Wednesday, March 14, 2012

Broken Promises: Pensions All Over America Are Being Savagely Cut Or Are Vanishing Completely

Pensions are vastly underfunded but the situation has reached a crisis level with public sector pensions at the state and local level where shortfalls have been consistently estimated at between $3 and $4 plus trillion. Politicians are notorious for promising public sector labor unions the sun, the moon and the stars in return for endorsements but these promises are rarely funded at the legislative level. The situation is so bad that some states and cities have resorted to issuing pension obligation bonds (POB's) just to fund current public pension obligations. The public pension crisis continues to be just another un-detonated financial bomb but the fuse is getting shorter.
According to Northwestern University Professor John Rauh, the latest estimate of the total amount of unfunded pension and healthcare obligations for state and local governments across the United States is 4.4 trillion dollars. America is continually becoming a poorer nation and all of that money is simply not going to magically materialize somehow. So where is that 4.4 trillion dollars going to come from? Well, either pension benefits are going to have to be cut a lot more all over America or taxes will need to be raised dramatically. Either way, we are all going to feel the pain of these broken promises. There simply is not enough money out there to keep all of the pension commitments that have been made. Something has got to give.
Read the rest here
The Economic Collapse