The $424,500 EACH AND EVERYONE OF US OWES for someone’s underfunded public pension is on top of ALL the other taxes we already owe. Have you made your 2012 New Years resolutions yet? Don’t forget to resolve to be fighting mad at what your Government, your elected and unelected bureaucrats, have done to you and your family. Do something about it at election time.
Here is a New Year’s resolution every American private sector worker must keep no matter what: Write a check for $14,150 Jan. 1 to make up for state and municipal pension shortfalls. Prepare to write one every year for 30 years. This is on top of all other taxes and fees governments at all levels gouge from us.
Taxpayers – through governments and public workers – pumped $25 billion into the top 100 pension funds in three months ending Sept. 30, according to the latest report. Those fund’s managers paid out $52 billion and lost$199 billion in market value. How deep into the fiscal abyss do they have to plunge us before somebody wakes up?
Even if by some miracle fund managers can meet promised average earnings to pay benefits through 2036 — which would require an average annual risk-free return of almost 10 percent —  somebody must come up with an additional $45 trillion for all state and municipal pension funds in between to pay promised benefits.That’s about $1.5 trillion a year —  one and a half times greater than the entire U.S. Defense budget —  to provide absolutely no public services. No police on the streets, teachers in classrooms, sanitation workers picking up our trash. No public buildings repaired or built, no food for the hungry or shelter for the homeless, no health care for the indigent —  no anything.
We all talk endlessly about the national debt, but this problem is bigger than the national debt with the bill for every single American now hitting $424,500….But the problem is being hidden from the taxpayers through accounting gimmicks.
I do not disagree that the public pension system is a disaster and that the unions and compliant politicians made it that way. However I would like to point out one flaw in the public perception of where this went wrong.
A typical public employees pension is paid half by the employee and half by the employer. Typically this would be a 6% contribution from both parties. But in practice the employee contributes every payday but the employer does not. The legislature made the employees contribution mandatory at the time they received their pay (as it should be) but allowed the employer to postpone their contribution indefinitely. Therefore thanks to the power of compound interest when the state’s “contribution” comes due it is typically well over $100,000. The employee’s portion of the retirement fund has grown nicely to six figures and now the employer suddenly is faced with a huge debt due to malfeasance. What else could you call it? The 6% contribution was authorized by the legislature in the yearly budget. The administrator of the department got the budget with the earmarked 6% to be contributed. But without any fiscal oversight management used that 6% for something else. Who’s fault is that and who should be punished for this failure???
Gone with the Wind, thanks for this information. I did not know that Employers are not required to contribute. Do you have any information about the legislation that made this law? I assume you are talking about US Congressional law? Are you talking about the current annual budget?
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I don’t believe I will be able to pay off my debt. Come and get me.
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There will be a lot of us Carl. Maybe we’ll finally get to meet:-)
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[...] places like New York are suing over tiny little increases to their health insurance contributions.Maggie’s Notebook and Say Anything have more.google_ad_client = "ca-pub-1395656889568144"; /* 300×250, created [...]
This system was well-intentioned, like so many things when started, but no thought went into how it would be paid for in the long-run. I can remember being young, looking for a job, expecting health insurance, vacation, etc. I was too young to think about retirement seriously then, but as the years went on I realized no employer owed me anything. They didn’t hire me out of the goodness of their hearts so they could give me a salary, they hired me to WORK for them, to do a job and to do it well, for a set amount of money. Too many these days don’t realize that.
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