Illinois
taxpayers are facing huge liabilities for their state’s bloated, poorly
managed, and underfunded pension system, and public sector workers face an
uncertain future, as taxpayers are unlikely to cough up the huge sums required
to make good on the debt.
Now everything is getting worse:
S&P has downgraded Illinois bonds, meaning that the interest rate on the
state’s huge debt is likely to rise, squeezing the state treasury even further.
As Businessweek reports:
Standard & Poor’s Ratings
Services said it lowered Illinois’ rating a notch because of “weak pension
funding levels and lack of action on reform measures.” The firm also said the
financial outlook for Illinois is negative, in part because the state’s
temporary income tax is scheduled to expire in 2015.Illinois politicians agreed the state’s massive pension shortfall must be corrected quickly, but they blamed others for the delay. Democratic Gov. Pat Quinn said legislators didn’t do their job. Republican legislative leaders said Democrats were the ones who quit.
Source: Filed under Business, Economics, Government, Labor Unions, Taxpayer Waste Posted on August 31, 2012
Comments:
In past years, when the Federal Reserve imposed low interest rates, all retirement funds moved to the stock market for higher returns. This time, not so much. What did happen is that retirees who tried to move their retirement funds to fixed return investments found returns way too low. They also don't trust the stock market. If the Federal Reserve allowed the market to fix interest rates, they would be about 6%. That would save retirement plans at government expense. Interest on the $16 trillion debt would increase substantially. So, you can have a retirement plan or the Federal Reserve, but you can't have both.
Norb Leahy, Dunwoody GA Tea Party Leader
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