American taxpayers are going to be completely destroyed by government-employee pension plans if drastic reforms do not happen–and soon.
The tax-funded pension plans of government employees are a ticking nuclear time bomb that threatens to blow the American taxpayer to bits, along with the economy. It may already be too late to stop it. And bailouts from a broke federal government will only make it worse.
Consider that even before the current crisis melted the economy, just state and local public pensions were facing a $5 trillion shortfall, according to a study by the Stanford Institute for Economic Policy Research. Total assets were about $4.3 trillion.
For perspective, Social Security, which serves everyone else — the other 83 percent of the population — has less than $3 trillion in assets.
Even if it were possible, having the broke federal government bail out these plans — concocted by government-employee unions and the political hacks they purchased — will not solve the problem. In fact, bailouts would only make everything much, much worse.
Obviously, the feds and the Federal Reserve have already been quietly bailing them out.
The absurdly named “CARES Act,” which apparently was meant to show how much your overlords care for you, funneled $190 billion to states, not including another $100 billion for government schools, Medicaid, and more. That is almost $250 billion to state and local governments — a number equivalent to about 3 months worth of state tax revenue.
Meanwhile, the Federal Reserve is quietly buying up endless amounts of state and municipal debt using currency created out of nothing. The Fed is also buying corporate debt, stock, and much more using front companies euphemistically dubbed “Special Purpose Vehicles.”
This is all insane, of course. And it’s going to end in disaster for everyone — including the government employees who are looting the taxpayer with help from politicians and the unions.
Not satisfied with that, though, Democrat states including New York and Illinois are now demanding yet another round of bailouts for their bloated state and local governments.
At first, Senate Majority Mitch McConnell took a hard line. “I would certainly be in favor of allowing states to use the bankruptcy route,” he said. “It saves some cities. And there’s no good reason for it not to be available.”
The constitutional implications of allowing sovereign state governments to declare bankruptcy were not discussed, and remain murky.
But McConnell correctly pointed out that those states would prefer to have Uncle Sam (and American taxpayers) pick up the tab.
“My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that,” he said on a radio show. “That’s not something I’m going to be in favor of.”
Trump echoed those remarks on Twitter.
“Why should the people and taxpayers of America be bailing out poorly run states (like Illinois, as example) and cities, in all cases Democrat run and managed, when most of the other states are not looking for bailout help?” he asked. “I am open to discussing anything, but just asking?”
Within days, though, McConnell was already backpedaling, saying he was “open” to a deal that would rob future generations of Americans to prop up broke Democrat-run state and local governments, if they agreed to various strings he is seeking to attach such as limiting liability for coronavirus.
But of course, a federal bailout would make taxpayers and responsible voters in more fiscally prudent jurisdictions pay for the idiotic and insane government waste and looting of Democrat jurisdictions. And it also would not solve the pension problem, which affects virtually every government at every level in America.
The situation is so bad, it is hard to comprehend. Keep in mind, in Illinois, as one example, the average total benefits for government workers — about half of whom retire before age 60 and earned far more than their victims in the private sector — is around $2 million dollars per retiree.
Over one fourth of the state’s budget now goes to pensions. And in some cities such as Peoria, 85 percent of the city’s tax levy goes to fund pensions of government employees, with that number set to rise to 100 percent soon.
Even “low-paid” workers are making a killing off the backs of taxpayers. An average teacher in Illinois who starts at age 22 could retire at age 52 and collect more than $70,000 pension per year. They also get healthcare and other benefits unheard of in the private sector.
Some retirees such as former University of Illinois Professor Leslie Heffez are taking in over $500,000 each year with an estimated total lifetime payout approaching $20 million, government data show.
In Illinois State Senate boss Don Harmon’s request for a federal bailout, he asked Congress for $10 billion in funding for the public pensions — and just $1 billion for poor people’s healthcare.
California has well over 25,000 government retirees bringing in over $100,000 annually in pension benefits, not including healthcare and other benefits.
Even many conservative states and cities have similar numbers. A phone operator in Coral Gables, Florida, for instance, retired in 2008 at about age 50 with a pension of almost $66,000 per year. Now, 12 years later, that has mushroomed into more than $90,000 per year with the automatic 3 percent annual increase.
A retired firefighter in Miami with two government pensions, known as “double dipping,” is bringing home $425,000 annually. “They put a pot of gold in front of me,” he told the Miami Herald. “Why would I turn it down?”
