Here’s a bombshell from the U.S. Census Bureau: State and local government pension plans lost $179 billion even before Wall Street collapsed. The news means that government liabilities may exceed the estimated $1 trillion shortfall in retirement funds and the $530 billion gap in health care benefits originally reported.
In a news release, Lisa Blumerman, chief of the Census Governments Division, said: “Shortfalls in state and local government pension plans may have long-term consequences for some state and local governments.”
According to the Franklin Center for Government & Public Integrity, the Census Bureau’s just-released 2008 State and Local Government Employee Retirement Systems Survey shows that 2,550 government employee pension plans covering almost 15 million members were already trouble before the recession officially started in December 2007.
“Recent independent studies of those plans, which primarily include retiree health-care benefits, show a gap between promises and ability to pay measured in trillions of dollars,” Franklin national editor Frank Keegan said.
The irony is that the same kind of enormous “promise gap” already plagues Social Security and Medicare, which these government plans were specifically set up to circumvent.