Public union pensions
are sinking federal, state and local governments in a tsunami of red ink, a fact not lost on voters and taxpayers at large. Nevertheless, hapless Democrat candidates all across the country still cling to their union life preservers as hot air from union bosses blow them further out to sea. How long will the Democratic Party continue to rearrange the deckchairs on the union Titanic
before the party notices its own ominous list to port?
Even as the unions failed to overthrow the governor of Wisconsin, similar currents, like the landslide victories in San Jose and San Diego of ballot measures meant to cut public-sector retirees' benefits, were pulling the Democratic Party under.
Warren Buffett describes the costs of public-sector retirees as a "time bomb." Put simply, public unions, and the public debt they’ve come to symbolize, are the single biggest threat to U.S. fiscal health, and in the end, this debt will take down the average taxpayer long before the retired government worker funded by deficit dollars.
The Greek-style financial crisis perpetrated by union thugs and subservient Democrats whose campaigns depend on union support is the next financial bubble. However this bubble involves everyone, whether they are paying taxes, retired or subsidized by various government programs. Even with a massive recession in the private industry and mounting government layoffs, we are enjoying the calm before the storm.
The collective wave of debt is a national catastrophe long in the making. California’s total pension liabilities - the money the state is legally required to pay its public-sector retirees - are 30 times more than the state’s annual budget deficit. Annual pension costs rose by 2,000% from 1999 to 2009.
In Illinois, pension liabilities equal15% of general revenue and the debt is rapidly increasing. In Ohio, pension liabilities are now 35% of the state's entire GDP.
Pension plans all across the nation are running up debt on unwary taxpayers through fraudulent pension plans based on phony, unrealistic assumptions about the return on pension investment plans implemented by politicians. For a plan to be deemed solvent, employees and the government must fund it through monthly contributions. The size of those contributions is determined by assumptions about the investment returns of the plan. Whatever amount faulty assumptions are off, taxpayers are on the hook to pay, and governments just keep on borrowing to cover their own deficit spending. Meanwhile, unions collect union dues and use much of the money to support candidates, mostly Democrats, who pay it forward with taxpayers’ money. These union government worker pension plans should be illegal.
, David Crane, an economic adviser to former California governor Arnold Schwarzenegger, pointed out that state pension funds have assumed that the stock market will grow 40% faster in the 21st century than it did in the 20th century. "In other words, while the market has grown 175 times during the past 100 years, state governments are assuming that it will grow 1,750 times its size over the next hundred years," as Fareed Zakaria states in the Time article.
In Wisconsin, we saw an exhibition fight between big unions and voters which pitted pro-union Democrat Tom Barrett against embattled Gov. Scott Walker. More voters than ever realize what is at stake and how the system is ripping them off. Union bosses ask for regular pay increases. Governors and mayors can only give them so much in salary hikes because of requirements for balanced budgets or other constraints. To get around their own policies, pro-union and other free-spending politicians grant generous increases to pension benefits.
In the past, pro-union politicos could get away with their absurd assumptions about pension investments since those costs would slam the budget many years after they were enjoying a comfortable retirement on the taxpayers’ dime.
Now, is many years later, and Democrats are going to pay for their support of big unions, especially Public-sector unions, with their own retirement.