Public Pensions: An Economic Time Bomb|5 Minute Video

Who cares about public pension liability? Joshua Rauh, professor of finance at Stanford and Senior Fellow at the Hoover Institution, paints a surprising image of just how broken the public pension system truly is, and what will occur if we continue to overlook it.

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Script:

I want to talk to you about three words that need to frighten the heck out of you, specifically if you’re young: public pension liabilities.

Okay, I understand you probably have about a hundred things you’re fretted about, and public pension liabilities likely aren’t among them.

However that’s the reason this is so frightening– due to the fact that nearly no one is paying attention.

Unless you’re all right with your city going complete Detroit and offering more of your hard-earned money to pay off another person’s debts, stay with me.

So what is a public pension liability?

A pension is an ensured, life time payment to somebody after they retire. Pensions used to be a huge offer in the private sector.

Pensions still live on in the public sector– among workers of the federal government– and they’re eating city and states’ budgets alive. More and more cash that could go to tax cuts or much better services is instead being shoveled aside to pay for these advantages.

Why is this taking place? Over years, political leaders have actually promised trillions of dollars in pensions to government employees. That includes police, firemens, instructors, and city and state officials. You call a government task, and there’s a pension associated with it..

Now, you may be questioning, “How big are these payments?” Lots of pensions are quite large. In California, more than 62,000 retired public workers are receiving pensions of over $100,000 each year. In some cases, it’s even crazier. A retired New York City sanitation employee is getting $285,000 annually. A retired county administrator in California gets over $400,000 per year.

Remember, these are ensured lifetime yearly payments.

Now, we love our public employees. Currently, numerous cities are, in effect, paying for multiple public departments at the same time: the department that’s working now and, due to the fact that people are living longer, a generation or two of senior citizens.

The system amounts to a self-perpetuating, corrupt merry-go-round. Public-sector unions offer big contributions to prospects, who are then responsible for working out how much of your cash goes to public sector employees. These arrangements not only promise high salaries in the short-term, however they likewise conceal the payments that will be due down the roadway when it will be much far too late.

The results are foreseeable.

State and local governments throughout the U.S. freely confess to 1.4 trillion dollars of unfunded pension liabilities, or $11,000 per family. “Unfunded” suggests dollars that have actually been promised, however there’s no real money in the bank. And that’s simply the quantity they confess to. The real number, according to the Federal Reserve, is much bigger– around 4 trillion dollars, or $32,000 per family.

Pensions have already thrown California cities like San Bernardino and Vallejo into personal bankruptcy. And the whole state of Illinois is teetering on the edge..

So how do politicians get away with this? They utilize a tried and true political strategy: they lie..

For the complete script, go to https://www.prageru.com/video/public-pensions-an-economic-time-bomb.

source

Who cares about public pension liability? Joshua Rauh, teacher of financing at Stanford and Senior Fellow at the Hoover Institution, paints a stunning picture of simply how broken the public pension system really is, and what will take place if we continue to disregard it.

Over years, political leaders have guaranteed trillions of dollars in pensions to federal government workers. In California, more than 62,000 retired public staff members are receiving pensions of over $100,000 per year. State and local federal governments throughout the U.S. openly admit to 1.4 trillion dollars of unfunded pension liabilities, or $11,000 per household.