State by state, county by county, city by city: they will default. The money is not there. The promises were huge.
New Jersey’s governor Christie is touring the state, telling the voters that the state will break promises to retired government workers. He is doing what other government officials refuse to do: tell the truth early.
The public employees were told to trust the state. Silly people. They believed the promises: above-market salaries, tenure, and fat retirement benefits, including health care. Now fiscal reality is intruding. This has barely begun.
A few New Jersey retirees are protesting. These protests will do no good. You can’t extract income out of a state that is over-taxed, over-regulated, and running deficits. The gravy train is about to run out.
In the next recession, retired government employees around the nation will experience what New Jersey’s retired government employees are now experiencing: reality.
They would be wise to start looking now for a second income stream. Avoid the rush.