And don’t know it.
Mike Shedlock, perhaps better known as “Mish,” lays out why Colorado’s 2/2/2 plan to fund State Pensions is unsound.
Click on the link, and read it all. I will be here when you get back.
As Shedlock says, “The first question to ask is “Why the hell do public employees remotely deserve a Cadillac plan when no one in private industry gets one?”
“The ’2/2/2′ plan forces employers (read taxpayers) to pony up still more so that public workers get Cadillacs while private plans get Pintos if they get anything at all.”
Mish is right. And Colorado, California, New York, and most other public pensions are in much the same boat.
The simple fact is that the growth predictions most States based their pension payout on are wrong. Hopelessly wrong. In this economy, there is no way at all that Colorado or any other state can realize an 8% annual gain on its investments – UNLESS it turns gambler and puts all it’s money on high risk and therefore high return investments.
People and institutions who bet against the house have a one word description. Losers.
Since both future and past predictions are wildly above reality – which is probably not more than a 2% gain without excessive risk, the taxpayers are on the hook for the shortfall.
NOW, my question is much the same as Mish’s. Why in blazes do public employees deserve gold plated jobs, gold plated job security, and gold plated pensions?
The average wage of a Federal employee is a staggering $71,000 a year. That’s almost twice America’s median family income.
The typical Federal employee is a “civil servant,” and has job security for life – in a time when most Americans cannot depend on having a job next week.
And the typical Federal employee will receive a pension and perks comparable to their final Civil Service rating – for life. While the typical wage earner will barely subsist on a Social Security Pittance.
To add insult to injury, Social Security taxes are being systematically diverted to pay Federal employees pensions. So the Social Security trust fund is flat busted.
Both State and Federal pay and pension systems must be reformed. New hires should be paid the same as comparable positions in industry. New hires should join Social Security, just as if they worked in private industry. And new hires should “retire” with the same Social Security benefits as any recipient who has made the same contribution to Social Security.
After all, “fair for the goose is fair for the gander.” So yes, I do include Congress Creatures in that reform.