Friday, August 6, 2010

The Looming Pension Crisis

There's been a lot of discussion of the inability of cities and states to fulfill their pension obligations. Shrinking cities like Flint are especially hard hit by legacy costs that just keep getting bigger while city revenues get smaller every year. Ron Lieber of The New York Times puts the looming national crisis into perspective...and it's not pretty:

There’s a class war coming to the world of government pensions.

The haves are retirees who were once state or municipal workers. Their seemingly guaranteed and ever-escalating monthly pension benefits are breaking budgets nationwide.

The have-nots are taxpayers who don’t have generous pensions. Their 401(k)s or individual retirement accounts have taken a real beating in recent years and are not guaranteed. And soon, many of those people will be paying higher taxes or getting fewer state services as their states put more money aside to cover those pension checks.

At stake is at least $1 trillion. That’s trillion, with a “t,” as in titanic and terrifying.

7 comments:

  1. The only way to feed the government pension and debt monster is to bring back value added manufacturing. The alternative is not just Flint, but the entire nation becoming like a third world country. The old Flint experiment worked. It's the outsourcing and Ponzi schemes that don't.

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  2. You sound like my pal at Ford, who makes a very convincing argument that we need to start creating things that other people from other regions and countries want to buy, rather than just trading money via the "service industry."

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  3. And this helps fuel the fire of anti-government resentment.

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  4. I'm reluctant to write this lest I be viewed as a Republican, which I'm not, or anti-union when I'm a union member but...it's really not fair that government workers get 85 percent of their take-home pay, plus yearly raises, for the rest of their lives after they retire. Especially when so few other workers get such a sweet deal. I know that used to be the deal, but it makes no sense anymore. I don't see a problem with everyone getting some sort of 401K with a clearly defined matching amount from an employer, perhaps along with a higher yearly salary, and expecting workers to actually save their own money. Come on.

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  5. We all know times are tough now but why is it so popular now to give everyone a cut in pay and not think twice. Or not give people there pensions that many pay into. private/government workers.

    Meanwhile,politicians, democrat or republican and big business work together every day regardless of what we all think.
    They keep the "little people" convinced to scramble and fight against each other, convincing each other that no one is worth what they work for any more.

    Bull!

    We have all heard the ridiculous wealth now in American for CEO's, . Why are there pensions ok? (90% or wealth owned by the 1%)

    Just recently Tony Hayward will receive 600,000 a year(and could reach 11 million) in pension. Why aren't we complaing or doing anything?

    Wake up folks!

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  6. I'm reading Christopher Buckley's novel, "Boomsday," which revolves around a related issue -- Baby Boomers retiring in massive numbers with younger generations become increasingly resentful at having to support them. Very entertaining (and somewhat troubling). Side note: Buckley happens to be the son of William F. Buckley whose ill-fated visit to Flint has been immortalized by our Mr. Young.

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  7. Just to clarify, the fantastic William F. Buckley piece was by the fantastic writer Stephen Rodrick. I was just along for the ride.

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