Why public pensions will collapse, and should

by Joel McDurmon on Mar 5, 2012

 

Twenty-one million (21,000,000) public employees in America expect to be treated superior to the rest of us when it comes to their salaries, benefits, and retirement packages, but the promises they have secured for themselves—throughout governments all across this land—cannot be kept.


One activist, Wayne Allyn Root, explains why government employees are the “true 1%.” A couple points:

• One toll booth employee bragged he would retire at $120k per year, beginning at age 50, which leaves him drawing over $6 million of taxpayer money should he live to 80.
• “An average firefighter will pick up eight to ten million dollars for the rest of his life for not working.”
• The average government-employed janitor makes $600,000 more during their career than a private-sector janitor.
• A third of the Nevada teachers’ union budget goes to pay nine top employees.
• “Bernie Madoff has nothing on the government employee union scam.”

Root concludes, “These are the true 1% privileged class that are bankrupting our country and destroying our one-great economy.” It is a “national disgrace.”

Mike “Mish” Shedlock has this informative post on this issue. He cites a New York Times article explaining how New York is actually borrowing from its pension funds in order to pay the very pensions plans from which they are borrowing:

When New York State officials agreed to allow local governments to use an unusual borrowing plan to put off a portion of their pension obligations, fiscal watchdogs scoffed at the arrangement, calling it irresponsible and unwise.

And now, their fears are being realized: cities throughout the state, wealthy towns such as Southampton and East Hampton, counties like Nassau and Suffolk, and other public employers like the Westchester Medical Center and the New York Public Library are all managing their rising pension bills by borrowing from the very same $140 billion pension fund to which they owe money.

Across New York, state and local governments are borrowing $750 million this year to finance their contributions to the state pension system, and are likely to borrow at least $1 billion more over the next year. The number of municipalities and public institutions using this new borrowing mechanism to pay off their annual pension bills has tripled in a year.

Mish adds,

As I have commented on numerous occasions, defined benefit pension plans are going to bankrupt numerous cities and states. Several smaller cities have already gone bankrupt over union salaries and pensions.

Numerous other cities are on deck. The public pension Ponzi scheme will fly apart as soon as one major city declares bankruptcy to get those pension benefits tossed out in court.

Realistically speaking, numerous cities such as Los Angeles, Houston, and San Diego are already bankrupt, as are second tier cities like Oakland, Newark, Cincinnati, and Baltimore and others too numerous to list, they just have not admitted it yet.

Simply put, pension promises have been made that cannot and will not be kept.

In the meantime, defined benefit plans need to end, city services privatized or eliminated, Davis-Bacon and prevailing wages laws scrapped, national right-to-work laws implemented, and at the top of the list, collective bargaining of public union workers need to stop immediately. Source @AmVisionNews