In a time when government bailouts are the current craze, it is perhaps impolitic to note that governments at all levels cannot meet the obligations they currently have, let alone fund massive new undertakings.
Case in point public pensions. Glenn Reynolds at Instapundit has been sounding the tocsin on this issue for some time and he points his readers to this story. As the article notes, the Chapter 9 bankruptcy of Vallejo California may not set off a wave of municipal bankruptcies as a result of public pensions, but the simple fact is that most municipalities and states lack the funds to meet their pension obligations longterm. I can see a titanic political showdown looming a decade or two down the road. How will private sector voters, largely lacking pensions nearly as generous as those granted by governments, react to increasing taxes in order to fully fund public sector pensions? This article from Business Week in 2005 gives some idea of the magnitude of the problem, and the situation has only gotten worse in the intervening years. What will happen? Unless we have the stomach for radical reform in public pensions and bring them in line with tax revenues, I think the answer is obvious: debt repudiation as a result of bankruptcy, massive inflation or a flat inability and refusal to pay by politicians elected by fed up voters.