The Instapundit channels one of my favorite commentators, Walter Russell Mead, "The Pension Crisis Keeps Getting Worse"
Instapundit on the Pension Crisis
Here is the Mead article:
The Pension Crisis Keeps Getting Worse
"The $2 trillion public sector pension shortfall created by decades of interest group bullying and political fecklessness is not going away on its own. In fact, according to a recent report from a major consulting firm, it’s getting steadily worse. The Financial Times:
The health of the US public pensions system is deteriorating. The latest figures reveal that retirement plans have less than three-quarters of the assets they need to pay current and future retirees.
… According to Wilshire Consulting, an institutional investment advisory company, state-sponsored pension plans in the US had just 73 per cent of the assets they needed in mid-2015, down from 77 per cent in 2014."
Unsettling, but consistent for our current crop of craptacular politicians.
"At least some state and local governments are taking steps to reform their public pension systems before it’s too late. For others, that moment may have already passed. It’s probably only a matter of time before the most indebted states and localities start going hat-in-hand to the federal government requesting massive bailouts. Time for think tanks, academics, and policymakers to start preparing for this eventuality: Should Congress be prepared to offer any assistance, and if so, on what terms?"
This is not the subject for a federal bailout. The states need to come to Jesus on this issue with their own voters finding responsible solutions. It seems likely that this could be catalyst for great positive change in the public sphere, if it is allowed to work itself out. If the federal government simply offers bailouts, nothing will be learned, except how to petition, hat in hand. If the various states are allowed to experiment with solutions, we are likely to see valuable change.
Progressives are not ready for the damage this will bring to the tattered remains of progressivism in the US.
"At least some state and local governments are taking steps to reform their public pension systems before it’s too late."
Two Cheers for Arizona
". . . [T]he Arizona Capitol Times reports on the State Senate’s recent vote to make it more difficult for localities in Arizona to restrict AirBnB apartment rentals without permission from the state government, part of Ducey’s “pre-emptive strike” on sharing economy regulation. (In his State of the State address in January, Ducey said that “Arizona should be to the sharing economy what Texas is to oil and what Silicon Valley used to be to the tech industry.”)
To be sure, the full slate of pension reforms (which include changes to the cost-of-living index and requiring new employees to create their own retirement accounts) has yet to be fully implemented, and the AirBnB bill has yet to pass the House. But if Arizona does manage to execute these changes successfully, and they yield the kinds of returns Ducey is hoping for, the Grand Canyon State could plausibly offer itself as a model model for how to slay the worst features of blue model governance—in particular, crony capitalist carveouts and budget-busting union payoffs—and pave the way for a social system better adapted to the economic and demographic realities of the new century. We’ll be watching."
Kill the pensions by shifting current workers to a defined contribution plan. Calculate how much each of these worker had vested in the pension system and deposit that amount into their new defined contribution account. Then find a way to live with the existing pensioners. This will not be easy, but the federal government does not need to step in and bail out these states.
Oh, and you Oregon public pensioners, don't get too comfortable, this specter also comes for you. Plan accordingly.