willis
Jul 09, 2009
"The majority of the pain will ultimately be borne by people who will see their pensions cut,β says Jacob Funk Kirkegaard..."
You don't get out enough J. Funk. The majority of the pain will be borne by taxpayers barely scraping by, paying their own medical care when they can get it, no pensions at all, and working two jobs to get by at all. Sadly taxpayers are being taxed by a shadow government not elected by the taxpayers...the unions.
PD Quig
Jul 08, 2009
Either over-generous pensions will be willingly renegotiated, or fiscal events will "renegotiate" unilaterally. Judges don't have the power to create money (not yet anyway), so rule they may--but enforce they cannot. The unemployed cannot be taxed, and those taxpayers who still have jobs are not going to work around the clock to pay for retiree pensions.
This is what always happens to the last entrants into the Ponzi scheme. Reality bites.
IC_deLight
Jul 08, 2009
"Our state income tax is only 3 percent. It should go up,β says Ken Swanson, president of the Illinois Education Association.
Why does this union leader want income tax to increase even on his flock? Because his membership expects the rest of the state to contribute to their pensions and the point that his members lose will be more than made up by the taxes paid by all the non-public sector employees. The only winners in that scenario are the public sector employees. That's a double loss for the private sector folks who only see higher taxes which go to pay for pension benefits for someone else.
rk
Jul 08, 2009
Maybe their "political clout" would be less if the average voter understood that COLAs are unheard of in the private sector and retiree healthcare has been disappearing rapidly in the private sector.
We have developed a class of government workers that are doing quite well for themselves. Given the unions track reocrd over the decades, I think that that the future looks bleak for the taxpayer.
Robert Smith
Jul 08, 2009
The pain will not be borne by them at all. Courts seem to say that you cannot cut pensions after they have vested. Unless the legislators clueless enough to vote for these plans left a "we can't afford it" escape hatch allowing pension cuts, they won't be cut. And...since the legislators also have tax funded pensions and don't want their cut, I wouldn't bet there are NO escape hatches like that.
The Unions nationwide are demanding that shortfalls in the pension funding be made up by the taxpayers. They have no intention if suffering any "cuts."
Sean
Jul 08, 2009
with the assumption that this recession is over/very close to over, and that the recovery will be brisk and robust.
If we wind up in a several-year malaise, which is likely given the amount of government spending we're seeing, the poop will hit the fan.
What's more, if they're putting away a significant amount of their holdings in cash, and inflation hits, expect more trouble.
The reality is, the Federal Goverment will print trillions more dollars to bail out state and local pensions. The governments who lacked the political will to avoid these messes in the first place will not suddenly get the courage to take on the public sector unions.
This, of course, will further drag down the economy as a whole, and the stock market, thereby only temporarily alleviating the penion-underfunding pressure.
We're really seeing a fiscal perfect storm on the horizon. Most folks under 40 have never seen the US in BAD economic times. They simply cannot fathom the idea of our economy NOT expaning, or suffering through rough times. As such, they vote for more, more, more, with nary a thought to who will actually pay for everything.
They're also the ones most likely to whine and complain at the slightest inconvenience.
The next five years are going to be very interesting.
Bull
Jul 08, 2009
Quoting βThe majority of the pain will ultimately be borne by people who will see their pensions cut,β says Jacob Funk Kirkegaard ........
Considering the multi-decade GREED of Civil Servant Unions, I can see no better and more appropriate outcome !
Gary Mueller
Jun 30, 2009
Michael Riley brings up an excellent point. Why shouldn't public pension funds face similar regulation that corporate pension funds do? Underfunded pensions are an easy way to try and hide deficit spending.
Michael G riley
Jun 15, 2009
I live in Narragansett Rhode Island ,a fairly prosperous resort town in Southern Rhode Island. Our town manager and council have turned a surplus in 2002 into a $25 million dollar unfunded liability. They use 7 1/2% return expectation and discount rate. The entire budget was $49 million dollars in 2008-9 and the ARC is $3.5 million of which the town has promised to pay 1.2 million. Why isnt this illegal? This is pure deficit spending.Done completely deliberately. At the same time they hand out raises and increase in other benefits to the same employees whose pensions they underfund. Shouldn't there be a law that elected officials can not negotiate raise s or increased benefits while the pension is underfunded?
mg riley
