[Submitted/published State Journal-Register]
Several writers have already responded regarding the bias Ralph Martire of the Center for Tax and Budget Accountability has in favor of the current state pension system (“Critics say 401(k)-style state plan unworkable, expensive,” July 1).
The other two authorities quoted have similar financial and philosophical stakes in the status quo. In other words, it turns out people with vested interests in defined benefit plans are against replacing defined benefit plans and can’t imagine how 401(k) plans could possibly work. Despite almost the entire private sector having gone there years ago. Dog bites man.
The actual useful information was inadvertently provided in this quote:
“As new employees come in, their contributions help fund debt for the older employees,” Martire said.
Did you catch that? If that’s not the classic definition of a Ponzi scheme, perhaps Martire could explain why Bernie Madoff is in the slammer. Madoff took billions on the pretense of investing it for peoples’ future. He was really just blowing it and covering up by giving some of the newest suckers’ money to longer-term “investors” when needed — until it imploded.
Actually, I know why Madoff is in prison. Maybe someone could instead explain why our legislators aren’t. The system they keep passing the buck on, and that Martire and company advocate for, is different only in scope. Illinois is much worse.
Meanwhile, Gov. Pat Quinn just issued nearly another billion in bond debt at 6.95 percent interest. That rate reflects a 25 percent “cumulative probability of default” score — financial markets give 1-in-4 odds they’ll default, even though those get paid first, per the constitution. As in, before pensions.
Cheer up. It’s hopeless, but it’s not serious.