about America’s shambolic pension systems, and you should be too.Many have been arguing
recently that Detroit is an outlier, but we wonder whether they have seen the national and state-by-state pension liabilities numbers that Moody’s published
and the Economist analyzed
. A nationwide shortfall of $1 trillion rounds out the “optimistic discount rate” that states themselves apply to their pension obligations; some think it could be as much as 25 percent worse than that. Illinois leads the pack with a pension liability equal to 241 percent of its annual tax revenues:
For everything you need to know about America’s pension crises, read the whole article here
. Besides the billion dollar shortfalls, you’ll learn about: retired fire chiefs making over half a million dollars a year; tens of thousands of public servants in California with pensions over $100,000 per year; and widespread use of pension gambits like “spiking” (when public employees use overtime and unused holiday to inflate their final-year salaries, thus raising the base of their future pensions) and “double-dipping” (when a public employee collects pension payments while returning to a salaried job).The Economist
suggests that public employees retire later, and that states hasten the shift to defined-contribution schemes. To that we would add
large-scale regulation and oversight of public pension systems and aggressive surveillance of collusion between union heads and politicians.As the Economist
Uncle Sam offers an array of “entitlements” that there is no real plan to pay for. Barack Obama is on his way to joining George W. Bush as a president who did nothing about that, while Republicans in Congress imagine they can balance the books without raising taxes. The government spends more on health care than many rich countries and still does not cover everyone. America’s dynamic private sector is carrying on its back an unreformed Leviathan. Detroit is merely a symptom of that.
Our thoughts exactly.