Greece. Puerto Rico. Chicago. Illinois. Social Security and Medicare. All of them teeter on the edge of bankruptcy because politicians promised more benefits than they were willing to pay for. They played Santa Claus and gave the debt to the next generation.
Here in North Carolina, conservative reformers in the Senate are showing guts. Instead of passing the buck to the next generation, they are forthrightly dealing with billions of unfunded liabilities in state retirement.
First, reformers want to end lifetime health care benefits for newly hired state employees. Today, state employees get lifetime health benefits mostly for free. This perk amounts to a $25 billion unfunded debt. Benefits promised without any money to pay for them. The kind of deficit financing used in Athens and Washington. Ending lifetime health benefits for newly hired workers defuses the fiscal time bomb and keeps the retirement system solvent for people already counting on it.
Conservative reformers also want to end the phony accounting in state pensions. Right now, the state claims it will earn 7.25% on the retirement fund. That isn’t realistic in a zero interest rate world. That phony assumption will force us into wild Wall Street speculation in a gambler’s futile chase for return.
Conservative reformers want a reality based investment assumption so the state will be forced to honestly fund pensions now instead of phonying up the book, hiding the debt and dumping the bust on future generations.
Yes. Conservatives have guts to face unfunded liabilities now. And an ostrich caucus is already opposing change with Janet Cowell auditioning for the lead. (Asheville Citizen-Times)
Will North Carolina keep following Washington’s head in the sand approach? Or will we put the next generation first? Legislators will decide.