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.
It is GM times 100,000. The tick tick tick under most local and state governments. Given the fact that at least a dozen states have publicly displayed their financial distress- CA, NJ, NJ, MI, others- root through the financial records and you will find this potential mess. Now switch to Washington and the administration of the Ponzi scheme that is Social Security. Which many experts will claim goes kablooey on or around 2016. You have a potential crisis that makes the current kerfuffles look trivial. Watch the next four to five years. There is radical change underway in virtually every major American institution. It is what Phila. Mayor Michael Nutter faces during his current round of community meetings to explain the $108 million tax revenue shortfall and why their neighborhood libraries, pools and rec centers will close. How ironic. Just before the Great and Handsome Apostle of Big Gummint assumes the Presidency, the Era of Big Gummint is coming to a screeching halt.
Quite right Gerard. I used to jokingly tell people that my retirement plan was to be carried dead from behing my desk at 85. Now I fear that my retirement plan may become a reality for many.