Pensions — the promises that cannot be kept
June 29th, 2009 at 02:16pm Linda Grist Cunningham
Illinois’ public officials and legislators learned a long time ago that short-term solutions get them re-elected and they can push the reckoning down the road a couple of decades.
The state’s pension system is the biggest, ugliest, meanest pig in the room — and no amount of lipstick makes that sucker look good. The public government types have perfected this decades-old dance with the state’s pension system, now somewhere between $54 billion and $73 billion in the hole. (The spread depends on who’s talking and what the stock market is doing, but those numbers are from the state budget forecasting department.)
That’s upwards of $75 billion in payouts to judges, teachers, cops, firefighters and assorted other public employees and legislators that the state must by law pay — but does not have, has no way of getting, and is simply pretending will not be a problem. Illinois has the worst track record in the country for chronic underfunding of its pension systems. Today, just a hair more than 50 cents on the dollar is available to pay retirement benefits for the state’s current and future pensioners.
The time will come when every tax dollar you and I feed into the coffers will go to pay for pensions. Every dollar. If we want streets paved, kids taught, criminals caught, then taxes will have to go up to compensate.
There’s nothing secret about all this. It’s been fact for decades. Newspaper editorial boards have railed about it for years. So have a handful of business people, mayors and the occasional state official.
But, every time the darn thing reared its nasty head, the public types drugged it back to sleep with financial sleights of hand ranging from shifting funds to bonds and borrowing — all accompanied by press conferences promising to get us to 80 percent funding in just a few short years.
Bogus. They lied. They have no intention of facing the brutal facts, of doing what needs to be done: (1) Reform the pension systems, including a two-tiered system in which new workers would get less; (2) reduce overall state spending; and, (3) raise the personal income tax.
Nope. Our legislators have no intention of taking on any of that. Instead, they’ll posture and opine and once again push the monster back under the bed.
Savor this from financier Warren Buffett: “Public pension promises are huge and, in many cases, funding is woefully inadequate. Because the fuse on this time bomb is long, politicians flinch from inflicting tax pain, given that the problems will only become apparent long after these officials have departed.”
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2 Comments Add your own
1. Paul | June 30th, 2009 at 8:17 pm
So what are you media’s types doing about it? The answer is nothing. You know this diversion of funds has been going on for years and just sat back doing nothing.
Like you mentioned, the public types (libral term for politicians) drugged it back with promises to get us back to 80% funding in a few years. So what did you do when that did not happen. Again, the answer is nothing.
They keep doing that because they know they can. When have you ever went back and blasted these “public type” after they fail to follow through. How many of our locals voted yes to diverting the pension funds to other pet projects? We don’t know because you continue to endorse these same politicians.
The only way to correct this in the long run is to vote these crooks out of office and it takes a responsible media providing factual information to get people to vote responsibly. Negative publicity is the best way of getting any politician to change his ways and start doing the right thing. Let them get away with anything and they will continue to do the wrong thing.
By allowing themselves to be manipulated by the politicians, the media is equally responsible for the current financial crisis in Illinois.
So don’t just sit up there in your ivory tower and complain. Do your job.
2. Jeffrey Stewart | July 5th, 2009 at 11:59 am
So where is the outrage? This has been an issue for a very long time. Yet voters continue to vote the rascals in. It is great that this newspaper is starting to focus on the issue. But the issue has been an issue for a couple of decades. It doesn’t take a rocket surgeon to identify an unsustainable process. Well, perhaps it does.
And it’s not like there are not cries from the wilderness. As one legislator, Senator Severson has always made this a major point. But again where is the outcry? If the state and federal governments were held to the same standards as private business, this process would be illegal. There would be even more Illinois Governors in jail. This deception is one of the components of the Enron scandal and the resulting Sarbanes-Oxley regulations. Again, why are there not elected officials in jail?
You note that the unfunded pension liabilities in Illinois are over $50 Billion. On a national level, unfunded obligations for social security, Medicare and pensions are approaching $50 TRILLION. This will eventually bankrupt us all. Our kids understand that there is not way that these social support structures will be there when they retire… and they will be responsible for our evil ways. It kills me to think of how their future will be so burdened by this horendous debt.
Everyone should take a look at the work of the Peter G. Peterson Foundation (www.pgpf.org). They are trying very hard to raise the pubic awareness of this issue. The only way any of this will ever change is for all of us to rise up and not only demand change on this issue, but demand change for the entire political process. Unfortunately this is an excellent example of the adage that people get the government that they deserve.
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