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Its the same for the USA as it has 126 Trillion in unfunded liabilities. In the next 30 years, the US will face the same problems as cities are today.

rayiner 11y ago
That number probably isn't real: http://www.washingtonpost.com/blogs/fact-checker/wp/2013/10/23/does-the-united-states-have-128-trillion-in-unfunded-liabilities http://www.washingtonpost.com/blogs/fact-checker/wp/2013/10/.... There are also a couple of key distinctions: 1) The Supreme Court decided in Fleming v. Nestor that people do not have a contractual right to their social security benefits. Therefore, the benefits can be changed at any time. In contrast, several states have a constitutional amendment protecting public pension benefits. 2) Most of the liabilities are Medicare, which doesn't have a defined benefit at all. 3) Unlike the states, the Federal government can print money to reduce the real value of benefits. 4) The tax base is far less mobile between countries than between cities and states.
- SilasX 11y ago
  It's not real because the government can just not pay it? Because, even though people are counting them, they're not "really" liabilities that the government really takes seriously? I can't say that dissolves my worry about this...
  - rayiner 11y ago
    No, it's two separate points. One that the $127 trillion number is almost certainly overstated. Two that whatever the number is, it's of a fundamentally different nature than state pension liability. In Illinois, Gov. Rauner's modest attempt to reform the pension situation in the state was shot down by the Illinois Supreme Court because the state has a constitutional amendment guaranteeing pension benefits. Under Fleming the federal government can reduce Social Security and Medicare benefits if necessary. It'll be politically divisive, but it'll be possible. You won't have the situation you have in Illinois where the courts are telling the electorate they can't make certain reforms.
    - HarryHirsch 11y ago
      What if the constitution made sense? It isn't that pension funds become underfunded one day to the next, these are crises that are long time in the making, they are political crises. In essence, they need to fall back on all the electorate. rayiner, I have seen you make this same argument about police misconduct. The police are citizens representatives, if they are out of control, the same citizens need to pay. Why should pension funds, especially the kind that isn't town-sized be treated different?
      - rayiner 11y ago
        When you make taxpayers pay for police misconduct, the people that are paying are the same ones that voted for the police chief that made that environment possible. But current taxpayers didn't vote for these generous pension programs--their parents and grandparents did. I'm a big believer in democracy over pretty much anything else. There is nothing democratic about one generation binding the discretion of future generations. At the federal level, democracy is still operative. The decision whether to raise taxes or cut benefits (or some combination of both) will be left to the people who will actually have to pay those taxes. At the state level, democracy has been subverted by the courts telling voters what they should do with their tax dollars.
    - SilasX 11y ago
      I'd say that they're the same issue -- whether the state can honor expensive obligations that a lot of people are depending on -- and that distinguishing them is pedantry. ("Oh, see, it wouldn't technically be reneging on a debt.") When someone brings up the figure, the point is, "hey, there is a huge bill coming due, and not paying it would screw over a lot of people". When you dismiss that on the grounds that: - We can just not pay it - We can debase its real value - It wouldn't be a default in the legal sense then you are not addressing the core point. I don't see how someone can read your post and say, "oh, I guess I don't have to worry about this anymore", and if your post is not arguing to that effect, then I'm not sure what it adds to the discussion. At most, you're just saying, "you shouldn't totally freak out because the figure is just $60 trillion." Let's assume for a minute that Illinois did have legal recourse -- say, but implementing a special tax on pensions. Would you feel any better? I wouldn't; someone is still getting screwed, the situation is still bad.

rayiner 11y ago

That number probably isn't real: http://www.washingtonpost.com/blogs/fact-checker/wp/2013/10/23/does-the-united-states-have-128-trillion-in-unfunded-liabilities http://www.washingtonpost.com/blogs/fact-checker/wp/2013/10/.... There are also a couple of key distinctions: 1) The Supreme Court decided in Fleming v. Nestor that people do not have a contractual right to their social security benefits. Therefore, the benefits can be changed at any time. In contrast, several states have a constitutional amendment protecting public pension benefits. 2) Most of the liabilities are Medicare, which doesn't have a defined benefit at all. 3) Unlike the states, the Federal government can print money to reduce the real value of benefits. 4) The tax base is far less mobile between countries than between cities and states.

SilasX 11y ago
It's not real because the government can just not pay it? Because, even though people are counting them, they're not "really" liabilities that the government really takes seriously? I can't say that dissolves my worry about this...
- rayiner 11y ago
  No, it's two separate points. One that the $127 trillion number is almost certainly overstated. Two that whatever the number is, it's of a fundamentally different nature than state pension liability. In Illinois, Gov. Rauner's modest attempt to reform the pension situation in the state was shot down by the Illinois Supreme Court because the state has a constitutional amendment guaranteeing pension benefits. Under Fleming the federal government can reduce Social Security and Medicare benefits if necessary. It'll be politically divisive, but it'll be possible. You won't have the situation you have in Illinois where the courts are telling the electorate they can't make certain reforms.
  - HarryHirsch 11y ago
    What if the constitution made sense? It isn't that pension funds become underfunded one day to the next, these are crises that are long time in the making, they are political crises. In essence, they need to fall back on all the electorate. rayiner, I have seen you make this same argument about police misconduct. The police are citizens representatives, if they are out of control, the same citizens need to pay. Why should pension funds, especially the kind that isn't town-sized be treated different?
    - rayiner 11y ago
      When you make taxpayers pay for police misconduct, the people that are paying are the same ones that voted for the police chief that made that environment possible. But current taxpayers didn't vote for these generous pension programs--their parents and grandparents did. I'm a big believer in democracy over pretty much anything else. There is nothing democratic about one generation binding the discretion of future generations. At the federal level, democracy is still operative. The decision whether to raise taxes or cut benefits (or some combination of both) will be left to the people who will actually have to pay those taxes. At the state level, democracy has been subverted by the courts telling voters what they should do with their tax dollars.
  - SilasX 11y ago
    I'd say that they're the same issue -- whether the state can honor expensive obligations that a lot of people are depending on -- and that distinguishing them is pedantry. ("Oh, see, it wouldn't technically be reneging on a debt.") When someone brings up the figure, the point is, "hey, there is a huge bill coming due, and not paying it would screw over a lot of people". When you dismiss that on the grounds that: - We can just not pay it - We can debase its real value - It wouldn't be a default in the legal sense then you are not addressing the core point. I don't see how someone can read your post and say, "oh, I guess I don't have to worry about this anymore", and if your post is not arguing to that effect, then I'm not sure what it adds to the discussion. At most, you're just saying, "you shouldn't totally freak out because the figure is just $60 trillion." Let's assume for a minute that Illinois did have legal recourse -- say, but implementing a special tax on pensions. Would you feel any better? I wouldn't; someone is still getting screwed, the situation is still bad.