Here’s Kevin D. Williamson once again making sense:
Prediction: The fiscal imbalances about to be worked out, probably violently, in the markets and budget committees will change our lives more than Islamic terrorism has or will.
The European disease is headed to these shores. As Michael Barone points out today, California, Illinois, New Jersey, and possibly New York are headed toward insolvency. Once you look at the crisis in public-employee pensions, twenty or thirty U.S. states may be headed for insolvency. We may end up in a situation in which 35 states are looking to the other 15 to bail them out. And when the house of cards starts to tumble, it will happen faster than anybody expects. Texas isn’t going to be able to carry the Union by itself.
No matter how much I would like to believe otherwise, there really is no two ways about this. The economic assumptions at the root of the public pension system in America were faulty when they were first conjured and they’re faulty now. We bit off more than we could chew; politician after politician won elections by promising more than they could promise, signing generation-spanning IOU’s and hoping that it would all work out in the end or that at the very least they’d be long gone when the house of cards collapsed.
Workers and union-members acted rationally enough, lobbying for better pay, better benefits and retirement packages. But the political class and the union bosses sold them down the river, promising the moon rather than working within the constraints of reality. And they sold the American taxpayer down the river, too. Now insolvency looms across the nation, as state after state realizes they can’t pay out what they promised. Nor can they borrow to cover the difference like the federal government. In fact, most of these states have no good options except to cut vital services or raise taxes – or often, to do both.
There is no good time to realize that your pension fund is made up of play money, or to realize that the stewards of your money or your constituents’ money were con-men or career politicians looking to win the support of big labor in order to further their own career. And in the midst of a serious recession is probably the worst time to realize this. But federal bail-outs are little more than band-aids. Serious pension reform is politically near impossible – as New Jersey governor, Chris Christie, has learned over the past two years of uphill battles with powerful public employee unions in his state. But one way or another, the piper needs to get paid. Either that, or our children will pay for us.
