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Let 'Em Go Without Pensions!

Reported by Ellen - May 26, 2009 -

Co-authored by Brian

On Saturday's (5/23/09) Forbes on Fox, the panel of regulars' first topic was the financial problems facing many states, particularly California. Host David Asman broadcast his opinion first, saying that letting the states fail would be “the best medicine.” The banner on the screen as he spoke read, “Best fix for cash strapped states: Let 'em fail!” So much for “we report, you decide.” And after that what should the states do? Though nobody said so directly, it was pretty clear that at least most of the panel thought the cuts should come out of the pockets of retirees. WIth video.

Jack Gage noted that states can't go into bankruptcy “per se,” but "We can let them (states) fail by not extending them federal money or municipal money from the bottom up. This is a problem where they've been given standing eight count after standing eight count. I think it's time to throw in the towel, let them tend taxpayer ruins before they do serious damage down the road. Look at New Jersey as a great example, they've already let 220,000 residents in the last six years leave the state because of high tax burdens they can't afford anymore."

Victoria Barrett, a Californian, agreed states should not be bailed out. "What you could do is go in and do some severe cost cutting. California desperately needs it. You look at our $42 billion deficit, you look at our state pensions which by some estimates are underfunded by $200 billion. That's because you can retire after 30 years and get 90% of your salary. That's a real sweet deal. But it can't last unless we want to see our taxes skyrocket even further. Cut costs.”

Michael Ozanian said, "I think you force them to cut spending." He did not mention specifics but he, too, hinted that cuts should come from pensions. “If they default on their municipal bonds, you're just going to hurt tax payers in the future because they're going to be charged higher rates when they borrow.” Ozanian added that Schwarzenegger “is in the trouble he's in, David... because he refused to take on the unions.”

Bill Baldwin lamented that “$100,000 a year pensions “for those state employees” are better secured than secured bond holders. Nobody pointed out that only the top 1% of state pensioners get over $100,000 a year whereas more than half get $15,948 a year or less.

Asman continued, “Forbes had a great piece not long ago on how these long term pension plans by the states are bankrupting states. You got to make 'em face the music, right?"

Neil Weinberg said he didn't want to “demonize” teachers or policemen but "The fact of the matter is, the states have been making promises for years and years they can't afford. The problem is you can't let the states fail because if they fail, their municipal bonds don't get paid. That's pension funds, that's people's retirement, it just can't happen. It would make Lehman Brothers look like a party."

Asman said, "These states have been spending like drunken sailors. You don't cure an alcoholic with more booze."

Of course, there's a big difference between alcohol and pension funds but Fox seems to want you to think that they're both for wastrels.