Bankrupt Central Falls, RI

No one understands the state-by-state pension time bomb in America better than Mary Williams Walsh of The New York Times. For several years now, Ms. Walsh has been studying and chronicling the crisis.  Her latest piece, in case you missed it, is on the pension underfunding disaster now descending on Rhode Island. It should terrify all members of the public, but particularly those in public employee unions.

The bottom line, as these pages have written before, is that states and municipalities have promised — in ink — more to public employee retirees than they can afford, and their future revenue estimates have been grossly inflated to make things add up on paper.  Now, the math is unraveling.

That means two things:  Entire networks of social programs will have to be defunded to meet growing pension costs, and, ultimately, as we are beginning to see in California, Rhode Island, and other states, municipalities will go bankrupt to shed their promised pension obligations, badly hurting fixed-income unionized retirees and destroying the ability of municipalties to borrow in emergencies. 

The charade continues, though.  Unions continue to call for more, and state pension funds continue using fuzzy math to make all seem right.  And day after day, the dark and lurking crisis grows worse. It’s madness.