If the Tea Party had a reading list a report released today (10/13) would surely be included. “Iceberg Ahead: The Hidden Cost of Public-Sector Employee Benefits” is the work of the well-respected Empire Center for New York State Policy. It’s a lucid expose of how government and our “public servants” are spending our and our kids money.
The report is concerned with NY and the number is $205 Billion. That’s the unfunded liability for NY’s public sector retirees according to the Empire Center’s math. The amount is taken from an accounting category called “Other Post-Employment Benefits” or OPEB. Credit Suisse believes OPEB for all fifty states was $1.5 Trillion as of 2007. As of 2009 only Arizona, Alaska and Arizona had funded at least half of their OPEB liability.
The relatively recent requirement to report OPEB means the true costs of retiree bennies can be pulled from what the Center calls “the murky depths of state and local finances” New York has an astonishing 1.3 million current public employees. Paying their health insurance after they retire will result in a “mammoth wealth transfer from future taxpayers to current employees”, according to the report.
Iceberg Ahead explains how most government budgets claiming to be balanced or “pay-go” are shams. Tea Party views on the absolute need to cut government spending are amply supported. In fact the report suggests muni bond investors have concluded that various bond issuers simply won’t pay promised benefits. Citing New York City’s AA credit rating they note a private debtor with the Big Apples balance sheet would be in the junk category. “Investors must assume that the OPEB obligation is not really binding in the same sense as general obligation debt”
Then a line that might have been written by a Tea Party “crazy”: “…someone needs to break the news to municipal labor unions whose members do assume they will receive life time health coverage when they retire…”
Buffalo is cited as a present example of what the future holds. The state’s second-largest city now pays more for retiree health benefits than for active employees. New York City in 2008 put all of it’s OPEB on the balance sheet with the result that Gotham had negative net assets to the tune of $97 billion.
In the case at hand only one candidate for governor, Carl Paladino, is promising remedial action and for his candor gets labeled crazy or wacko. His proposals were dismissed in a NYT editorial as “clownish” The liberal media treats the Tea Party in the same dismissive way.
However, the folks are paying attention (finally) and reports like this have increasing impact. It’s a fairly easy read and the ammunition provided is the intellectual equivalent of say .350 Magnum. Bang bang.