There are 1,200 people in New Jersey who pull pensions of more than $100,000 a year.
Across the nation, the state pension systems are creating red ink for state and local governments. The unions negotiated these deals. Now the taxpayers are trapped.
Of course, they are not trapped. These states and municipalities can declare bankruptcy, the same way a private firm can. They can shed their obligations.
Governments at all levels now face a choice: cut existing programs or re-negotiate future pensions. But legally they can’t cut existing pensions. So, we can expect to see fewer government programs.
The pension obligations are today a bigger threat to expanding governments than the Tea Party is. The Tea Party has government unions on their side. The more the unions get for their members, the less money is left over to expand the power of government.
So, the news on the pension fund front is bad for taxpayers, but it’s worse for local power-seekers who want to expand the governments.
Government debt piles up. But debt has this advantage: it squeezes current government. The only way to expand government these days is with more debt. Voters can organize to vote down bond issues. This is crucial in stoppong the growth of government.