More Bad Financial News

In ancient societies it was often the norm for bearers of bad news, like a battle loss, to be quickly executed as a sacrifice to the gods and to limit further publication of the negative report. I am certainly glad that this tradition was terminated long ago for my blogs are often filled with bad and/or disturbing news. Here is some more.


Recently I had the honor of speaking at the monthly meeting of the local Tea Party. While addressing the major issues that are facing our nation I expressed my difficultly at even comprehending that the American national debt was at $12.8 Trillion. An audience member immediately stated that this debt had just passed $13.0 Trillion driving home the fact that many Americans are well aware of our huge debt and are deeply concerned.



In later discussions that evening, the recurring theme was that Americans had to accept and exercise personal sacrifice if national and state and local public debts were to be eliminated. The chances of enough of our citizens voluntarily saying "no thank you" to new public debt if it is for a public recreation facility or for "earned" government retirement benefits is at best remote. But something has to be done.

Government retirement benefits for former employees is in a shortfall status so sever that benefits could well be reduced or even eliminated. A recent report stated, "Skyrocketing employee pension costs have been a major factor in the fiscal crisis affecting every level of government...". The national deficit figure on retirement programs has been set at over $3,000,000,000,000.00 [$3.0 Trillion]. It has been estimated that currently California's government employee retirement program is $500,000,000,000.00 [$500.0 Billion]underfunded. New York is better but at a shortfall of $300,000,000,000.00 [$300.0 Billion]. Ohio and Kentucky and every other State in the Union are also in the red on their State retirement funds.

A group from Stanford University researched extensively the public employee pension situation and opined, "It is highly questionable whether these debt burdens are sustainable." If not sustainable, then what is the solution?

One suggestion has been to continue allowing the right to retire after 20-25 years of government service but with no benefits to be paid until the age of 65 is reached. The notion of being retired at the age of 45-50 with full a government pension is unacceptable. Another idea is to require every government employee under the age of 50 to establish a private retirement fund with some level of government contribution but no government pension. A more drastic plan is to merely declare that all government pension benefits are hereby reduced by 20%. Every pension reform plan, other than the 20% across-the-board reduction plan, has carried with it language that no changes would be made at all to current government plans impacting an individual over the age of 50 years.

I well remember going to a family function in the early 1950s. I was a young boy and we were celebrating the hiring of a young adult relative by a local government. It was explained to me that although the new employee would not be paid as much as he would have received from a private employer, he was set for life with an unthreatened salary and a "solid" government pension. What a different story today! Pay levels now for government employees, and there are more government employees than ever before, are well over the amount of income private businesses pay for similar positions. Additionally, the retirement benefits for government employees can only be described as liberal, lucrative and guaranteed.

Every government entity must address this retirement fund crisis before these funds collapse. However, no real changes will be voluntarily initiated by our government as long as Obama and his ilk run this nation. The Progressive/Socialist goals of the current Administration are too well served by lots of government employees and lots of other citizens, such as the retired on Social Security, being dependant on Washington.

With any luck, after November of 2012 realistic approaches to this particular financial mess can be implemented.