Illinois Governor Pat Quinn wants the federal government to bailout his state’s public pension system. As insane as that sounds, one certainly can imagine progressive Democrats going along with such a harebrained scheme. Why, what better way to pay off the unions that do so much to help get them elected? Well, if Senator Jim DeMint has any say in the matter it’s not going to happen.
Among those leading the charge is Republican Sen. Jim DeMint. The South Carolina senator has joined the Illinois Policy Institute’s national “No Pension Bailout” campaign — an effort to stop Congress from attempting to rescue failing state and municipal pension plans.
“Our greatest concern is states will assume they can run their pension systems into bankruptcy and then turn to the federal government for bailout,” DeMint said Thursday.
He also suggested the problem is the result of state legislators trying for decades to win over voters through pension promises based “on accounting methods that would put any business in jail.”
The conservative policy group estimates the total amount of under-funded pension liabilities in states is at least $2.5 trillion, with Illinois leading the nation. (Read More)
Can you imagine the precedent something like this would set? Good grief, if you think the $16 trillion national debt is bad just let guys like Quinn get their way.
So, just how bad is the state of the states’ pension systems? It’s bad. The Washington Examiner just addressed it yesterday.
State and local governments are getting squeezed ever more tightly and something is going to have to give. They will be forced to cut key services to residents, hit up taxpayers again with higher levies, or curtail pension benefits.
A survey this month by Loop Capital Markets found that only 58 of the 149 state-level pension plans it viewed were funded at 80 percent or more, the standard by which funds are judged to be financially healthy. The median funded ratio for state pension plans fell from 76 percent in 2010 to 73 percent in 2011.
What passed for good news here was that while Loop Capital said the situation was “bad,” it argued it was not “catastrophic.” Not yet anyway. States and local governments could still make up the shortfall.
That’s the most positive spin on the situation. The bipartisan State Budget Crisis Task Force used a colder, more clinical eye in a July report. It found that state and local governments underfunded their pension plans by more than $50 billion between 2007 and 2011. The shortfall will have to be made up.
According to the Illinois Policy Institute, even after the uproar Quinn still hasn’t ruled out a federal bailout.