Wednesday, October 13, 2010

Ya think this might be a problem?

It's starting to dawn on everyone that politicians have promised public employees such generous retirement benefits that the governments don't have the money to pay for. Do you think that this might be a problem?
The cities, counties and authorities of New York have promised more than $200 billion worth of health benefits to their retirees while setting aside almost nothing, putting the public work force on a collision course with the taxpayers who are expected to foot the bill.

The total cost appears in a report to be issued on Wednesday by the Empire Center for New York State Policy, a research organization that studies fiscal policy.

It does not suggest that New York must somehow come up with $200 billion right away.

But the report casts serious doubt over whether medical benefits for New York’s retirees will be sustainable, given the sputtering economy and today’s climate of hostility toward new taxes and taxpayer bailouts.
I can answer that one. These benefits won't be sustainable. Period. David Brooks puts it in basic terms when he answers the question about why a state like New Jersey can't afford to go forward with a new tunnel to New York.
New Jersey can’t afford to build its tunnel, but benefits packages for the state’s employees are 41 percent more expensive than those offered by the average Fortune 500 company. These benefits costs are rising by 16 percent a year.

New York City has to strain to finance its schools but must support 10,000 former cops who have retired before age 50.

California can’t afford new water projects, but state cops often receive 90 percent of their salaries when they retire at 50. The average corrections officer there makes $70,000 a year in base salary and $100,000 with overtime (California spends more on its prison system than on its schools).

States across the nation will be paralyzed for the rest of our lives because they face unfunded pension obligations that, if counted accurately, amount to $2 trillion — or $87,000 per plan participant.

All in all, governments can’t promote future prosperity because they are strangling on their own self-indulgence.
This is the scandal of our generation. And, as Brooks points out, this is a Democratic scandal - it's their epic failure. They sold their soul to the public employees unions and we'll all be paying for it and our children will reap this whirlwind. And the politicians will be long gone while the havoc they've unleashed upon their states destroys any prospect for growth or even plain sustainability.