I am not a state pensioner - but I pay state taxes, and like most of you I am watching the economic disaster of the COVID situation cause utter destruction. Most states have grossly mismanaged their bloated pension systems, and COVID has caused their ships to hit the proverbial iceberg.
Despite the massive turn around in investment opportunities since the 2008 economic collapse, state pensions have only become more insolvent. They couldn't exploit that incredible growth - and I predict that many states pensions systems are about to collapse.
See this article from Reason:
I know many of the responses here will be "Good - F em!" Believe me, I am no fan of funding the six figure, gold plated state pensions in my state. I post this because the pension collapse is going to affect quite a bit: the economy, and politics, very soon.
I spoke to a friend who runs and accounting firm, and who knows many politicians at both the state and national level. He told me that some states are going to keep hoping for a bailout, and other states are trying to use the COVID crisis as an excuse to cover up for their years of pension mismanagement and over promises. He also said the instinct in many states will be raise taxes (sales, property), but even many insane Democrats know that with the economic collapse, this will only make their states bleed out taxpayers and revenue. You can't get blood from a stone.
We live in incredible times.
This talks about the cost to local economies of states declaring bankruptcy and getting out of the lavish and unsustainable pension promises they made to public sector workers. What about the cost of actually paying those pensions? I don’t get any benefit from the politicians’ promises to teachers unions and the like. All I get is cost and taxes. Less money out of my pocket means more money in the local economy because I’ll have more to spend more.
What we’re really talking about here as with all public benefits schemes is taking money from Peter to pay Paul. Most of us are Peter in this scenario - just regular ole taxpayers. In any event, states are sovereign and are responsible for their debts. There must be absolutely no federal bailouts of insolvent states. Demanding taxpayers in Wyoming and Arizona pay for the lavish pension and healthcare benefits of public sector retirees in California is totally unreasonable. They never had the chance to vote for or against the politicians who made those promises.
Its long past time for public sector workers’ benefit schemes to take a severe haircut so as to be more in line with private sector retirement plans.
The pensions in many cases are fraudulent to start. Cops earning 60,000/yr then work massive overtime in their last 3 years to earn 100,000 per year then retire at 70,000 per year instead of 40,000.
Solution, either investigate these abuses or cut everyone’s pension by 25%.
“Kentucky already had the worst-funded state pension system in the nation—only 16% funded—before the COVID-19 market meltdown”
Matt Bevin lost his reelection bid because he dared to try difficult measures to solve this problem and voters recoiled at it.
Oh well...