As the saying goes, if something can’t last forever, it will stop. And now some public employees are discovering the devastating consequences wrought by government unions and liberal politicians blocking much-needed pension reform.
The Wall Street Journal reported Tuesday that U.S. public pension obligations may be as high as $4 trillion. The problem has metastasized for decades, despite warnings from critics that the benefits promised to many government retirees — which far exceed those available throughout most of the private sector — were financially unsustainable.
But the incestuous alliance between elected Democrats and government unions — labor bosses donate millions to seat and sustain progressive politicians, who return the favor by pushing generous public-sector pension benefits (and repeat) — has fueled the problem and thwarted reforms.
Now, “Certain pension funds face the prospect of insolvency. … It is increasingly likely,” the Journal reports, “that retirees, as well as new workers, will be forced to take deeper benefit cuts.”
In Central Falls, R.I., for instance, retired public safety workers took a 55 percent reduction in their retirement checks when the town of 19,000 declared bankruptcy in 2011 after its unfunded liability for pension and medical benefits hit $80 million, quadruple its annual budget.
“It really gets you sick mentally and physically to go through something like this,” one retired firefighter told the Journal. “It’s a betrayal, as far as I’m concerned.”
The angry firefighter should aim his ire at those who for decades have denied a problem exists. Too many politicians and government labor bosses have irresponsibly dismissed the issue, elevating their own professional survival above sound, long-term fiscal policy.
“Cities and states can either raise taxes, cut services or become more aggressive about reducing benefits to retirees,” the Journal notes. “For many years, governments were unwilling to take these steps because they weren’t politically palatable.”
The consequences of such craven inaction are becoming clear in many locales. Nevada and its local governments may be in better shape than most, but the state retirement system has an unfunded liability of between $13.5 billion and $50 billion, depending on who’s running the numbers.
Republicans have in recent years navigated a handful of minor pension reforms through the legislative rapids. But Democrats and their union allies continue to block more substantial proposals, such as tightening perks and benefits or transitioning to a defined-contribution plan.
Nevada’s escalating pension obligations can’t go on — so eventually they won’t. And don’t expect state taxpayers to tolerate higher levies to preserve lavish benefits for public employees that they can only dream about. If legislative Democrats and public employees continue to derail necessary reforms, they’ll have nobody to blame but themselves for the eventual outcome.