As IF Times

link State Budget Crisis: Alabama Town’s Failed Pension Is a Warning – CNBC.

It’s a certainty that stories like this will multiply over the next while but which will include much larger cities and municipalities.  This type of tragedy has been predicted by many, but the actual demise of a municipal pension fund has to my knowledge not happened until now.  The very simple math of payouts not being matched by contributions still does not hit home for many people, especially those in charge of public policy.  Most realize that politics is often about appeasing interest groups, getting and staying elected and kicking pressing problems down the road.  The harsh realities of managing public services and expectations is glaringly deficient among many who wind up in office.  Oddly, political office can be attained by anyone with a bit of support money but without any real skill set or experience as we’ve recently seen.   Once in office however, they control vast amounts of financial resources and can commit populations to years of fiscal grief with misguided policies. 

The most telling part of this particular article appears in one of the comments on the dilemma faced by this Alabama town.  A poster by the moniker of Dr. Doom says:

“…The state is required by law to pay these pensions out and therefore are breaking the law.
Why are not these people and the unions taking the state or city to court to enforce the pension contract?
The state or city have the power to tax and therefore should be required by law to increase taxes, or sell state or city property, to pay for obligations contracted by the state or locality!  This whole thing sounds real stupid and will in the end be resolved in favor of those people who are legally entitled to those pensions plus penalties on those delayed payments and damages!…”

This little comment in a nutshell most clearly illustrates why cities and indeed the country are in as dire circumstances as they find themselves.  The writer, who probably speaks for untold millions of delusional people, think that a legal solution will resolve the issue.  In addition, the default cure of raising taxes to pay off any deficiency is also offered as a solution,  rather matter of factly.  Clearly they are unable to see the correlation between inflated promises and flaccid payouts.  The lack of clarity on funding shortfalls is reminiscent of some Wile E. Coyote cartoon scenario wherein a rapidly shrinking coil of rope is tied to an anchor, while of course the other end is tied to old Wile E’s leg.  Despite this cold hard reality, people still manage to elect those that continue to keep pushing out the anchor of higher deficits without any attention and regard to the long rope being attached to all of their legs. 

The notion that the aggrieved pensioners can sue is particularly laughable.  Who would pay the lawyers? As if they would work for free. Then there’s the idea of selling off state or city property.  To whom? Other states? The Feds? Other people? If a municipality or state had to increase its tax grab on their citizens, eventually people will just move their homes and businesses out of the area, much as what has happened in California.  When that happens, the tax base shrinks, crippling the ability to fund pensions and entitlements even more in an ugly vicious circle.  Eventually, the money does run out.  Try to find a lawyer then.