The crisis preventing government from providing services and maintaining infrastructure is due to political misfeasance across the board. Politicians at every level of government, along with elected judges, have created a situation that is serving to bankrupt local and state governments via the government pension crisis. Moreover, a similar crisis is threatening the retirement of the private sector as it affects Social Security and Medicare.
Unfortunately, most citizens are clueless as to what is happening. This has to do with their inability to see non-events. The non-event of our enjoying bigger freeways, adequately maintained roads and schools, and plentiful water supplies. Worst of all? The average citizen doesn’t realize that the benefits they plan to rely on in their old age will be cut when they can least afford it.
In Lompoc, some citizens are protesting for the right to vote for higher taxes in order to pay down the pension debt that is engulfing the third-largest city in the county. Of course the situation is never characterized as such. No, the citizens are always asked to give more to prevent service cuts. But the service cuts are due to unfunded pension liabilities. In essence, local citizens are faced with the situation to forgo supplementing their own retirement savings in order to make public employees whole in their retirement.
To put this in context, consider the following. Years ago, a judge issued a ruling that taxpayer-funded government pensions can’t be cut going forward, regardless of the ability of taxpayers to foot the bill for the same. Similarly, neither can Social Security benefits be cut from those government workers who get both Social Security and a government pension. What that means in practical reality is that most government workers will earn at least double in retirement than their counterparts in the private sector. Some of the pension/Social Security double-dippers will earn, in retirement, more than they earned while working.
Compare this situation to the plight of the average citizen, solely dependent upon Social Security. The cost of benefits paid out by the Social Security Administration will begin to exceed its outcome next year. In 16 years, Social Security will face a $15 trillion shortfall. That means that all retirement benefits will face significant cuts. Medicare’s hospital insurance fund is even worse off. It is on track to be bankrupt in 2026.
Meanwhile, the county of Santa Barbara continues to struggle with an unfunded pension liability of nearly $900 million and other post-employment benefits that exceed $100 million, for a total unfunded liability of over $1 billion.
Unfortunately, some people don’t consider our current situation as all that bad. Believe it or not, in a recent presentation to the Board of Supervisors, the annual payout of $100 million in local government pension payments was characterized as “an economic engine investing back in our community.”
Well, here is a newsflash. This particular engine is backfiring. It is about to blow a hole in the engine block that will render this gravy train inoperable.