Saturday, September 20, 2008

Ponzi player pooh-poohs pension panic

Ron York is a police pay consultant who has been quoted in newspapers all over the country on public employee fringe benefits issues.

So when he says governments shouldn't pre-fund employee benefits and should instead switch to a 100% pay-as-you-go system of paying government retiree pension and healthcare benefits, people are listening.

Unfortunately for us, some of those people are probably in Kentucky.

York said:

"One of the most common statements made by politicians about government is:“We are leaving our children and grandchildren saddled with huge pension debts that will be impossible to pay.” First, let me respond to that statement. So what?"

York makes the case for ignoring mounting pension debts and paying them out of general funds only when they come due. That is pretty much how Kentucky has operated the last quarter-century. While everyone is casting blame for the banking industry's woes, the nearly $28 billion unfunded liability for Kentucky taxpayers is set to hit home hard within a decade.

Kentucky officials have, for the most part, limped feebly toward even starting to deal with this problem realistically. Media coverage has been limited and the results have been mixed -- see Lexington Herald Leader versus Louisville Courier Journal. The unpleasant fact remains: The mountain of long-term debt on the state employee benefits will soon roll up to our front door and need to be paid in large chunks.

And we don't have the money.

1 comment:

Hempy said...

To solve the money shortage, Kentucky needs to enact a proportional tax system and that would cover all transactions including junk bonds, mortgages that are sold and resold each time they are sold. Then the state income and sales tax can be eliminated. Under this system, there are no exclusions, exemptions, etc.

The British have a stock transfer tax that would address the Bush-administration enabled mortgage meltdown crisis that we're now in.

In Federalist Paper 12, Alexander Hamilton wrote:

"The ability of a country to pay taxes must always be proportioned, in a great degree, to the quantity of money in circulation, and to the celerity with which it circulates. Commerce, contributing to both these objects, must of necessity render the payment of taxes easier, and facilitate the requisite supplies to the treasury."

Tax the movement of all money based on the value of the asset each time it moves. This would also tax banks as they transfer their laundered drug mony from account to account, etc., ad infinitum, ad nauseam.