opinion by northwestern economics professor Joshua Rauh. Study is on Illinois. its a video and interesting/scary. The Link
Interesting video. Unfunded pension liabilities are a fraud b/c they don't come from an independent fund. There should be a huge pension fund that has been invested over time and all benefits come from that.....not from future tax payers. When pensions come from general revenue that is not sustainable. Promises to public employees? They need to phase out these pensions. New employees no pensions....get 401k plan. Employees over 65 who have already retired....full pensions. Other employees who are either retired but under age of 50 or still working (20, 30, 40 year olds) can get their pensions stopped and then rolled into a 401k plan. May cost a bit up front to settle these pension promises but in the long run it will save Trillions and get states back on track.
Congratulations on turning the most powerful country in the history of the world, a beacon of liberty for humanity, into a gd banana republic. .
That Gingrich plan is horrible. Yes, let's just allow them to renig on their debts and allow the muni bonds to collapse. How about some fiscal responsibility. At least make a plan and renegotiate your debt payments maybe. Illinois is hiking their taxes temporarily: money.cnn.com/2011/01/12/news/economy/illinois_income_tax/index.htm?hpt=T2
Yes, Illinois is hiking state income taxes by 60% without even addressing spending cuts. The other two "temporary" tax hikes they made were never rolled back. Hey, this is how you create jobs, the Chicago way. Except that Illinois is 48th in the nation in job creation.
Agreed. And their biggest expense is those state pension funds so until they deal with those they will be continuing to spend. This will be interesting to watch over the next few years. We'll see states renegotiate the pension plans and make massive tax cuts, and then we'll have Illinois. We'll get to see all the affects of each state's strategy.
It's a lose-lose choice. For states using the Illinois strategy (higher taxes to cover the deficits) businesses will collapse and/or move, people will spend less because more of their wages will have been taxed away, and the hole will get deeper. For states using the New Jersey model (massive spending cuts, renegotiating pension plans - possibly following a state bankrupcy filing), look for riots and/or relocation of the poorer population out of the state. The country's governments are flat broke. There is no way out without pain. Its pick your poison.
Please note that Texas is not in this predicatment, and the state pension is funded at an acceptable amount of 83%. However, exorbitantly escalating health care costs may soon cause problems, but the benefits will have to be cut and the co-pays and drug costs raised. There's some guidelines for how much these funds need to have to provide their promised benefits, and it appears some states went way overboard in abusing these sound fiscal practices. I don't know what they are going to do.
