by Dave Blount | October 25, 2010 2:24 pm
Liberals love the word “sustainable.” However, the mess they’ve made of California is anything but:
California, which has the largest U.S. public-pension fund, faces liabilities that may exceed its annual state-tax revenue fivefold within two years unless lawmakers rein in benefits, according to a study.
To keep their promises to retirees, the California Public Employees Retirement System, the biggest plan, the California State Teachers Retirement System, the second-largest, and the University of California Retirement System may have combined liabilities of more than 5.5 times the state’s annual tax revenue by fiscal 2012, according to the study released today by the Milken Institute. Levies are forecast to reach about $89 billion in the year that began July 1.
Debts to government retirees including those in California, the biggest state by population, have grown into a national crisis as pension plans strive to meet obligations to more than 19 million active and retired firefighters, police officers, teachers and other state workers. Fewer than half the plans had assets to cover 80 percent of promised benefits in fiscal 2009, according to data compiled for last month’s Cities and Debt Briefing hosted by Bloomberg Link.×
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“California simply lacks the fiscal capacity to guarantee public-pension payments, particularly given the wave of state employees set to retire” in future years, said researchers Perry Wong and I-Ling Shen in the Milken report.
The country as a whole doesn’t have the fiscal capacity either. That’s why when the federal government inevitably tries to bail out California with our money, the result will be that the whole country is pulled down after it into economic ruin.
We had better elect politicians willing to fight government employee unions as if the country’s existence depends on it — because it does.
On a tip from Just TheTip. Hat tip: Mish’s Global Economic Trend Analysis. Cross-posted at Moonbattery.
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