Public Servants Feel Sting of Budget Rancor

Washington Post ^ | December 21, 2010 | Karen Tumulty and Ed O'Keefe

[Liz]

Contact writer Rich Karlgaard, Forbes Magazine.

[John O]

I’m not here to be quizzed by the likes of you.

So it's "No" then. Figures.

Lurker, your passion for this argument must have hindered your reading skills. Back in post 53 CitizenUSA named the enumerated power that is applicable to this discussion (That is, to the point he was making), national defense.

Defense and the rest of the powers are found in Article I Section 8.

[CutePuppy]

One of the problems is that there are simply too many government workers employed by too many unnecessary, unneeded and often deleterious government agencies and departments, which of course, among other expenses, results in egregiously high overall government compensation burden on the private sector.

But re specifically the pension and benefits system, federal government is not quite as bad for the taxpayers as the states and cities "government entitlement racket," particularly in the blue states and cities, but they all point to the need of downsizing the government workforce and abolishing or reducing the influence of government employees' unions:

Excerpt from Public Pensions Face Underfunding Crisis Report: Philadelphia, New York, Chicago and Boston Top List of Cash-Starved Plans - AP, by Alan Farnham, 2010 December 13

Two professors of finance are giving a sharp rap on the knuckles to Philadelphia, Boston, Chicago and other major cities. Their warning: Better fix your pension problems fast.

An analysis by Robert Novy-Marx of the University of Rochester and Joshua Rauh of the Kellogg School of Management finds that public pension plans for America's 50 biggest cities and counties are underfunded by $382 billion -- or $14,000 for every household in those same cities. Some of the biggest plans may run out of money to pay promised benefits in as little as five to eight years. ..... < snip >

..... Year after year, municipalities have put off fully funding their pension obligations, just kicking the can down the road. Now, though, with the Baby Boom retiring, that road is running out.

"For 30 years elected officials have failed to meet these 'boring' obligations," says Zuccht, referring to his city's and others' pension plans. "They preferred to spend their money on 'exciting' things like parks and libraries and recreation. Guess what? It's come due now. It's hit the fan."

Cities claim their liability is less -- only $190 billion, or $7,000 per household. But Rauh and Novy-Marx say this lower figure is the result of government accounting that assumes too rosy a return on assets and underestimates the cost of pension promises. The professors use private sector accounting standards, then calculate how long the assets in each fund (as of June 2009) could keep paying out the benefits promised, as of that same date. ..... < snip >

[PDF file] The table of 50 municipalities with the biggest underfunded pensions is at the end.

Article goes on to mention that, for example, in California, the "public service" obligations to pay are written into the state's constitution, gives an example of city of Vallejo go into bankruptcy to have the judge "pop the unions" and modify the public pension contracts, and contrasts it with the pensions in the private sector where this is not controversial...

That's just cities, the Pew Center estimates that the states' pension systems alone have a shortfall of about $1 Trillion.

This kind of burdens of government on productive private sector economy are simply not sustainable. "We are all Keynesians now" has led directly to "We are all bankrupt now."