As reported by the Associated Press, the Pew Center on the States released a report citing that there is at least a ONE TRILLION DOLLAR deficit in state pension plans.
The article by AP begins by stating, “States may be forced to reduce benefits, raise taxes or slash government services…” due to the billion dollar gap.
More than likely, it will be a combination of all three.
The study, unfortunately, does not include any county, city or municipal pension programs.
The most troublesome news about the study, however, is that AP says the report does not necessarily include pension plan losses from the 2008 economic downfall.
Thus, the trillion dollar gap is, in all reality, much much more.
According to the AP article, “The report said policy makers have exacerbated the problem by expanding benefits, relying on overly optimistic assumptions about investment returns and failing to sufficiently fund the programs.”
That phrase “relying on overly optimistic assumptions about investment returns” is scary.
This sort of financial mis-management, regardless of the 2008 financial market crash (as the Pew study does not take ramifications of that into account), heightens concern for Main Street USA that the public sector (i.e., the federal government) should take over healthcare or any other services they may be considering, for that matter.
The phrase “expanding benefits” is also worrisome. Why is it that public sector executives feel that they have the right to expand benefits if money is not there to cover the obligation?
Does the thought process during public sector budget meetings run along the lines of, “Oh, not to worry, we can always raise taxes, or charge new fees for services to make up for that gap.”
And then to top it off, “failing to sufficiently fund the programs” simply means that, come budget time, those in charge decided that certain budget items would be covered with money that is currently available while leaving the pension plan with less money than called for, thus widening the deficit even more.
That sort of “planning” is simply policy-makers not taking any responsibility for actions taken, but, rather, pushing the problem off to the next generation.
That is corrupt and criminal.
As more and more services are performed by the public sector, which seems to have no rules against operating with massive debt obligations or not meeting financial projections, the burden will ultimately fall on the US taxpayer.
And, while the White House Administration and Congress continue to implement, or strongly suggest the need for, more government oversight in and on the private sector, who is it that is running oversight on their own financial misdeeds?
Food for thought.
Over For Now.
Main Street One