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Pension Meltdown
The Pension Reckoning Is Only Beginning
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  • Andrew Allison

    “One certainly feels that the pensions of politicians who voted for the policies that created this mess should be viewed a little more harshly than the pensions of public sector workers. Mr. Sweeney and his legislative colleagues might have to see their own pensions eviscerated as the price of helping their constituents.” Amen to that! Those responsible for these unfulfillable promises not the federal taxpayer should pay the price.

    • Boritz

      That someone else should pay is a functional instinct, but only one herd of cattle has pockets collectively deep enough to attempt to fund all facets of our emerging workers’ paradise.

  • Fat_Man

    The Federal Pension Benefit Guarantee Corporation which insures the pensions of private employers gives severe haircuts to beneficiaries. In 2015 the maximum amount they will pay is $5,512.50 per month at age 66 on a single life annuity without cost of living adjustments. With a hair cut like that, maybe the states would be able to pay their pensions out of their own resources.

    • RonRonDoRon

      In order to use the FPBGC, law would have to be passed to make public pension plans subject to ERISA requirements. The people calling for bailout don’t want that – they just want a pot of federal money.

      • Fat_Man

        As a wise man once said, “you can’t always get what you want.” I was only pointing out that any remedy, from any quarter will require haircuts.

        • RonRonDoRon

          I strongly agree that the union members and officials need to take a haircut (a buzz cut). The unions (and the governments involved) negotiated unrealistic pension deals – at best they were incompetent; at worst, colluding in deals that made them look good at the time but would blow up later. The union members foolishly trusted union officials (and the governments).

          It would also be great if the people involved on the government side of those negotiations could also be made to take some kind of haircut. I hope any who are still in office are voted out by union members and other disgusted citizens – probably won’t happen. The government officials who are out of office probably got away with it. (At the least, I hope any government official involved in those delusional sweetheart deals take a cut in any pensions they have from local government coffers.)

  • rheddles

    state constitutions that guarantee worker pensions no matter what will have to be amended

    True but that will be a lot easier said than done. The crisis will have to be quite severe and I doubt many courts will allow it. Except in time of war.

    • RonRonDoRon

      State constitutions are amendable by some state process. Why would courts be involved?

      If you mean courts wouldn’t allow the federal govt to force amendment, I don’t think it would be any different from the conditions often attached to receipt of federal money: “You don’t have to do it – unless you want the money.”

      • rheddles

        Courts in California regularly overturn amendments with which they disagree. Rights are involved. I’d not be surprised to see liberal judges invoke Lochner to maintain union benefits.

        • RonRonDoRon

          You’re right, I hadn’t thought that much about state supreme courts (was mostly thinking about federal courts). They might overturn if they consider that a contract was created.

          If that happened, the federal government could say, “OK, no bailout for you.” Unfortunately, Congress isn’t very good at saying “no bailout” (to anyone, but especially to unions).

          • Rick Caird

            Oh, I think the State courts can be forced into going along. If it is clear that there will be no pension vs a reduced pension, they will pull a John Roberts and find some way to justify overriding the pension contracts.

  • JR

    It looks like Chicago will be the first major US city that will go bankrupt.

    • rheddles

      Detroit and New York City have fallen that far?

      • JR

        I wouldn’t count Detroit as a major city, not in 2015 at least. NYC is a center of world finance so it will go on a while longer. But when it comes to bankrupting the city, Comrade DeBlasio is definitely giving it an ol’ college try.

        • rheddles

          Detroit was the fifth largest city in the US as recently as the 1970 census. New York was effectively bankrupt in 1975 until the unions caved. New York recovered its senses in time and rescued itself. Detroit became the show case for black power. But both were practically bankrupt long before Chicago. And don’t forget Orange County, and actual bankruptcy but only a major suburb. So Chicago is far from the first. Financial irresponsibility is not a recent phenomenon.

          • JR

            All true. But I think what I am thinking of is pension that will require bailouts.

          • Fat_Man

            IIRC, in the NYC deal of 1975, the City accepted a state run panel to oversee its finances. In substance, the deal was a bankruptcy even though, it was not in Federal Bankruptcy Court. BTW, the Federal Bankruptcy Code with Chapter 9 was not enacted until 1976, although there were similar but less comprehensive provisions in Federal law before that.

          • William Ockham

            A correction, Chapter 9 was enacted in the late 1930’s, not 1976. You may be referring to the amendments made in Chapter 9 in 1976 which reflected concerns raised by the near bankruptcy of New York City that year.

    • William Ockham

      Huh? What happened to Detroit?

      • JR

        It was finally rescued from those citizens of Detroit elect to represent them.

  • RonRonDoRon

    Government plans are exempt from ERISA’s reporting, disclosure, and funding requirements (Title I) and plan termination insurance (Title IV). [http://www.ebri.org/pdf/publications/books/fundamentals/fund39.pdf]

    If public pension had been made subject to the same requirements as corporate pension plans, it’s unlikely we’d have this mess. Of course, that would have inhibited the collusion between local politicians and public unions.

  • Cpакошвиля

    Sorry for the bad English, I used Google – translate.

    Ukraine sacrificed the same purpose for which the affected people of Iran (1953), Guatemala (1954), Thailand (1957), Laos (1958-1960), Congo (1960), Turkey (1960, 1971, 1980) Ecuador (1961 and 1963), South Vietnam (1963), Brazil (1964), Dominican Republic (1963), Argentina (1963), Honduras (1963 and 2009), Iraq (1963 and 2003), Bolivia (1964, 1971 and 1980 ), Indonesia (1965), Ghana (1966), Greece (1967), Panama (1968 and 1989), Cambodia (1970), Chile (1973), Bangladesh (1975), Pakistan (1977), Grenada (1983), Mauritania (1984), Guinea (1984), Burkina Faso (1987), Paraguay (1989), Haiti (1991 and 2004), Russia (1993), Uganda (1996) and Libya (2011). This list does not include approximately the same number of failed coups and revolutions in Africa and other places where US involvement has not been proven, although there are suspicions.

  • RexMottram

    “…how America digs itself out of this hole will be one of the big questions of our time.” A stupid metaphor worthy of Obama. Try: climbing out of a hole.

  • stan

    These workers voted for Democrats in exchange for the promised pension benefits. Let the Democrat party pay the pensions. Seriously. Dems got the benefit of the deal. Let them make good. Why should GOP taxpayers be on the hook for the corrupt deals between Democrat voters and Democrat politicians? Democrats made this bed. Let them lie in it.

    I say screw the public workers, if the Democrats can’t make good. Especially since public sector workers are overpaid already. Why are we always bailing out Democrat voters? We don’t bail out GOP voters. When a small business gets wrecked by the EPA, Obamacare, or the vicious tactics of the social justice warriors, the govt doesn’t make good on the losses.

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