Some economic terms cause spontaneous narcolepsy to the uninitiated, but here is one, which should have the same effect on your psyche as the sound of distant artillery. In the next decade or two the term "Unfunded Pension Liability" is going to become one of the most important phrases in America.
Why? Because it’s our civil (cough) "servants" who are the people decide how taxpayer money is spent. And shockingly, they have been exceedingly generous to themselves. That complex sounding term above refers to just how much more generous they have been with their spending on themselves than we have actually authorized. Think of a teenage girl who went off to college with her daddy's credit card stashed in case of emergencies, and now, she’s calling collect from Cancun with a huge hangover, asking for a wire transfer to pay for a ticket home.
In fact the airport phone booths are mobbed with drunken kids ringing up for daddy from virtually every state in the union. The worst is California who apparently is still so hammered that she's sprawled out barefoot over her luggage with her shirt on backwards, while an angry looking hotel staffer dials for her. But just behind her in terms of self-humiliation is... you guessed it "New Jersey".
According to Wall Street analyst Harry Dent, New Jersey has a mind-blowing 60 Billion dollar total unfunded pension liability. For such a small state that is an unbelievable sum. As an example, Illinois, a state several times larger than New Jersey, has a still impressive 40 Billion dollar outstanding bill. That’s going to hurt plenty when she gets home, but at least she won’t have to live with seeing the pictures all over the Internet like New Jersey and California.
This analogy really has legs, because it extends well into what the taxpayers, (or angry parents if you’ll follow along with me a minute) can actually do about it. We basically have three choices.
Number one: We can bite the bullet and pay the bill for her by allowing our feckless politicians to raise our taxes. Even though it’s quite likely to go that way, (because what they hell do our politicians care what we think about it) I’m sure you can already imagine how I feel about solution number one, so lets move on.
Number two: We can make her pay the bill herself by cutting benefits. Since it’s a benefit I’m unlikely to see any part of, I’m all for solution number 2, but given the decision makers are the same inscrutable weasels we’ve elected to office, who have long been bought and paid for by the little princess currently puking into the Mexican airport trash can, it’s quite unlikely to happen that way.
Number Three: We can roll it into the loan we took out to send her to college in the first place, and put off the pain for another day. This is what is by far the most likely because it let’s our politicians do what they like to do best, pretend the problem isn’t there. In the meantime they can go off promising everyone more cake and circuses, and bragging about the things they did to the hot drunken co-ed they met when they were down in Cancun last year. But solution 3 is also the most expensive option by far, and not without other consequences.
The biggest consequence, and it follows as quickly as that all too early Mexican sunrise, is that we’ll get our credit ratings lowered. Every state in the union starting with California and New Jersey will all be at risk for a reduced credit rating, and that’s when the fun REALLY starts. That will add multiples onto the cost of (still most likely) solution number 3. And it will eventually result in places like China and Holland calling us in the office and demanding to know why we’re late on our payments. It’s not going to be pretty.
So is there anything we can do about it now? Well the first thing we can do is try to find a way to cut the metaphorical credit card before any other little tramp does herself too much damage. By that I mean we can begin to cut the generosity of our commitment to future civil (here’s that word again) “servants”. The oldest girl may be on her way to a future in pole dancing and “modeling” but maybe it’s not too late to save her little sister.
And the next thing we can do is make our current and future state employees earn as much of their own way as possible by introducing market forces into government through privatization. With the exception of law enforcement, government doesn’t do anything so well that there aren’t dozens of companies who could do it better, and we should encourage them to do so. The teenager who spends years asking people if “they want fries with that” is unlikely to throw away all the money that was so hard earned.
But all that speaks to the future. For now, all we have left is to accept the charges, buy her the plane ticket, and pray that none of the guys at the office ever get the urge to rent the “girls gone wild video”.