State employees in California retire as early as age 50 with pensions that divert money from higher education and other programs. That diversion would not be taking place if the pensions had been sufficiently pre-funded with contributions from employees and employers when the pensions were awarded but they were not. That’s because the pre-funding amounts were set unduly low by boards of public pension funds controlled by pension beneficiaries in whose interests it was to keep pre-funding amounts lower than the amounts required to protect future generations. If those pension boards had been controlled by people who cared about future generations, pension pre-funding would have been higher so that today there would be lower or no pension deficits. But they weren’t and that’s why annual taxpayer spending on state pension costs has grown from $1.3 billion in 2000 to $12.2 billion in 2023.
Reforming public pensions in California will take the same gutsy leadership demonstrated a decade ago by the then-governor of Rhode Island, Gina Raimondo, who’s an example of the rare politician who took on a reform that produced long-term benefits for residents but only headaches for the politician while in office. We need the same leadership at the federal level of government, where debt as a percentage of GDP has nearly hit the level reached during World War II and — even in the absence of another world war — is projected to nearly double by 2050:
In effect, our elected federal leaders treated the Great Recession and COVID-19 as wars, which neither was. If a new world war were to start today, would our country be in a position to finance it? Even if it were able to do so, would it also be able to sustain spending on Social Security, the “trust fund” for which is invested in even more US debt not reflected above and forecast to be depleted by 2037? Social Security reform is long overdue. Life expectancy when the program was inaugurated in 1935 was 63.9 years for women and 59.9 for men as compared to 80.2 and 74.5 today, and the last reform took place 40 years ago via a bipartisan agreement between President Ronald Reagan and House Speaker Tip O’Neill. But as French President Emmanuel Macron is experiencing today, modifying retirement ages is a third rail. Elected officials and candidates with the nerve to touch that rail deserve the persistent support of political philanthropists.
David is a clear thinker who presents data & reality unclouded by personal perferences