themselves. Public union leaders simply refuse to believe America is out of money.

Just last week, Chicago Mayor Richard M. Daley -- usually no proponent of fiscal austerity -- was begging Illinois Gov. Pat Quinn to veto a deal that would raise property taxes in the Windy City by $550 million to fund public pensions.

"This is the highest real estate tax increase in the history of Chicago and that's only for fire and police. If you put the other unions in there, it's about $1.2 billion in one year. ... This will really hit the people. How are you gonna sell your home even if you're retired? Who would want to buy your home? Buyer beware," Daley told the Chicago Sun-Times.

In Chicago, the unions claim they are making concessions. Police and fire fighters agreed to reduced cost-of-living increases, salary caps and raising the retirement age from 50 to 55. The legislature further offered a meaningless pledge to make sure their pension fund was 90 percent funded by 2041.

Is that supposed to be a fair trade-off? Taxpayers get sharp tax increases and can't sell their houses, but still pay for firefighters and police to retire with 80 percent of their salary and full benefits a decade or more before most Americans can even dream quitting their jobs? And pensions still won't be fully funded 30 years from now?

It's no mystery why the Times reported Pritchard "stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain." (Philadelphia is also raising property taxes 9.9 percent to fund pensions.)

If the busted public pensions in small-town Alabama make for a particularly tragic tale, what kind of misery is going to unfold when some of the largest towns and states in the country run out of money?

Mark Hemingway is an editorial page staff writer for The Examiner. He can be reached at mhemingway@washingtonexaminer.com. Get Email Alerts

Read more at the Washington Examiner: http://washingtonexaminer.com/opinion/columnists/2010/12/mark-hemingway-americas-public-pension-crisis-has-tragic-consequences#ixzz19i7ROUKQ

[eagles]

Police are leeches?

[ResearchMonkey]

“I think SS should be means-tested. I know it’s not suppose to work that way, but we’re bankrupting that system, too. So if you have an adequate pension or means from some other source it only makes sense to limit SS to the needy.”

I would accept this as part of the plan to phase out SocSec.

[US Navy Vet]

Some are some aren’t...case in point what is going on next door in Omaha, NE. Police, Fire and UNION Public Pensions are bankrupting that city and affecting surrounding environs.