THE KIDS WILL PAY
May 16, 2005
Public services may be nothing to brag about, but retirement is still sweet for government workers and increasingly costly to taxpayers. Chalk that up to unions and to pliant politicians, says Investor's Business Daily (IBD).
The news these days is full of stories about the costs of over-promising. Social Security, United Airlines, General Motors and Medicare are in trouble for making commitments to present and future retirees that they can't afford to keep. The list could go on to cover a number of states.
Pension costs have touched off political warfare in California:
- Gov. Arnold Schwarzenegger backed off from a proposed reform plan after being bloodied by a union PR campaign.
- Taxpayers now can expect to pay $2.6 billion this year to keep the state pension system afloat, up from almost nothing at the start of the decade.
California isn't the only state strapped with pension liabilities:
- New data from the National Association of State Retirement Administrators, covering 127 public pension systems, showed an overall funding gap of $278 billion; assets covered only 88.3 percent of obligations.
- Some states run their systems well and keep costs under control, but a number of others -- Illinois, Oklahoma, Rhode Island, New Mexico and West Virginia -- are scrambling to close funding gaps with bonds, lottery funds and higher retirement ages.
Moving to personal accounts is the only permanent way to prevent future pension blow-ups. Most private sector companies, outside of union enclaves such as autos and airlines, made that shift long ago.
It's what any smart government should be doing, if only to lighten the load on today's young when they hit serious taxpaying age, says IBD.
Source: Editorial, "The Kids Will Pay," Investor's Business Daily, May 16, 2005.
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