Pension Bomb: NYC is Paying More for Services Already Rendered Than Services it Provides Today

Great piece in Real Clear Markets today by Manhattan Institute scholar Diana Furchtgott-Roth on the growing state pension crisis across America. This was an issue prominently raised in 2010 by a friend and former client Harry Wilson when he was running for New York State Comptroller. 

In short, the amount cities and states owe their retirees is growing every year — it’s well over $3 trillion now — and they don’t have the money to met those obligations. What’s worse, states are vastly overestimating rates of return on their pension fund investments in order to justify giving public union employees generous benefits.  The bubble will soon pop unless the stock and bond markets boom to extraordinary heights, which not a single reasonable investor believes will happen. 

What does that mean to you and me?  It means more of our tax dollars will go toward paying for services already rendered than those currently needed. We will be paying for retired teachers at the expense of present day educational expenses. New York City has already reached that mark.  City taxpayers now pay more for retiree pensions and fringe benefits than they do for present day services.  And it’s only going to get worse. It’s an issue Harry Wilson 100% convinced me to be very, very worried about — and he’s wicked smaht.  Can’t keep kicking this can down the road.