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The moral hazard created by an unfunded pension system can be avoided with adequate legislation. By accepting bailout money, the state could be legally obligate

The moral hazard created by an unfunded pension system can be avoided with adequate legislation. By accepting bailout money, the state could be legally obligated to restructure some of its processes. What you describe in your family dynamic applies so minimally as to be a strawman representation of the far more complex systems at play governing the dynamic between the federal and state economies.

michaelt 8y ago
The only attempt I'm aware of to obligate saving for employees' retirement is the USPS PAEA and it's received some pretty heavy political criticism in the press as "the most insane law" ever passed by Congress, creating a "manufactured crisis" and making the USPS less competitive. [1, 2] And pensions are just one way a municipality can take on debt. Even if you force them to lock up savings ready for their employees' retirement, they can still load up on debts with municipal bonds, signing long-term contracts, delaying payments to suppliers, and suchlike. Have there been any examples where a federal bail-out has been accompanied by legal mandates, and it's been successful? And even if federal pension fund bail-outs bring with them strict rules that prevent them recurring in the same city, unless you can impose such rules on other cities without giving them bail-out money, you've still got the issue that paying off City A's unmanageable pension deficit will encourage City B, which is struggling with its pension deficit, to make it truly unmanageable to get a bail-out. [1] https://www.cnbc.com/id/45018432 https://www.cnbc.com/id/45018432 [2] https://www.bloomberg.com/opinion/articles/2018-04-04/congress-not-amazon-messed-up-the-u-s-postal-service https://www.bloomberg.com/opinion/articles/2018-04-04/congre...