Illinois gov wants state pension bailout

[Wiseacre]

Had to know this was coming sooner or later. Today's WSJ has a piece in it that says Ill gov Pat Quinn's budget proposal is "floating the idea of a federal guarantee of it's pension debt".

snippet:

" Illinois now has some 8 billion in current debts outstanding and taxpayers are on the hook for more than 200 billion in unfunded retirement costs for government workers. By some estimates, the system could be the first in the nation to go broke, as early as 2018. "

" Liabilities are also spiraling nationwide, with some 2.5 trillion in unfunded state pension costs. According to a paper released thursdsay by the Illinois Policy Institute, the crisis will end up pitting states against each other, .... "

It goes on to say that states have used unrealistically high return rates and other accounting tricks to make it look like the liabilities are covered when in fact they are not. One can debate the exact magnitude of the shortfall, but the problem surely exists and it ain't minor and it is growing.

Since most of these states that are in trouble are blue ones where unions have enormous clout, does anyone doubt that the democrats will be offering bills, amendments, and earmarks to anything they can to bailout their states? And it is not unreasonable to assume some republicans from blue states would join them. That fight is coming folks, how do you feel about it?

 

[Mad Scientist]

Well let's see. The American Tax Payer is already on the hook for 7.77 Trillion in Bank Bailouts (which they used to play the Stock Market)

So what do I think the chances are of Gov't Fat Cats (of either stripe) helping the American Tax Payer?

Zero.

 

[Mr. H.]

I wish I could move myself and my business out of this state but it ain't possible.

 

[blastoff]

Tell the good pols of Illinois to go pound sand if they come looking for help in D.C. Bail one of those damn states out and the others will fall all themselves getting there next.

 

[Wiseacre]

Look at the recent Chicago teacher's union strike. The city already has a budget shortfall of nearly a billion dollars next year, with hundreds of millions of dollars due for annual pension costs for retired teachers. But the negotiations never touched on the pensions; how on earth are they going to meet those financial obligations down the road? The final deal gave the union a pay raise of over 17% over 4 years and they keep their pensions and benefits. It can't possibly work, and they know it.

Look at what Gov Quinn said in his budget proposal: significant long-term improvements in the state pension debt will come from seeking a federal guarantee of the debt. IOW, taxpayers from other cities and states that have made the tough fiscal decisions to be financially responsible will be asked to pay for the debts of those states that didn't. Can't happen? I think it can if a democratic president ever again gets a filibuster-proof, democrat-controlled Senate and a majority in the House.

 

[Toro]

Had to know this was coming sooner or later. Today's WSJ has a piece in it that says Ill gov Pat Quinn's budget proposal is "floating the idea of a federal guarantee of it's pension debt".

snippet:

" Illinois now has some 8 billion in current debts outstanding and taxpayers are on the hook for more than 200 billion in unfunded retirement costs for government workers. By some estimates, the system could be the first in the nation to go broke, as early as 2018. "

" Liabilities are also spiraling nationwide, with some 2.5 trillion in unfunded state pension costs. According to a paper released thursdsay by the Illinois Policy Institute, the crisis will end up pitting states against each other, .... "

It goes on to say that states have used unrealistically high return rates and other accounting tricks to make it look like the liabilities are covered when in fact they are not. One can debate the exact magnitude of the shortfall, but the problem surely exists and it ain't minor and it is growing.

Since most of these states that are in trouble are blue ones where unions have enormous clout, does anyone doubt that the democrats will be offering bills, amendments, and earmarks to anything they can to bailout their states? And it is not unreasonable to assume some republicans from blue states would join them. That fight is coming folks, how do you feel about it?

Depends on the state.

The Florida pension plan - now, that's an awesome pension plan! But some others? Not so much.

People should take the "unfunded liabilities" with a grain of salt. What it essentially means is that if it were to shut down today, would it be able to pay off all of it's claims? Since that doesn't happen, it is somewhat of a theoretical exercise. However, it can be a gauge of health for pension plans. Dramatically underfunded pension plans are likely to stay that way, and are a long-term problem.

Pensions are discounted back at a rate of interest which may or may not be accurate. Today, the doomsayers are all saying the rate is too high given the supposed unlikelihood of the discount rate being attained, or so they say. That may or may not be true. What is absolutely true is that people are lowering their discount rates in part because of the low returns generated over the past 12 years. This is a foible of the human condition. The exact same thing happened in the 90s when people started thinking that 10%-12% was possible for the indefinite future. That's because we had been in a bull market for 20 years, so people assume the future will be like the past. Likewise, today, because the markets have been so bad, people assume the next 12 years will be like the last 12 years. History says this is almost certainly wrong, and so do I. Asset markets are likely to do better going forward than in the past, and all these doomsayers will be proven wrong IMHO. The doomsayers often use a very low rate to discount liabilities based on the argument that government pensions should be discounted to the government bond rate, given that government bonds would have to be issued to bail out the pensions, at least theoretically. I think the economists are terribly wrong about this. The $2.5 trillion is probably a silly number.

