These are the facts: in 1950 there were ~16 workers for each retiree, ~5 per retiree in 1960 and ~4 in 1970. There are less than 3 workers for each retiree currently, and that will become a ~2 to 1 ratio by 2030.
It's obviously neither affordable nor sustainable, and the current direction means that the financial picture will be growing worse for both workers and retirees with each passing year.
Yet our politicians aren't even seriously talking about the ticking debt time bomb that will harm future Americans for generations to come.
The common belief is that our government is $18 trillion in debt, but that's simply untrue. The amount of our total indebtedness is perhaps $200 trillion or more and not the $18 trillion being tossed around by both politicians and the pundits.
The $18 trillion number doesn't include unfunded state or municipal obligations, and vastly more important, the 'official' tally omits promises to fund the promises made for commitments such as unfunded health care and Social Security benefits. ObamaCare is the latest example. Moreover, there are many additional real but unrecognized taxpayer obligations, such as government guarantees for student loans and retiree benefits for city, state and federal government employees.
But today we'll look at the PBGC to highlight one simple example of existing-but-not-yet-on-the-official-radar-screen-taxpayer-obligations. Pensions Timebomb Keeps Ticking in Year of Funding Challenges says this:
But one of the most dire, and potentially most explosive, gets far less attention: the perilous condition of the government entity established to back wobbly pension funds.
The Pension Benefit Guaranty Corp. is in trouble, and largely because of the mounting risks now facing the nation’s 1,400 or so multiemployer pension plans, which are jointly run by unions and employers and cover an estimated 10 million Americans.
A Government Accountability Office report earlier this year noted that the PBGC was running a financial deficit of $61.8 billion at the end of 2014, with an estimated exposure to future losses of $184 billion, mostly driven by severe shortages in the multiemployer program. GAO warned that the PBGC faces “an immediate and critical challenge with its multiemployer program.”
In a report last month, the PBGC forecast that its guarantee program for the multiemployer funds will most likely run out of money be 2025. . . .
The multiemployer plans have long predominated in sectors like trucking, construction, mining and retail, where workers move frequently from employer to employer. A cascade of pension failures, or sharply reduced benefits, would worsen the widening gap between retirees who have sound nest eggs and those who don’t.
PBGC’s Net Financial Position of the Single-Employer and Multiemployer Programs Combined (Click on the image to view the full-size chart.):
One of the nation’s largest multiemployer plans, the Central States Pension Fund, last month became the first fund to seek benefit reductions under the 2014 law. The plan covers over 400,000 former truck drivers and their families, who stand to lose nearly a quarter of their pension payments on average under the proposal.
The fate of the Central States proposal, which will take months to resolve, is being closely watched by many other big and troubled pension funds. The Central States fund is large enough that its collapse could wipe out the multiemployer wing of the PBGC.
A group of Democrats in Congress, led most prominently by Vermont senator and presidential candidate Bernie Sanders, are now pushing for legislation to make cutting promised pension benefits illegal once again and they want to use tax increases on the wealthy to shore up the wobbly multiemployer funds.
Some Republicans, too, want to change the 2014 law. Ohio Sen. Rob Portman is pushing legislation that would give retirees a binding vote on whether to agree to pension cuts. The existing law allows the Treasury Department to move ahead, even if a fund’s beneficiaries turn down a proposal to cut payments."
The government promises regarding underfunded benefit obligations for future retirees are huge, and the serious discussions about what should be done about them are lacking.
There are underfunded pensions for multi-employer pensions, Social Security (including Social Security Disability), Medicare, Medicaid, ObamaCare, pensions for teachers, police and firefighters, and student loan guarantees --- just to name a few.
Why won't our pandering politicians even talk about how to fully pay for all this stuff? And why won't the media make it a prime topic for debate and discussion? Even better, when will We the People start demanding a full and complete accounting from the political class about our real commitments and obligations?
After all, it's our money and our futures that they're 'playing with' -- as well as the money and futures of our kids and grandkids.
That's my take.