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My personal guess is a state constitutional crisis.
State courts will order the payments even though there is no cash to cover the check. Will state courts intervene and confiscate general fund money to pay then-current pensions? Will state courts order an increase in taxes to fund pensions? Would such orders violate state constitutions? Would the SCOTUS intervene somehow?
I have no idea what will happen, I just know you can't get blood from a stone.
No matter how much you say: "They will have to pay"
It was the bankruptcy of key large corporations in the 1960s (e.g., Studebaker, which in turn meant Studebaker retirees received pennies on the dollar for their pensions) that ultimately led to an important law called ERISA -- The Employee Retirement and Income Security Act of 1974. Amended several times since, ERISA requires companies to adequately fund their pension plans.
Draft ERISA legislation extended the requirement for adequate funding of pensions to Public Sector Pensions. Makes sense, right - public sector pensions deserve protection in the form of actuarially sound accounting, right?
Public Sector Unions went to Capitol Hill to lobby *against* it.
That's right -- public sector unions did NOT want public sector pensions to be appropriately funded according to actuarial tables.
Why?
The answer is pretty straightforward. Union Bosses knew that the pensions were already relatively underfunded. They also knew that at the next bargaining session, if public sector governments, agencies & authorities were required to put more money into pensions because of ERISA, then that means less money would be available for cash raises in current paychecks to rank-and-file public sector union members.
The Union Bosses did not want money diverted from raises to fund pensions when they knew full well any future pension shortfall would occur decades in the future after they themselves had already retired.
Sooooo.... it was the Public Sector Unions who killed the application of ERISA to Public Sector pension plans.
It is not about Wall Street.
That hasn't happened.
It doesn't have anything to do with the sub-prime mortgages in which people fraudulently borrowed money with no intention of paying it back.
The deficits are the direct result of negotiations between public sector unions and governmental entities & authorities over the past several decades. The negotiations went like this:
Elected officials: "We don't have money for big raises."
Union Bosses: "OK, then give us big increases in our pensions. The bill won't come due for decades until far-off 2017 when you are already retired. It will be someone else's problem."
Elected officials: "That's not fiscally responsible."
Union Bosses: "Give us big raises to our pensions and we will contribute to your re-election campaign & support you for re-election. Fail to give us what we want and we will launch a massive get-out-the-vote effort to support your opponent, donate to your opponent, and make sure you are never elected to anything ever again. So give us what we want. Besides, what do you care? The bill won't come due for decades in far-off 2017."
Elected officials: "OK."
First, it seems obvious to any honest person that the negotiations above were not honest nor arms-length. Thus, they should be held by the courts to be invalid.
Second, it has been documented everywhere that the Treasury made a profit by preventing the wholesale collapse of our economic system. Taxpayer money was not "given" to Wall Street. Taxpayer money was injected into major banks balance sheets (no gift - it was in return for purchasing stock). Taxpayers ultimately made a profit when the stock was sold.
The crooks to which you should focus your ire are Public Sector Union Bosses & elected officials whom they bribed.
Keep in mind that there are many public sector employees, including teachers, who are not in unions at all. Situations vary greatly between states.
Keep in mind that there are many public sector employees, including teachers, who are not in unions at all. Situations vary greatly between states.
California teachers have been unionized for many decades. But yes, situations vary greatly from state to state, which is why the statement in the thread title is absurd.
Calif. has over 40 million people so there is lots and lots of teachers. Their union is the most powerful on the planet.
Calif. is now proposing the highest gas tax in history plus a big increase in car registration plus a small fee for electric cars plus a huge increase in diesel fuel tax to fix the roads.
Because all the money collected to maintain the roads has gone to public employees unions pensions.
Democrats have a 2/3rds majority in both the house and senate so it will undoubtedly pass.
Due largely to increases in Medicare and Social Security costs, the federal debt will reach 150 percent of gross domestic product in 2047, the CBO report said.
The total current debt held by the public of $14.3 trillion is 77 percent of GDP. The current total debt level of $18.8 trillion is about 101 percent of GDP (the CBO computes debt to GDP based on public debt). The debt-to-GDP ratio would rise to 89 percent in 2027, according to current projections.
Is it fair to say that all of the folks against public sector pensions and the debt associated with them are also against Social Security and Medicare and the debt associated with those programs. Remember pensioner contribute to their pensions just like SS and Medicare recipients made contributions. Are they of the what is good for the Goose is good for the Gander school? Or perhaps are they of take your benefits but not mine even when the examples are parallel?
Is it fair to say that all of the folks against public sector pensions and the debt associated with them are also against Social Security and Medicare and the debt associated with those programs. Remember pensioner contribute to their pensions just like SS and Medicare recipients made contributions. Are they of the what is good for the Goose is good for the Gander school? Or perhaps are they of take your benefits but not mine even when the examples are parallel?
A sober assessment of the situation is that benefits and spending, of all types, are going to have to be drastically reduced, and taxes will likely have to be hiked. This doesn't please either party, and that's why it won't get done.
The more things change. You know just because this is the USA doesn't mean it cannot happen. Some of these pensions projected 8% return ad infinitum.
The only way these pensions can be paid is if they can get more money from the people. Raise property taxes until people just are forced to walk away from their homes. Happened in Ancient Rome it can sure happen here.
The more things change. You know just because this is the USA doesn't mean it cannot happen. Some of these pensions projected 8% return ad infinitum.
The only way these pensions can be paid is if they can get more money from the people. Raise property taxes until people just are forced to walk away from their homes. Happened in Ancient Rome it can sure happen here.
So pensioners, just like SS recipients and those on Medicare will see their programs yanked from them and the poor house in front of them.
Folks should note (and the cop from Dallas too) that many public employees do not pay into social security. Dallas county is an example. So that "big"contribution is instead of SS tax. The cities and states thought they'd do much better in their investing than SS - less cost for the city/state. We now know how this is turning out.
The problem is real, and it is widespread. But looking for scapegoats among the cities/states/wall street/unions/employees/etc. won't address the problem we have now. Instead, pay attention to the boneheaded "solutions" being used now, such as borrowing (via bonds) to fund a plan (looking at you, Illinois), which only kicks the can down the road. Be aware of the different kinds of bonds that can be issued by a government.
Most importantly, if you're in an affected place, pay attention and vote, lest short term fixes just make the problem worse. Don't tell me how deserving/undeserving someone is. That's in the past.
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