Saturday, November 16, 2013

Witless Predictions about Pension Reform by John Dillon

‘“…Illinois’ four legislative leaders may be drawing closer on an agreement that could address Illinois’ massive public pension debt.  The House Speaker, Senate President and the Republican Leaders in each chamber have told us to be prepared to return to Springfield the first week of December for a possible vote…’

Bond and credit ratings agencies are warning that further downgrades can be expected if there is nothing done about the debt issues in Illinois… [However,] as Ralph Martire of the CTBA would point out, the rating companies do NOT call for the raiding or impairment of pensioners promised and earned benefits to improve credit ratings in Illinois.  They are describing a lack of revenue to fix a serious debt problem that has become systemic.  Fix the revenue stream, not by stealing money from someone else… 

‘“Illinois holds the record for the worst-funded public pension system in the nation. A system that is about $100 billion in debt and only has assets to cover less than 40% of the debt the state owes. The state’s poor pension funding has been a major contributor to Illinois having the worst credit rating in the nation.’ In fact, the reasons for this are many, but none are more significant than the theft or nearly $32 billion over decades from the pension funds by the General Assembly.  And let’s not forget that [legislators’] insistence to hold to the feckless RAMP pay-back scheme of 1995 has made it impossible if not improbably that they can escape the debt they’ve built themselves into through theft of public worker funds.  Fix the debt problem by amortizing the debt, and pay back the fully due amount, not the lesser interest.  The end result in two years will be no different than if Illinois stayed on the ‘ramp,’ and it will diminish from there…

“[According to] Senator Barickman: ‘Although there appears to be progress toward a proposal that all four legislative leaders can urge their members to support, no final decision can be made until the ideas under discussion are scored by financial experts.’ That’s a painstaking process that relies on complex financial projections as to what the impact of each individual component may be on the retirement systems over the coming decades. Those calculations are then used to arrive at an estimated overall savings. Senator Barickman makes it all sound like a clean surgical strike, not a decimation of families or futures or their dreams.  Remember that whatever their take from the public workers’ promised futures (from which they’ve already stolen), the amount will never be enough to prevent their return for more, according to Ralph Martire and earlier actuaries who have determined that even the most draconian of cuts will fall short of Illinois’ structural revenue deficit…And they still have not dealt with the unfunded liability of nearly $100 billion. Fix the revenue stream and work slowly back to fiscal health…

Call your Representative and Senator.  Tell them to fix it the right way, the moral way, the constitutional way.  1-888-412-6570.

Excerpts from Perfect Storm: Unwitting Meteorologists and Witless Predictions by John Dillon

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