Central States Pension Fund is essentially broke, and will need to cut payments to retirees . . .

"This Is Going To Be A National Crisis" - One Of The Largest U.S. Pension Funds Set To Cut Retiree Benefits

. . . or face insolvency by 2025.

"As the Washington Post reports, the Central States Pension Fund, which handles retirement benefits for current and former Teamster union truck drivers across various states including Texas, Michigan, Wisconsin, Missouri, New York, and Minnesota, and is one of the largest pension funds in the nation, has filed an application to cut participant benefits, which would be effective July 1 2016, as it "projects" it will become officially insolvent by 2025. In 2015, the fund returned -0.81%, underperforming the 0.37% return of its benchmark."

Pensions were always a bad idea, but they worked during the first half of the 20th century, today they are failing. This is not just a public pension problem, it is a problem with all pensions. Expect millions of retirees to be hit by these insolvency problems.

"The Central States Pension Fund is currently paying out $3.46 in pension benefits for every $1 it receives from employers, which has resulted in the fund paying out $2 billion more in benefits than it receives in employer contributions each year."

That is a problem indeed. These pensions, and more often the public pensions, forecast returns on invested assets of 7-8%, but if you note the Central States Pension only returned a -0.81%. This allows the pension to make it appear as if the pension fund is returning to solvency, while it is actually losing ground. Then, unexpectedly, it is insolvent. 

Fortunately there is a solution the Pension Benefit Guarantee Corporation.

"As a result, Thomas Nyhan, executive director of the Central States Pension Fund said that the fund could become insolvent by 2025 if nothing is done. The fund currently pays out $2.8 billion a year in benefits according to Nyhan, and if the plan becomes insolvent it would overwhelm the Pension Benefit Guaranty Corporation (designed by the government to absorb insolvent plans and continue paying benefits), who at the end of fiscal 2015 only had $1.9 billion in total assets itself. Incidentally as we also pointed out last month, the PBGC projects that they will also be insolvent by 2025 - it appears there is something very foreboding about that particular year."

Ok, perhaps it is not a solution, more of an additional problem. 

Ok, then, but wait! The Bern has a solution! Stop laughing! 

"All hope is not lost, however.

Democratic candidate Bernie Sanders has proposed a bill that would repeal the measure allowing cuts, and instead calls for the government to provide assistance to troubled pension funds.

In other words, another bailout.

Which brings us to the current juncture, where we remind everyone that the governments own safety net, the PBGC has itself become insolvent, and according to CNN, projects that more than 10% of the roughly 1,400 multiemployer plans, covering more than 1 million workers fits the current criteria to be able to apply for benefit cuts for participants.

"This is going to be a national crisis for hundreds of thousands, and eventually millions, of retirees and their families. It's going to open the floodgates for other cuts." said Karen Friedman, executive president of the Pension Rights Center."

Everyone has their hand out seeking only a few million or perhaps a few hundred million from the federal government. Which is in debt up to its eyeballs, and which is only paying 3/4 of the budget with tax dollars, the rest is being financed, like one might finance a used car. Actually it's worse than that, this is like some poor benighted lolly knob earning $30,000 per year, then borrowing an additional $10,000, so he can live the lifestyle of the $40,000 per year bloke. And the federal government does this year after year after year. Brilliant! Talk about poor benighted lolly knobs.

Everyone wants a buck out of Uncle Sam. So, we have cities wanting new light rail, many more cities wanting to completely rebuild existing light rail lines because they are worn out, we have most of the states, counties, and municipalities with serious public pension overhang problems, serious private pension problems, which will reduce the retirement benefits to millions of retirees. Obamacare is falling into a death spiral, and I am just scratching the surface. How about the more than $1 trillion in college debt, nearly one half is either not being paid, or in actual default. And what of the universities, and colleges, they have spent so much and their fees, and tuition is now so high no one but the wealthy can actually afford it even with student loans. They really could use a load of cash about now. And how about . . .  It's endless. And all of them are looking to the feds for cash.

We have serious problems, and nearly all of them are related directly to the blue model of government. 

Walter Russell Mead has been writing about the collapse of the blue model for a very long time.

The Once and Future Liberalism

This article defines, analyzes, and points out possible alternatives to the blue model. It is well worth your time.

Government as we know it is likely coming to an end. We will need to replace it with something more functional, and soon. Please stay abreast of the blue model articles, you will need to make informed decisions on how to proceed, and they will allow you to be informed as you ponder the way forward.