The speed at which this monster grew is breathtaking, too. Many of these pension funds had obligations double, triple, or even quadruple just since the year 2000. And the ballooning fiasco is getting worse, quickly.
The taxpayers who fund this extortion racket, meanwhile, are stuck with the nearly bankrupt Social Security and their devastated 401(k). Average Social Security payments are around $17,000 per year.
While government workers can and often do retire in their early 50s with an enormous, full pension, private sector workers can retire with their measly Social Security payment at 67.
Plus, those private-sector workers are going to be having to pay the government pension monster some big bucks.
In California, according to Stanford, total market pension debts are over $1 trillion — almost $80,000 per household. Illinois has almost $150 billion in unfunded liabilities. Other states such as Alaska, Connecticut, New York, and more are also in similar trouble, along with countless local governments.
One reason for this is that government-sector unions are bursting at the seams with cash. In most states, laws guarantee members and dues for these organizations, ensuring that they have the power to buy politicians — and destroy those who refuse to be bought.
They use these enormous revenues — over $1 billion at the state and federal level — to fund campaigns, political ads, get-out-the-vote schemes, lobbying, and more.
Almost all the beneficiaries of this largess — about 95 percent, to be precise — are Democrats.
Pressure on these politicians from government-sector unions has made the pensions extremely difficult, if not impossible, to push through reforms, even though without reforms, the result will be an economic catastrophe.
Despite the rhetoric coming from Democrat governors and mayors whining about how coronavirus and the recent market meltdown was to blame, this coming tsunami was taking shape for over a decade.
In fact, this writer warned about it in a May 11, 2009, article for The New American magazine headlined Cancerous Growth of Government.
“The cost of public employees is about to sky-rocket as well, in part owing to poor planning by public retirement plans,” reads the article from more than a decade ago before outlining the difference between defined-benefit plans of government workers and defined-contribution plans in the private sector.
Citing an estimate by the National Bureau of Economic Research, the article noted that pension promises made just by state governments would total about $8 trillion by 2024. This would “push many state’s economies into a death spiral,” one expert quoted in the piece explained.
The article also warned that the federal government’s unfunded pension and benefit liabilities at the time were close to $5 trillion.
It was easy to see where this was going to anyone who was paying attention: “State and local governments … will either have to beg the federal government for a bailout, slash spending in other areas, or take the most likely course of action: raise taxes even more,” the piece predicted.
And the cancer goes even deeper than just bankrupting taxpayers and productive citizens.
Another major problem with this absurd scenario that is almost never mentioned is that it allows these government pension funds to bully publicly traded companies into supporting “social justice,” Big Government, and other policies that sensible companies in a free market would never dream of backing.
With trillions in assets under management, these pension funds can make or break companies — and the companies, even the Fortune 500, all know it.
Just this month, a member of Congress revealed that some $50 billion from the U.S. military’s pension fund was being used to fund Communist Chinese state-owned “companies” producing military ships and aircraft for the regime’s “People’s Liberation Army.” Some of those companies are even on the U.S. sanctions list.
“We cannot have the American military who’s out on the frontlines retirement account funding their biggest adversary in the 21st Century,” said Congressman Michael Waltz (R-Fla.), comparing it to funding Soviet industry during the Cold War. “America, we need to wake up.”
Obviously, a bailout for these reckless state and local governments and their bloated pension schemes will not solve the existential problems they pose to America, the free market, and the U.S. taxpayer.
Rather, it will pour billions into Democrat campaign coffers, allow further distortion of the U.S. business sector, and kick the pension can down the road for perhaps another few years at best.
Then America will be right back in this situation again. Worse, it could potentially include a Democrat Congress and White House ready to loot all hard-working Americans to shower endless “free” money on their cronies at the state and local level.
Of course, the Social Security system is a giant Ponzi scheme — and it is almost insolvent. And it’s unconstitutional. It should ultimately be abolished, over the long term, taking care not to harm anyone already dependent on it.
But analysts who have thought about this public-pension nightmare have suggested one solution to the looming crisis that just might work: abolishing the government pension systems and dumping all those trillions — along with all those government workers — into the Social Security system.
It may not be perfect, but it would stop the bleeding, and it would give everyone a powerful incentive to fix the system.
Drastic times call for drastic measures. It is time to deal with the pension crisis, hold Democrat politicians accountable, drastically reduce the size and scope of government, fix the corrupt monetary system, and open the economy back up.
Failing to deal with any of those critical issues may well be the death-knell for America’s constitutional Republic. The time to do it is now.