Posted by Sir Four at 1:43pm Jun 21 '12This seems pretty damning. Can anyone debunk any of this? I usually find Mr. Zakaria to be a well-informed moderate commentator.
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In California, total pension liabilities--the money the state is legally required to pay its public-sector retirees--are 30 times its annual budget deficit. Annual pension costs rose by 2,000% from 1999 to 2009. In Illinois, they are already 15% of general revenue and growing. Ohio's pension liabilities are now 35% of the state's entire GDP.
The net effect of these retirement benefits is to starve state and local governments of funds for anything else. Last year, California spent $32 billion on employee pay and benefits, which is up 65% over the past 10 years. In that same period, spending on higher education is down 5%. Three-quarters of San Jose's discretionary spending goes to its public-safety workers alone--police and firefighters. The city has closed libraries, cut back on park services, laid off many civil servants and asked the rest to take pay cuts. By 2014, San Jose, the 10th largest city in the U.S., will be serviced by 1,600 public workers, one-third the number it had 25 years ago.
The system as it is evolving is highly regressive. Current workers will have their salaries cut, their numbers thinned and their benefits slashed, all to maintain relatively comfortable benefits for retirees, who are on average richer than the people who are being asked to make these sacrifices. Current residents will watch their services dwindle, so that retirees--again, who are richer on average than they are--can have guaranteed generous cost-of-living increases year after year.