There are only three possibilities regarding these pension obligations. You agree to let them double your real estate taxes, government employees agree to take cuts or the States declare bankruptcy and default on their promises. Which do you think will happen?
Chart of the Day
IL, CA, NJ, TX and PA Worst at Keeping Pension Promises
September 12, 2014: IL, CA, NJ, TX and PA are the five worst states at keeping their pension promises. These states continue to increase their pension debt instead of setting aside enough money to pay retired employees.
|
State |
2012 Unfunded Pension Benefits Due |
2013 Unfunded Pension Benefits Due |
|
|
Illinois |
$94.6B |
$100.5B |
|
|
California |
$53.4B |
$59.4B |
|
|
New Jersey |
$34.7B |
$37.6B |
|
|
Texas |
$31.6B |
$35.9B |
|
|
Pennsylvania |
$29.3B |
$34.0B |
|
· These States promise their employees pensions but do not set enough money aside to pay them
· Pensions should be fully funded yearly, since they are part of employee compensation.
· Future taxpayers will be responsible for paying for these debts – for services they never received
Government accounting rules allow these states (and others) hide much of their pension funding problem from public view. See Hidden Pension Debt: CA, IL, NJ, PA, TX 2009-2013 Check your state by selecting ‘Edit Chart Criteria’ below the chart, select your state, scroll down and ‘Generate Chart.’ READ MORE
Pending Pension Crisis – They Are Only a Promise
By Martin Armstrong
We have a major reform coming for the Pension field besides Obama trying to divert that money for infrastructure expenditure. The GASB Statement No. 68, Accounting and Financial Reporting for Pensions, was issued in June, 2012 and is effective for fiscal years beginning after June 15, 2014. This statement is an amendment to GASB Statement No. 27, Accounting for Pensions by State and Local Governmental Employers and GASB Statement No. 50, Pension Disclosures.
This goes into effect for most public pensions during FYE 2016 as many have a Sept-Aug fiscal year. They are just starting to evaluate the effect .
In other words, governments are going to have to report the degree of funding for pensions. This will heighten the insolvency problem and it is right on schedule for 2016.
Even in Canada, the Ontario government faces a potential bill of $400-million to bail out U.S. Steel Canada Inc. pensioners if the steel maker’s pension plans are not restructured. Then we have companies laying off people a few year before they qualify for pensions. The entire crisis is a real global mess.
I think we are going to see people voting with their feet. I live in California at the moment though I am working on obtaining foreign citizenship at the moment so I can leave. Anyway, why should I pay for the bloated gold plated retirement plans for all these worthless parasites? They have made it next to impossible to do business here and the petty bureaucrats making life difficult for everyone expect to retire when they are 50 and get 90% of their income (and health benefits) for life. It just isn’t going to happen. Not now, not ever.
Eventually, the government is going to have to choose between education, prisons & pensions but there will not be money for all three.
I understand the pension situation and the S.S. situation, well, as much as my pea brain can understand anyway, why is it we never hear about SNAP or welfare running out of money?
Illinois could raise its sales tax to 20% and not cover the amount “robbed” from gov’t pensions.
Does it not leave you bemused to see grown-ups, men and women of presumed above average intelligence, discuss this subject with the dispassion of describing the size of a tree or the color of a car….not a bridge guaranteed to collapse into a chasm.
Someone is going to get stiffed.
It won’t be the taxpayers, they’re leaving the state by truckloads.
It will be the foolish teachers and the conniving school administrators, cops and fire fighters (few of the teachers expect to be rich in retirement, but the other three….oh boy, were they promised six figure gold plated retirements) who will have nowhere to sit when the music stops.
Card, SNAP and other welfare programs are small potatoes by comparison.
They could be funded by a eliminating a ROUNDING ERROR in what is spent on Medicare or Policing the World for Profit.
Social security is supposedly somewhere in between.
Not sure what will happen, but I do know what SHOULD happen. Something like this, for starters:
http://rt.com/news/188260-ukraine-protesters-deputy-rubbish-bin/
Why can’t Americans do this kind of thing?
dc sunsets I agree with your thinking But do you really believe the PTB (namely government employees – ex elected officials are powerless I believe the rest of us are really powerless, unless you want a revolution About 30 years ago I was having a small sidewalk put in next to my garage and one of the guys working on it was a young Irish kid. Most of the home builders in my area (Chicago) are Irish We got to talking about new housing developments and how the builder of the development I moved into was a simple carpenter from Ireland, now a very successful and wealthy builder The one phrase the kid said summed it up YOU GOT TO KNOW THE TOWN CONSTABLE
In the fine state of Il the pensions are guaranteed in the state constitution. We will be paying these drones until the last producer gives up and departs for greener pastures. The morons who live in Lincoln park, North shore , Western Suburbs would rather cut their own dicks off than move. Addicted to the Bears , Blackhawks , etc. 21 k property taxes on house worth maybe 700k and falling, no sewer or water or garbage. The squeezing of the productive has a long way to go before the final curtain.
If IL crooks (er, politicians) attempt to make good on the pensions it will drive anyone who is a net taxpayer out of the state, destroying everyone’s real estate value (and the value of anything else that can’t be relocated across the border.)
I say this despite my wife having paid into Teacher Retirement System for years.
Card 802 says:
“…why is it we never hear about SNAP or welfare running out of money?”
Because it is mandatory spending not governed by a real budget. The laws simply gives the qualifications for he programs and whoever qualifies get whatever benefit they qualify for. The actual money spent each year is dictated by the law and not how much money should be spent. You can only cut the spending by making the qualifications stiffer.
Just maybe wishful thinking, but my wifes and mine retirement are for the most part in 401’s and IRA/s. I pretty much mentally gave up on SS as being viable say in 2030 or so. My point: Can I sleep better at night with Vanguard index 401k and IRA’s or is that too a wishful delusion. As a corrollary, this line of thought assumes no black sheep world disaster. Thanks in advance.
Jim
Your going to need a sleeping pill after the next financial implosion.
In answer to the question at hand of whch is the likely scenario, I see the states defaulting. Especialy the ultra lib ones of Cali., Ill., and NY. I don’t know how it plays out after that but I cannot see a doubling of prop. taxes, or a state (with few exceptions–like a Wisconsin) asking their “valued” employees to take one for the team.