You don’t hear politicians talk about it much but the state Pension Fund has a huge debt.
Years ago, at the end of the last century, with the economy booming politicians – in addition to raising government employees’ salaries – offered employees generous pensions. Some of that was due to lobbying, some to politics, but as long as the economy boomed the Pension Fund – which invested in a mix of stocks and bonds – remained healthy.
Then stocks dropped. First, early in the 2000’s. Then, again, in 2008. Next, to help out their Wall Street friends, politicians dropped interest rates. Returns on bonds dropped, stocks dropped, State Pension Funds slid downhill from ‘in the black’ to ‘in the red’. Billions of dollars in state pension debt piled up.
Politicians also started handing out lavish benefits, promising government employees, If you work for the state 20 years, we’ll pay for your health insurance for the rest of your life. Employees worked for the state twenty years, went to work for another employer, and state government went right on paying for their health insurance. Next, healthcare costs shot up. And the state’s debt hole got deeper.
The state’s Pension Fund is now $50 billion in debt. Fortunately, we don’t have to write a check to pay that $50 Billion all at once. But we do have to pay it – taxpayers are on the hook. And the sooner we start climbing out of this hole, by reducing our mountain of debt, the better.