Just say no to a state pension bailout
BY JUSTIN OWEN
There is growing debate in Washington, D.C., over yet another bailout. This time it’s not the automotive companies, the airlines, or any other industry. It’s the states themselves. Numerous states’ politicians have pilfered their residents’ hard-earned money to the point that they can’t tax them anymore. They have made obscene promises to state workers, offering handsome retirement and healthcare benefits “for life!” only to throw chump change at those benefits.
Recently, the Tax Foundation analyzed all 50 states’ pension systems to see which states’ leaders made do on their retirement promises and which offered little more than false hope. Tennessee fared exceptionally well, ranking third in the strength of its pension system, funding 97% of its promises made to current and past government employees.
On the other end of the scale, Illinois (38%), New Jersey (36%), and our neighbors to the north, Kentucky (34%), are barely funding their pension systems at all. This is terrible for their state employees, who have to risk their retirement-age livelihoods on these promises being fulfilled.
It’s also dangerous for the rest of us who don’t live in those states. That’s because they now see a golden opportunity to get the rest of us to bail them out. Illinois has already called on Congress to bail out its pension system amid the Coronavirus pandemic. Pathetic as it may be, Congress has a long history of bailout bungles, so don’t expect it to reject the notion outright.
Residents of states like Tennessee are currently shielded from the massive tax hikes or deep spending cuts necessary to make do on these promises when the “chickens come home to roost.” And because our leaders have been better stewards of our money, we most certainly should not be on the hook for those that have not. That’s like forcing the teetotaler to bail the drunk out of jail over and over again.
It would be patently unfair—and even reward bad actors—to force Tennesseans to fund a bailout of pension systems for bankrupt states like Kentucky. Maybe that’s the real reason Kentucky Gov. Andy Beshear recently told his residents not to travel to Tennessee. He wasn’t really afraid they’d get COVID-19; he was afraid they’d never come back home to pay off his state’s broken promises.