Sep 25 2006
Government Pension & Benefit Shortfalls Looming for Taxpayers
- Last month, JP Morgan released what it considers the most comprehensive preliminary estimate. It projects the present value of unfunded health care and other non-pension benefits at between $600 billion and $1.3 trillion.“There’s a good chance some government entities are going to go bankrupt,” said California Assemblyman Keith Richman, a Republican from Chatsworth. “But the issue isn’t just bankruptcy, it’s governments dying of a thousand cuts in services. The costs of promises that have been made are going to be astronomical.”
That’s from and ABC news article titled Retiree Health Care May Overwhelm Governments
That’s because new accounting rules ordered by The Government Accounting Standards Board in 2004 are to take effect in 2008. These rules will enable taxpayers to see — for the first time –just how much they’re paying to provide benefits to active and retired state and local public employees. The new rules don’t require governments to fund liabilities right away. However, they must disclose the present value of these future costs and estimate how much more money is needed to pay for them. In other words, politicians will no longer be able to promise to win elections, and then walk away, leaving hidden problems to blow up years down the road under future regimes.
Our favorite part of the article is this:
- Union officials say it’s not their fault municipalities put themselves in a hole by promising more than they can deliver.
Put themselves in a hole? As if union lobbies — like the Teachers’ Union (running under innocent names like the National Education Association) and other government service unions don’t contribute tens of $ millions to candidates in order for them to load-up union benefits in exchange for reliable votes. It may as well have said “we can’t help that politicians accept our contributions as payment for what unions are organized to buy.”
Will the taxpayers wake up? Will they act prudently with their votes? Probably not. My guess is that they’ll stay true to form and ask the Federal Government to bail them out, who will in turn go to the Federal Reserve banking cartel with borrowing hat in hand. The Fed will in turn print money out of thin air to paper over the shortfall - and in exchange receive a stream of taxpayer backed interest paying loans. Citizens pay twice - once through taxes and also through the hidden tax of inflation.
Doubters need only look at this as merely a continuation a trend established and perfected since the creation of the Fed nearly 100 years ago. Ignore its implications at your own peril.
