Bailing out pensions not the way to go during pandemic
Within a month, the national debt was increased by more than 10 percent by enacting about $2.7 trillion in bailouts related to the COVID-19 outbreak. American families, businesses, hospitals and local and state governments are among the beneficiaries.
That is entirely appropriate. The coronavirus pandemic is the first true global emergency in most of our memories.
But should U.S. taxpayers — and, through increased debt, our children and grandchildren — be on the hook for even more because of an unrelated sickness? No.
That malady is purely political. It has occurred in states where politicians for decades have approved public employee pensions unsustainable in the long run.
It is a serious problem in a number of states, including Pennsylvania. Various studies during the past few years have estimated state pension funds collectively are somewhere in excess of $1 trillion underfunded. The worst are in Alaska, California, Connecticut and Illinois, according to a study last year by the Stanford Institute for Economic Policy Research.
Analysts there calculated the unfunded local and state pension liabilities based on per-family dollar amounts. In those four states, the liabilities range from $76,398 to $102,084 per family, the institute estimated last year.
Some in Congress are suggesting that federal assistance linked to COVID-19 should include bailouts for state pension funds.
We do not believe this to be appropriate.
First, why should taxpayers in states where public officials have been more conscientious about pensions have to pay for their neighbors?
Second, we have already committed nearly $2.7 trillion in assistance related directly to COVID-19. More help may be needed. Americans simply cannot afford to spend more money we don’t have on anything not linked solidly to the epidemic.
Third, using COVID-19 assistance programs to bail out state pension programs would set a terrible precedent. It would encourage irresponsible politicians to dig even deeper debt holes, in the hope they could be rescued in the future by the federal government.
Let’s deal with the immediate sickness, not with a longstanding epidemic of irresponsible politicians. They can be dealt with later.