AFSCME! et al!
Posted on 07/15/2015 8:46:41 PM PDT by Lorianne
At Governing’s Summit on the Cost of Government last September, I asked a group of city, county and state chief financial officers what they saw as the biggest challenge facing their governments. Every member of the group said it was public pensions. I have a great deal of respect for these individuals. They are dedicated public servants, and many of them are far more knowledgeable about state and local government finance than I am. But I think they’re wrong. I think the No. 1 challenge facing state and local governments is infrastructure, not pensions.
First, the dollar estimates for the infrastructure deficit are simply larger than those for pensions. Don Boyd and Peter Kiernan, in a January 2014 paper, pegged the underfunding of state and local government defined-benefit pension systems at $2 trillion to $3 trillion. That’s a lot of money for sure, but the American Society of Civil Engineers estimated the country’s infrastructure deficit at $3.6 trillion, and that was back in 2013.
Second, infrastructure issues are comparatively pervasive, even if they vary by type across the country -- the need, for example, for water-related infrastructure in California and the Southwest or for fixing aging bridges and rail systems in the Northeast. As for pensions, Alicia Munnell, director of the Center for Retirement Research at Boston College, points out that many plans are well funded and argues that we should “dispense with some of the hysteria.”
Finally, the consequences of not coming to grips with the infrastructure challenge seem more dire for the country as a whole. There is, of course, the very real threat to life and property. Beyond that is the loss of economic competitiveness. Governments with modern, well maintained infrastructure are going to enable their businesses to operate more efficiently and their citizens to enjoy a better quality of life.
I see two reasons why pension problems may have captured the attention of policymakers. There are those who have made it their mission to call attention to pension problems because it fits a small-government ideological agenda. The real abuses that have occurred, such as pension “spiking” in some plans and the abject failure of some governments -- notably Illinois and New Jersey -- to manage their pension systems with any fiscal discipline, have given plenty of fuel to those folks. And fixing pensions by cutting benefits and making public employees pay more into them is simply easier than finding the new money needed to invest in infrastructure.
My hope is that CFOs and other government finance experts will consider these arguments and use their influence to heighten government’s focus on infrastructure. The issues confronting pensions, while not trivial, are manageable. But while you may be able to pass a law to better fund a pension by sticking it to public employees, infrastructure is different: You cannot repeal the laws of physics.
What have they done with all the taxes in the past? They keep whining about infrastructure, but tax money is always spent on something else. Give them more, and they’ll waste it, too.
Yes, but roads don’t vote.
AFSCME! et al!
Of course he is classically wrong. Pensions, infrastructure, education...are just places to make the money go. The problem is either unfunded or phony funded liabilities. A well funded pension plan is not a problem. Detroit made deals they could not fund...and I believed they gambled on a bailout. In Washington we are spending 4 billion on a hole to replace an ugly but working elevated highway. The work has been stopped about two years while they fix the hole borer. The tunnel will not be the equal of the road it is going to replace in traffic flow or type of vehicles allowed. 4 billion dollars. One project to make money for real estate billionaires using tax money.
It is not one type of project but the attitude that it is not a problem to do just one more project...it isn’t much more money...but 100 of them are, so 200 of them make the rolls. And some are crappy “money pit” projects.
It never stops...until Detroit happens and no one goes to jail for it.
DK
What have they done with all the taxes in the past?
When you quit building roads and spend all the money on bread and circuses, you are on the way downhill.
It has happened before.
A well funded pension plan is not a problem.I don't know that there is such a thing in the public sector. As far as I know public pensions are paid from the general fund(s). That's why states, counties, cities are going bankrupt AND have failing infrastructure among others as a result.
Some retiree's are receiving more from retirement, and growing, than they earned while working.... That doesn't even include other benefits like the ever growing healthcare costs.
I suppose you think all that extra money comes from "well funded" wise investments.
As for pensions, Alicia Munnell, director of the Center for Retirement Research at Boston College, points out that many plans are well funded and argues that we should “dispense with some of the hysteria.”
Wait'll the youth of America truly find out that Public Sector Pops the Retiree is making 2-3 times more walking out to the mailbox twice a month than the youth is making working full-time (AND no benefits!).
The children are going to be hunting for ways not to pay their tax bills, up to and including going Galt.
Detroit>>Puerto Rico>>Greece>>USA
*sigh* That about sums it all up.
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