First, it was AIG. Then it was Goldman Sachs. Then GM, Chrysler, Fannie Mae, Freddie Mac, ad nauseum. Bailout after bailout after bailout. And it’s not over yet?
Last year, Congress passed several stimulus bills under the guise of “shovel-ready” projects. The only shovel that was ready was the shovel being used by individual state workers ready for layoffs because of irresponsible state spending during the past decade. Good news is that the fellow holding the shovel got to work an extra year. Bad news is that the stimulus money was a one-and-out.
But this “stimulus” money was not divided into the states based upon population. Tennessee should have received over $15 billion of these funds. But we did not. The reason? Redistribution. California, Illinois, New Jersey, New York, and Michigan received disproportionate shares of the money due to unfunded state budgets, including unfunded retirement plans. (Obama carried these states, by the way.) These states have not been responsible in planning for the retirements of their employees and now demand that the rest of the country “bail” them out. The benefits expected by state employees are not there unless you can confiscate the money from more responsible states, like Tennessee. Tennessee Congressman Jim Cooper supported this redistribution.
These same state employee benefit plans are unfunded into the future and stand to bankrupt them. Kind of reminds you of GM. (Is there a pattern here?) There is not enough tax revenue available to fund these programs into the future. But that does not stop the future recipients from demanding these non-competitive benefits. As New Jersey Governor Chris Christie is finding out, state workers will not accept even a 1.5% reduction in pay in order to balance the budget of near-bankrupt New Jersey. And it has not stopped State and Federal legislators from kicking this can down the road.
So what will happen when these benefits cannot be paid? If it was a private company, the owners would go to jail for not being responsible for the pension and retirement funds of its employees. Of course, the states will either try to raise taxes or demand a bailout from Uncle Sam! That means from the citizens of responsible states. These future benefits are in the same boat as Social Security and Medicare. There will eventually not be enough money to pay the recipients. It kind of reminds me of playing with Monopoly Money.
You remember what that was like. As you held those $500 bills in your hand, wishing what it would be like if they were real. What would we buy with them? A new bike? A new bat and glove? Well, we might as well treat these future benefits like they were Monopoly Money. They aren’t real. They will never come to pass. They are not market-based like real benefit plans. And those who could do something about this disaster before it happens act as if there is nothing wrong. We’ll just go to the Toys R Us and get another Monopoly game. Then we’ll have double the money!
Here’s the dirty little secret. Government employees over the age of fifty-five will probably see these benefits in their entirety. But their younger colleagues really are playing with Monopoly Money. By the time they start retiring, they will discover that they have paid into these funds for years for their senior colleagues only to be left out in the cold with no real benefits. They can demand the money all they want, but it will be to no avail.
I, for one, will be happy to work with my fellow citizens in Tennessee to get our own affairs in order. As for these other states, let them stew in their own soup. Accountability and responsibility are the best incentives for a person or a people to correct problems. It is ludicrous to ask the citizens in Montana to pick up the tab for the irresponsibility of the people of Illinois. We should not allow Washington, D.C. to print money for Illinois and send Tennessee the bill. We’ve had enough of this kind of confiscation and redistribution and we’ve had enough of Jim Cooper voting for this kind of redistribution.