Actually, the taxpayers who will bail them out are.
The Financial Times reports US public pensions face $2,000bn deficit
The US public pension system faces a higher-than-expected shortfall of more than $2,000bn that will increase pressure on many states’ strained finances and crimp economic growth, according to the chairman of New Jersey’s pension fund.
The estimate by Orin Kramer will fuel investors’ concerns over the deteriorating financial health of US states after the recession. “State and local governments are correctly perceived to be in serious difficulty,” Mr Kramer told the Financial Times.
“If you factor in the reality of these unfunded promises, their deficits will rise exponentially.”
Estimates of aggregate funding requirement of the US pension system have ranged between $400bn and $500bn, but Mr Kramer’s analysis concluded that public funds would need to find more than $2,000bn to meet future pension obligations.
A shortfall of that size could force state governments to take unpalatable decisions such as pouring more public money into their funds or reducing pension benefits. State and local governments have already cut spending to close budget deficits.
Two TRILLION Dollars. How much is a trillion?
Consider this post from last October Pension Fund Losses: To Infinity And Beyond!
Public Employee Pension Funds will need to cut benefits in the near future. They are bleeding billions of dollars and are left with few options other than doubling-down commercial real estate and other bad bets that they’ve already made. Make no mistake, pension funds are throwing a “hail-mary” passes to avoid either a taxpayer bailout or massively cutting benefits.This story will get much more interesting in a few years, when direct bailouts are needed to maintain benefits.
This will be after a 2nd Stimulus, FHA Bailout, State of California Bailout, another Fannie/Freddie Bailout, and a 3rd Stimulus…but probably before the introduction a new world currency.
Given, that Public Pensions are already Drawing More Scrutiny, the public will probably not be too interested in paying for public employees’ cushy retirements. Especially when many workers have no real retirement options at all.
The bailouts will come. The real question is whether or not an outraged public will stand for it.