All across the country, states are grappling with pension funds that are massively underfunded. Under new accounting rules, Illinois’ unfunded pension debt stands at a whopping $209 billion. And that’s not counting the debt for retiree health insurance, pension bonds or all local retirement debt.
Recent calculations have put the total level of states’ unfunded pension debt at $2.5 trillion, and possibly as high as $4 trillion. That’s more than one-sixth of the entire U.S. economy and more than all taxes paid to the federal government last year.
Sadly, the past few years have shown what happens when large institutions face big challenges. When institutions are “too big to fail,” the federal government feels the need to swoop in and bail them out. And there’s already movement afoot for the next big bailout.
In his fiscal year 2012 budget, Gov. Pat Quinn said that “significant long-term improvements” to the state’s pension debt will come from, among other things, “seeking a federal guarantee of the debt.”
With local resources tapped out, more and more cash-strapped states will look for federal “aid” to help reduce their pension debt. A federal bailout of pensions might be great for states like Illinois and California, states that have failed to substantially reform their runaway pension costs, but what about those that have been more responsible with taxpayer dollars? Should they have to bail out other states’ pension systems? A federal bailout would reward failure, punish success and, ultimately, destroy the very federalist structure of our government.
To learn more about why a federal bailout of pensions is wrong for America, and how it could impact your state or county, visit NoPensionBailout.com.