"Take a good look at your own state. How are the government pensions funded? Are they adequate or is your state on the same path as Illinois. Just asking..."
This could be the race of the "Blues". Blues? Blue what? And what race? This is the blue state marathon. Okay, maybe now it has turned into a sprint. And leading the pack right now to go over the cliff just like the Thelma and Louise movie is the great state of Illinois. How bad can it be? The current Republican Governor of Illinois, Bruce Rauner, recently said his state has entered "Banana Republic" status.
One would think that California with a state debt approaching $1.1T (Yes, that is trillion, not billion), would be the first state to go over the cliff. Ha! Illinois, a state which has existed under crushing Democratic rule and blistering corruption as long as I can remember, is finally starting to reap the negative benefits of such.
How bad is it? A top financial official recently warned that 100% (that be all) of the revenue projected to come in needs to go to court ordered payments. The state is so broke, it might have to abandon the state lottery as they will not be able to honor cash prizes won. The state also has $130B of unfunded pension obligation. And to put frosting on the cake, it also has $13B of unpaid bills.
The battle royal (politically) will be in Illinois, instead of a state like California. California has all but outlawed Republicans. So the monopoly of Democrats in California are spending money like nobody's business. The result? California's debt is almost looking as bad as our national debt.
Illinois on the other hand, has a Republican Governor who is trying to use a leaky bucket to bail out the Titanic. His biggest problem? A Democratic controlled legislature. The battle continues.
Illinois however, might only be the canary in the coalmine with its unfunded pension problem. Yes, it could be that bad. The United States, as well as individual states, have been making bets which cannot be covered for decades. Right now, according to a Business Insider article from April 2016, our country has as much as a $20T problem in unfunded and underfunded pensions. That is a huge bubble that many economists have been warning about for years.
Thinking about a sunny vacation in the Land of Lincoln this summer? I wouldn't. Stay as far away from that state as possible. And one more thing. Take a good look at your own state. How are the government pensions funded? Are they adequate or is your state on the same path as Illinois. Just asking...
Haven't thought of this problem for 13 years. My (34 yrs of service) companies pension was underfunded and not improving, so I took the lump sum and invested. Worked out so far including the 2008 recession. I'll have to take a look at some of the data and respond later. Enjoy the first day of summer, glad I'm not at AZ digs, 120 today. Dave Gjerdingen
ReplyDeleteAfter minimal research, I find nothing good re:under funded public and private pension plans. Liberal assumptions about returns and pensioners living longer has raised havoc. Just like SS, Medicare and Medicaid, pension reductions and outright defaults will haunt the future health of the American economy. 200 years is the magic number, all downhill from here.
ReplyDeletePs: State, county and municipal leaders kicked the can down the road by increasing obligations in future, rather than dealing with issues. Then they retire before issues affect them.
ReplyDelete