[quote=pri_dk][quote=CA renter]The NPV of Social Security’s unfunded liability over the next 75 years is $5.3 trillion[/quote]
[quote]The unfunded liability for the major pension plans sponsored by the fifty U.S. state governments is approximately [we’ll give you the benefit of using the lower number of “only”] $1 trillion.
[note this data only mentions “state governments” and seems to leave out municipal pensions][/quote]
Thanks for the data, now let’s apply some simple arithmetic and common sense.
Most importantly, you ignore the fact that only about 10% of the population works in the public sector. There is a ten to one difference in the size of the groups associated with these shortfalls.
Social Security:
3.5 trillion dollars divided by 157 million people paying into social security is about $22K shortfall per participant.
Public Pensions:
1 trillion dollars divided by 25 million public employees in the US is about $40K shortfall per participant.
(This 25 million figure also counts Federal employees. If we only counted state and municipal employees, where the problems are bigger, the distinction would be even more pronounced.)
So once again: Which one is WORSE?
[quote]If taxpayers are to bail out either system (both are government-backed retirement benefits), the burden on a per-capita basis is clearly higher for Social Security than for public pension plans, even if you use the higher amount (Treasury discount rates) for the unfunded liabilities of public pension plans.[/quote]
(Once again, your use of “per capita” counts the numbers of only who might pay, not who will receive.)
Thanks for highlighting another important distinction: General tax revenues are only going to bail out ONE system.
Some FACTS that I already posted up-thread:
There have never been any substantial proposal by a policymaker on either side of the political spectrum suggesting the use of general taxpayer funds to bail out Social Security. Social Security will be “fixed” by Social Security participants using only Social Security taxes.
EVERY proposal put on the table for fixing SS has called for increasing contributions, increasing eligibility age, or decreasing payments. All of these solutions will be applied consistently to all participants, public AND private sector.. Social Security participants – the people who PAY IN – will bear 100% of the burden of the SS shortfall.
Like Social Security, Public pension participants should also bear the entire cost of their own shortfall. Public employees and their unions are doing everything they can to make sure the other 90% of the population pay instead.
The difference is glaring, but I’m sure you still won’t see it:
Social Security’s problems do not impact non-participants (public employees) at all, while public-pensions – which have proportionally far bigger problems – impact everyone.
If the unions get their way, everyone is going to pitch in and bail out the pensions that belong to only 10% of the workforce. All will pay, few will benefit.
There is a demographic issue with Social Security (young supporting the old) but there is NO distinction between the public and private sectors with regard to who comes out ahead.[/quote]
No, my claims are not at all unfounded; and no, the beneficiaries/cost per beneficiary is NOT what counts here. We keep hearing about how “taxpayers” (as if public employees aren’t paying the very same taxes as everyone else) don’t want to pay for the retirement shortfalls of “the other group.” What counts is how much, per capita, taxpayers will have to pay to bail out the retirement system of the “other” group.
Remember, public employees who have DB pension plans DO NOT pay into, nor receive benefits from, the Social Security program, but they DO pay the same, local, state, and federal taxes as everyone else. If general funds are used to shore up Social Security (and I have no doubt that they will when push comes to shove), public employees will have to pay for the unfunded liabilities of the SS program.
More (from 2001):
“But as the Social Security Trustees projected in their most recent Annual Report, these current cash surpluses will turn to deficits in 2016. While small at first, these deficits “will eventually grow very large: $194 billion in 2025, $271 billion in 2030, and $318 billion in 2035 (in 2001 dollars).” In today’s dollars, the system’s cumulative deficits total more than $22 trillion through 2075. In present value terms, the system’s unfunded liability stands at $12 trillion.
Technically, admits the Commission report, “the program could redeem government bonds in its Trust Fund to pay full benefits until 2038.” But the existence of these bonds does not solve the problem. Indeed, says the report, once Social Security begins redeeming those bonds in order to cover its liabilities, “the nation will face the same difficult choices as if there had been no Trust Fund at all.” In other words, the only way to meet these shortfalls is to raise taxes (either payroll or income), borrow from the public, or cut other government spending. [Will this affect ONLY SS beneficiaries? -CAR]
To be sure, most Americans – and, unfortunately, most members of Congress – believe that the Social Security trust fund contains real assets that can be drawn upon to pay future benefits. But the Social Security “trust fund” is like the federal highway trust fund and some 110 other federal funds, merely an accounting device and not an actual financial entity. The Clinton administration’s FY 2000 budget put the issue very clearly:
These [Trust Fund] balances are available to finance future benefit payments and other Trust Fund expenditures – but only in a bookkeeping sense. … They do not consist of real economic assets that can be drawn down in the future to fund benefits. Instead, they are claims on the Treasury that, when redeemed, will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures. [Do you think this is only limited to SS beneficiaries? -CAR] The existence of large Trust Fund balances, therefore, does not, by itself, have any impact on the Government’s ability to pay benefits. (FY 2000 Budget, Analytical Perspectives, p. 337).
The ramifications of failing to address the system’s liabilities soon are significant says the Commission. For example, to close the funding gap by 2040 would either mean a payroll tax hike of 37 percent, a benefit cut of at least 26 percent, or $7 trillion in new public debt. [Which I’m assuming ALL taxpayers will be responsible for paying if we “go into debt” to shore up SS, not just SS beneficiaries. -CAR]”
BTW, have any of your taxes gone up in order to fund public employees’ retirement plans? I haven’t seen any increases in our household. What HAS happened is that public employers have been shifting more and more of the contribution burden onto the public employees, not taxpayers. This is reality, as opposed to the “all public employees are parasites” world, as seen on Fox News.
Additionally, which public pension plans have a current shortfall — in other words, cannot afford to pay today’s benefits with today’s contributions and/or funds available in their pension funds? From everything I’ve heard, the pension funds are capable of funding retiree benefits for many years to come, just like Social Security.
BTW, what did you mean when you wrote this:
“Thanks for highlighting another important distinction: General tax revenues are only going to bail out ONE system.”
