The Kellogg School of Management at Northwestern University and the University of Rochester have produced a new analysis of the public pension crisis. The message: It’s bad.
Specifically, large cities and their counties face a gargantuan public pension funding gap (more like a gulf) of possibly $574 billion. As if that wasn’t bad enough, that hole is in addition, as Nicole Bullock of the Financial Times puts it, “to $3,000 billion in unfunded liabilities already estimated for state-run pensions…”
Lavish pensions, negotiated by public-sector unions, combined with plummeting state and municipal tax revenues due to the economic downturn, have conspired to paint this dire fiscal picture. Joshua Rauh of the Kellogg School drolly sums up the situation:
What is yet to be seen is how this burden will be distributed between state and local governments and whether the federal government will be called upon for bail-outs.
Whether? Gee, I wonder….