You can thank your elected officials at the state and local level for making a mess of the public pension system, says Steve Malanga, a senior fellow at the Manhattan Institute.
"Around the country, state and local officials have increasingly discovered over the years that they can exploit the complex and sometimes ill-defined accounting of government pension systems, as well as loopholes in their own laws governing those pensions," he writes in the Washington Examiner.
"Over time, elected officials came to promise workers politically popular new benefits without setting aside the money to pay for them, declared 'holidays' from contributions into pension systems and changed their own accounting systems midstream to make the systems seem better funded — all just ways of passing obligations on to future taxpayers."
Laws and rulings that make it difficult to reform pensions have contributed to fiscal meltdowns in places such as Detroit and Stockton, California.
The ugly results have now become apparent.
"Our elected representatives played a deceptive game of chicken with pension funds. And now the chickens have come home to roost," Malanga says.
America's states and municipalities face a $1.5 trillion pension shortfall, and possibly $4 trillion if the funds' investment returns don't match expectations, he explains.
"In places with the deepest debt, taxpayers face rising taxes and declining services, which is hardly the sort of place that a family or a business wants to call home," he says.
For example, he said that places that cannot reform pensions, or where legislators were slow to act, are inevitably seeing tax increases to finance steep obligations.
Via: Newsmax
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"Around the country, state and local officials have increasingly discovered over the years that they can exploit the complex and sometimes ill-defined accounting of government pension systems, as well as loopholes in their own laws governing those pensions," he writes in the Washington Examiner.
"Over time, elected officials came to promise workers politically popular new benefits without setting aside the money to pay for them, declared 'holidays' from contributions into pension systems and changed their own accounting systems midstream to make the systems seem better funded — all just ways of passing obligations on to future taxpayers."
Laws and rulings that make it difficult to reform pensions have contributed to fiscal meltdowns in places such as Detroit and Stockton, California.
The ugly results have now become apparent.
"Our elected representatives played a deceptive game of chicken with pension funds. And now the chickens have come home to roost," Malanga says.
America's states and municipalities face a $1.5 trillion pension shortfall, and possibly $4 trillion if the funds' investment returns don't match expectations, he explains.
"In places with the deepest debt, taxpayers face rising taxes and declining services, which is hardly the sort of place that a family or a business wants to call home," he says.
For example, he said that places that cannot reform pensions, or where legislators were slow to act, are inevitably seeing tax increases to finance steep obligations.
Via: Newsmax
Continue Reading.....
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