Every year state politicians loot the pensions of more than 17 million public workers and retirees to “balance” budgets, yet those workers keep putting the looters back into office while fighting the few who try to head off this $4-trillion national economic catastrophe.
A look at the latest U.S. Census data shows that over four years the geniuses running state pensions lost almost 20 percent — $552 billion in total investment value — and blew more than $600 billion of income needed to pay benefits. They lost $4.33 for every dollar public workers “contributed.”
However, the geniuses did manage to pocket $36.6 billion in “Other Expenses” for themselves and their pals in the process.
That puts funds almost $1.3 trillion behind where they promised to be and increased the real long-term funding shortfall to well over $4 trillion despite taxpayers pumping $378 billion into the void through employee and government “contributions.”
Why do rank-and-file public workers continue to feed this devouring beast? Maybe it’s because they think oblivious taxpayers will endure decades of service cuts and tax increases to pay for it. They should think again.
Why do state and municipal workers cling to those who betray them?
Here’s an answer: The few getting rich off this scam use accounting tricks to lie about how deep the public pension crisis really is.
This crisis goes beyond Republican or Democrat, liberal or conservative. Delusion and denial are so entrenched many propagating the lies actually believe them. Others cynically coordinate a propaganda disinformation campaign in an attempt to hold off the day of reckoning as long as possible. That lets them take as much off the top as they can and flee before their house of lies crashes.
Crash it must, eventually. Census data for the top 100 state and local pension plans through the third quarter
show 2011 will be another year of public pension catastrophe.
The latest full fiscal year survey from Census shows another disaster trend: Fewer “active” members paying for more “inactive” members and average benefits increasing more than 13 percent even as money to pay them dwindles.
Despite politicians’ claims of drastic personnel cuts, total membership increased 3.9 percent from 2007 to 2010. But that’s only 1.2 percent more “active” members paying in, with “inactive” rising 12.5 percent.
Fewer paying in more, and more taking out more is a formula for certain disaster. It means young public workers are doomed to lifetimes of harder work, lower pay, higher contributions, later retirements and slashed benefits.
Yet they continue to cling to their oppressors. Take Wisconsin, please.
A Pew Center on the States “Widening Gap
” study last year cited Wisconsin as fully funded with full contributions to sustain the pension fund forever.
That pension plan was fully funded if you believed investment gurus would get 55 percent in 2011, the gain needed just to stay even. The investment gurus in fact failed. Now Wisconsin taxpayers have even more to make up.
From July 1, 2007, through June 30, 2010, total holdings actually crashed 12.5 percent, down more than $10 billion instead of up the $43 billion gain politicians promised. Earnings actually were a loss of $1.8 billion, for an average over the period of minus 0.61 percent. Some performance.
But get this: Public workers “contributed” almost $2.9 billion of taxpayer money during those years while the politicians shorted them by putting in only $2.5 billion. That shortage is money taken from pensions to “balance” budgets.
Worse, for every worker dollar invested, fund managers lost $4.27 in value and earnings while “Other Payments” to those who lost it totaled $1.8 billion. Such a deal.
This robbery of workers and taxpayers happened long before Scott Walker won the governor’s hot seat in the 2010 election. Now he faces recall for his fumbling attempts to pull Wisconsin out of a fiscal death spiral even he does not fully comprehend.
Who is leading the recall campaign? The very public workers who got screwed while their guy, Gov. Jim Doyle, held office and Democrats controlled the Legislature.
What a racket. These slaves actually pay their masters and fight to put them back in power.
The trend is ugly and inexorable. Despite any claims of austerity in Wisconsin, “Covered Payroll” over this time increased 14.5 percent, while “Active Membership” went up only 1.7 percent. In fact, “Total Beneficiaries” went up almost six times the increase in those carrying the load.
While the state lost more than $12 billion in value and earnings, it paid out $16.4 billion in benefits and expenses. That means the Wisconsin pension system never can recover from the past four years.
Yet taxpayers keep dumping good money after bad in “contributions” extorted through chump state workers and lying politicians.
And remember, Wisconsin claims to have one of the best fully funded pension plans in the country. That claim is patently false.
It does, however, prove the magnitude of our national municipal and state pension crisis. We are at the point of no return, a fiscal event horizon of perpetual debt.
Government workers should be fighting those who take money out of their pockets and blow it instead of going after the taxpayers who put money into their pockets.
If our state leaders do not act this year to honestly admit hidden debt and begin reducing it, they indenture generations of taxpayers and public workers.
Frank Keegan is editor of Statebudgetsolutions.org, a project of sunshinereview.org. The State Budget Solutions Project is nonpartisan, positive, pro-reform, proactive and anchored in fundamental-systemic solutions. The goal is to successfully engage political journalists/bloggers, state officials and opinion leaders in a new way of thinking about state government and budgets, fundamental reforms, transparency and accountability.