Public Sector Pensions: The Real Bailout Bomb is Still Midflight
by Kyle OlsonWill the madness ever stop? Just over two weeks ago, Congress passed a $10 billion “Education Jobs Fund” that gave money to cash-strapped states to keep teachers and other school employees on the job. It was spun as a victory for the kids, but the real winners were the teacher unions who were spared from making any concessions on pay and benefits that are necessary to balancing school budgets.
Once that $10 billion is spent, the structural problems of school spending will still remain. A recent study from the Manhattan Institute and the Foundation for Educational Choice finds that “teacher pension liabilities for all 50 states now total almost $1 trillion….almost triple the cost of what state officials have on their balance sheets.” The study concludes that these unfunded public burdens “could bankrupt state budgets including education programs.”
While the teacher unions won a temporary victory, we have to believe that they are paying careful attention to another, bigger bailout that is lurking in the shadows. And this time, there is more at stake than just a few billion dollars. If this latest bailout becomes law, it will mark the first time in American history that tax dollars are used to fund the pension plans of private—unionized—industry.
The teachers unions know that their lavish pension plans will result in a financial tsunami for the states. Should this new bailout go through, it will pave the way for a massive bailout for the teacher unions, the likes of which have never seen. This is a very big deal.
In late July, Sen. Dick Durbin (D – IL), the second most powerful Democrat in the U.S. Senate, announced that he is supporting the “Create Jobs and Save Benefits Act of 2010.” This proposed bill that would make certain labor union pension plans the “obligations of the United States.” Put another way, the American taxpayer will be on the hook for financially disastrous pension plans.






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