Friday, October 19, 2012

Mayor of Baltimore on the pension problem

Not often you hear this kind of honesty--especially from a public official (Mayor of Baltimore):

Baltimore County government pensions - "As 20 years of fiscal mismanagement by government officials comes to a head, we repeatedly hear public servants warn of their underfunded pension funds ("Baltimore Co. weighs pension bonds," Oct. 14). While the private sector* has had a decline in real wages over the last 20 years and the evisceration of pensions, government compensation has continued its upward climb. A recent article by CNN's Fareed Zakaria points out that the municipal bankruptcies we keep hearing about aren't about taxes being too low or spending on services being too high but about pensions. Mr. Zakaria notes that California's pension-related costs rose 20-fold in the decade since 1999, and that this frightening trend is true almost everywhere in America. For decades now, local governments have doled out patronage by increasing pension benefits that impact the budget years later, when the officials who gave the benefits are safely retired themselves. . . .In the private sector, the old defined benefit pension has long ago been replaced by the defined contribution plan. Yet the government plans are paying two or three times more than pensions in the private sector. This is a ridiculous situation that needs to be solved the old-fashioned way: By restructuring the government plans so they are in line with those of the private sector. . . .--Gary Moyer, Baltimore

*Remember Obama saying "the private sector is doing fine"? 


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