By Wiha Powell
“More than any other government programs, pensions are a test of political character. They are a bargain with the future; a statement about the value that a city places on it workers. When the bargain is corrupted, the whole society is affected. Its sense of equality is destroyed, and with it people’s faith in their leaders and their institutions.”- Lowenstein “While America Aged”
For decades, the pension system has been the perfect vehicle for procrastinations for both the private and public sector. Recently, either the public pension system is estimating to be $700 billion in debt, a problem legislators hope to resolve within the next 30 years or the system is facing a $3 trillion crisis, which requires immediate action to avoid states and municipalities from going bankrupt.
Like the current pension debacle, history is repeating itself, and our leaders have turned a blind eye to mistakes made in the past by GM, the New York City Subway and San Diego. GM, who ruled the American business world for about half a century after World War II, promised lucrative pension benefits to its employees by way of union negotiation. GM, happy about the profit boost, was not making the necessary contribution to their pension plan. This liability GM shareholders left to the future generation eventually causing GM to go belly-up. In 2005, the nation faced another pension disaster, the historical strike of the New York Subway System. In New York, the union workers where pushing for benefits that were far beyond the scope of what the government could properly fund. However, with political leaders wanting to secure powerful voters for their upcoming campaigns, the request of the unions was granted. The mentality of ‘I scratch your back, you scratch mine’ lead political leaders to shortchange the city pension fund and running the city budget on borrowed time, essentially putting off the pension problem to later generation. Subsequently following New York is San Diego, a city that almost went bankrupt in one of the biggest pension scandal in America, which eventually caused the mayor to resign and that almost depleted the city’s credit rating. Like GM and the New York Subway System, San Diego was promising public workers lucrative pension benefits that was far beyond the scope of its budget. Moreover, the major was dipping into the pension fund to make ends meet. As a result, the future came much faster than the city hoped.
Like ‘quicksand’ the public pension has been slowly diminishing and regrettably is on the back burner of most political leaders’ agenda in hopes that their predecessors will be the one to deal with the pension debacle.
It is now apparent that our leaders have not learned from the mistakes of GM, the New York City Subway and San Diego. Currently states are facing a monumental gap between the benefits public employees were promised and the funds set aside to cover the costs of these benefits. Even though states contribute less than 4% of their entire budget to the pension plan, political leaders are blaming the current debacle on the loss on investment returns, the shortfall of states revenue and the rising of pension cost. Resulting the public pension plan to be on shaky grounds.
Every worker has a dignified right to a retirement and with Social Security under fire, it is time our leaders step-up and address the current debacle of the pension system, whereby coming up with a solution that will once again put a positive light on the security of retirement.
The American retirement system is a ticking time bomb, and with the population getting older, our pension debacle is becoming worst. Therefore, if our leaders continue to mortgage the future, they will later regret the day.