The Trend for 2010
Sometimes, our work just writes itself. Follow us through the next couple minutes…
First, U.S. public pension plans face unfunded liabilities of over $2 trillion, says Orin Kramer, chairman of New Jersey’s pension fund. Kramer is stealing the show in this morning’s FT with a new take on an old story. Sneaky accounting and laughably unrealistic expectations of future returns have led many econ-nerds, your editors included, to suggest pension funds are in a deep, dark hole… maybe as bad as a trillion bucks.
Well, Mr. Kramer, citing his own experience running Jersey’s fund, said today that it’s probably twice as bad. For every dollar the average public fund has promised, he says, it has only 60 cents on hand. In other words, 40% of people with public pensions technically have no money saved on their behalf.
We’ve rung this bell again and again , but hopefully, Mr. Kramer’s admission in this morning’s FT will elicit change — while there is still time. Of course, it probably won’t. Kramer is also a huge player for the Democratic Party. Thus, we suspect certain members of the Senate will reject any notion with his name at the top. Not to mention we’d love to see a campaign built around pension reform… in this land of ballot busting baby boomers, you’d get more votes on a Neo-Nazi ticket.
So what’s going to happen to us? Well, here’s what went down last night:
A 66-year-old man shot up a courthouse in Las Vegas yesterday because his Social Security benefits had been reduced. Police killed him, but not before he murdered a security guard and wounded a U.S. marshal.
We aren’t making light of this tragedy one bit, just looking at it from a different angle. Relatively speaking, Social Security beneficiaries have it pretty good right now. What happens when the masses of loyal pensioners find out the emperor has no clothes?
If reform isn’t in the near future, perhaps state governments could help foot the bill. Heh, nope… 36 states have already fallen into a budget deficit since the 2010 fiscal year began back in July.
Then what about the federal government? You already know this story: They’ve got around $60 trillion worth of their own unfunded liabilities, plus over $12 trillion in national debt. The U.S. Treasury sold a record $2.1 trillion in notes and bonds last year, a debt accumulation greater than 2007 and 2008 offerings COMBINED. Never one to rest on its laurels, the Treasury is expected to issue a record $2.4 trillion in debt this year.