Thursday, May 20, 2010

The Next Big Bailouts - State Pension Plans

Hold on to your wallets.

See: Will State Pension Funds Need a $1 Trillion Bailout?

The federal government could face another economic disaster and massive bailouts within a decade if it doesn't force state pension funds to revamp their operations soon, an economist says.

Even if they meet "aggressive" 8 percent growth targets, several states will see the reserves in their pension funds dry up by the end of 2020, with many more running out of cash within another decade, says Joshua Rauh, an economist at Northwestern University's Kellogg School of Management. Broke states are likely to go begging to the federal government, which would probably have to bail them out to the tune of more than $1 trillion, he argues in a new paper.

It is important to keep in mind how big of a deal this is. The beneficiaries of these state pension funds are very powerful politically. These are government employees. They own the government. It is their play-toy. (Government employees are the most powerful lobby in any government.)

You will be told to just shut up and pay.

More debt. More taxes. Are we having fun yet?

See also: State Pensions Face $1 Trillion Shortfall
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1 comment:

  1. AnonymousSaturday, May 22, 2010 at 9:57:00 PM PDT

    Hey Syrah! This is realwest and I just had to say what a GREAT post this is. Course, the US Taxpayers will have to fund the bailout of the Union Pension funds - hell Health Care Reform - I just learned this today May 22 - included $56 Billion (yes BILLION) bucks for Union bailouts - not sure if it's limited to Pension funds either.

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