re: #121 Racer X

Battle Looms Over Huge Costs of Public Pensions

There’s a class war coming to the world of government pensions.

The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide.

The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks.

At stake is at least $1 trillion. That’s trillion, with a “t,” as in titanic and terrifying.

The figure comes from a study by the Pew Center on the States that came out in February. Pew estimated a $1 trillion gap as of fiscal 2008 between what states had promised workers in the way of retiree pension, health care and other benefits and the money they currently had to pay for it all. And some economists say that Pew is too conservative and the problem is two or three times as large.

So a question of extraordinary financial, political, legal and moral complexity emerges, something that every one of us will be taking into town meetings and voting booths for years to come: Given how wrong past pension projections were, who should pay to fill the 13-figure financing gap?

When the bottom falls out of a private retirement, the private retiree loses. When the bottom falls out of a public retirement, the private retiree loses…he must ante up however much extra it takes in new taxes. A minor town official in some minor CA town can “earn” $500 000 in his final year, and that becomes the base for his pension, which must be paid by the taxpayers of CA.

CA has gone from being near the top in K-12 education, to near dead last. CA has gone from being an economic leader, to being barely able to keep the lights on. The only thing that has not suffered under liberal rule of CA is liberal self-confidence. Supremely sure that anyone who thinks differently on any of their pet topics is an “ignorant bigot”, or for simplicity’s sake, a “shit”, they forge ahead.

No matter. The Red States can be nicked for however much taxes it takes to shore up CA’s finances. The sharecropper in MS can pay his bit toward that $300K pension, and the innumerable other profligate expenditures that characterize CA’s finances.