FTR, I don't think the federal taxpayer should bail out the recklessness of state politicians. If they go belly up, so be it. The problem is that we protect private pensions through the PGBC. It's also difficult to bail out huge banks and not bail out working folks.

 

[jwoodie]

I wish I could move myself and my business out of this state but it ain't possible.

The point is that they want to make everybody in all the states pay for their corruption.

 

[AmericanFirst]

Had to know this was coming sooner or later. Today's WSJ has a piece in it that says Ill gov Pat Quinn's budget proposal is "floating the idea of a federal guarantee of it's pension debt".

snippet:

" Illinois now has some 8 billion in current debts outstanding and taxpayers are on the hook for more than 200 billion in unfunded retirement costs for government workers. By some estimates, the system could be the first in the nation to go broke, as early as 2018. "

" Liabilities are also spiraling nationwide, with some 2.5 trillion in unfunded state pension costs. According to a paper released thursdsay by the Illinois Policy Institute, the crisis will end up pitting states against each other, .... "

It goes on to say that states have used unrealistically high return rates and other accounting tricks to make it look like the liabilities are covered when in fact they are not. One can debate the exact magnitude of the shortfall, but the problem surely exists and it ain't minor and it is growing.

Since most of these states that are in trouble are blue ones where unions have enormous clout, does anyone doubt that the democrats will be offering bills, amendments, and earmarks to anything they can to bailout their states? And it is not unreasonable to assume some republicans from blue states would join them. That fight is coming folks, how do you feel about it?

I am sure obamaturd will push it through.

 

[eflatminor]

The central planners in Illinois are broke? Shocking.

If they were to actually pass a bill to fund this crap, it would be the perfect opportunity for states to practice the second to last resort against tyranny, nullification.

 

[kyzr]

.....FTR, I don't think the federal taxpayer should bail out the recklessness of state politicians. If they go belly up, so be it. The problem is that we protect private pensions through the PGBC. It's also difficult to bail out huge banks and not bail out working folks.

1. The Federal taxpayer will NEVER bail out any State, period.
2. The banks were not "bailed-out" they had loans and paid them back with interest. They needed the loans because the government forced the banks to give loans to the unqualified, via the Community Reinvestment Act, et.al. Research BO's "redline" lawsuits.

 

[AquaAthena]

I wish I could move myself and my business out of this state but it ain't possible.

I so wish I could too. Many people are, and more will be leaving, if the current tax rates aren't renewed. Then what will the moochers live on? Barry's good looks? There won't be much of a tax revenue, with fewer and fewer jobs.

 

[Jackson]

Illinois is in such a mess, they can'get out unless there are new laws put into place about the unions. It's time for the state legislature to act.

 

[RoadVirus]

Illinois is in such a mess, they can'get out unless there are new laws put into place about the unions. It's time for the state legislature to act.

The state legislature....the Democrat-controlled state legislature? Good luck!

 

[Wiseacre]

As long as any state or union believes they could get bailed out by the federal gov't, they will not make the necessary tough decisions to get their fiscal house in order. So, the problems get worse and worse.

 

[ShootSpeeders]

It's not the pensions. Illinois is a sanctuary state and they need this money to give free health care and schooling to people that aren't even allowed to be here!!!!

 

[ShootSpeeders]

As long as any state or union believes they could get bailed out by the federal gov't, they will not make the necessary tough decisions to get their fiscal house in order. So, the problems get worse and worse.

It's not just the states and unions. As we know, mismanaged companies have been getting bailouts for 4 years and homeowners and students in debt are also demanding them. Responsible people like me who have never used credit in their life will pay for these bailouts

 

[OKTexas]

The feds have their own problems, their on the hook for almost 100 trillion, yes with a t, in unfunded liabilities for social security, medicare and medicade so Ill has no problem at all compared to the feds, but I say screw em.

 

[ShootSpeeders]

[
2. The banks were not "bailed-out" they had loans and paid them back with interest. They needed the loans because the government forced the banks to give loans to the unqualified, via the Community Reinvestment Act, et.al. Research BO's "redline" lawsuits.

Where is your evidence that the banks paid back the loans?