Thursday, June 3, 2010
Are We There Yet?
Last week I finished reading While America Aged by Roger Lowenstein. It is about the financial crisis that looms on the horizon: Pension plans. Lowenstein's three examples are GM, the New York City subway system, and the City of San Diego. Each entity put off to future generations the payment of large pensions. When the bill came due, each was driven to extreme measures to avoid bankruptcy. Do you think these are isolated incidents? Yesterday the Wall Street Journal carried an article regarding a bill proposed by Senator Casey (D-PA) to bailout pension funds managed by unions. It is only $8 billion, says the Senator. But the article states it is actually more like $160 billion! More debt for someone to pay. But it makes sense for the senator, because those pensioners are voters. Those questioning who is going to pay for this are fewer in number and less organized. The bigger question remains Social Security. Babyboomers start hitting 65 next year, and the money is not there. And what about all of the other pension plans out there?