Yesterday’s column looked at which states had the biggest unfunded liabilities for bureaucrat pensions, with Illinois, Connecticut, New Jersey, and Kentucky being the worst of the worst.
Today, courtesy of the good work of Geoffrey Lawrence, Jordan Campbell and Mariana Trujillo at Reason, let’s look at which cities in America have dug very deep holes for taxpayers.
The Reason experts put together the numbers for America’s 100-largest cities. On a per-capita basis, Chicago is far and away the most irresponsible big city (hardly a surprise), followed by Portland and New York City.
By the way, both today’s column and yesterday’s column are focusing only on pension debt. Many state and local governments also have significant unfunded liabilities for other fringe benefits such as health care for retired bureaucrats and I’ll write on that topic, perhaps as early as tomorrow.
Sticking with the topic of pension debt, there are three points to consider. The first two are simple and straightforward.
- First, it is a form of fraud to promise future benefits without also providing the revenue to meet those promises.
- Second, this is why states should migrate to defined-contribution retirement systems rather than defined-benefit schemes.
But here’s the issue that most people don’t fully appreciate.
- Third, politicians are making long-term spending commitments while simultaneously driving away the taxpayers needed to pay for those promises.
Let’s use the worst state and the worst city as an example. Migration data shows that people are escaping Illinois (including lots of people escaping from the Windy City).
But what matters most is who is leaving. IRS data on migration shows that it is the people paying taxes who are leaving. And that’s true for Illinois and its true for Chicago.
So what’s going to happen 1o or 20 years from now when Chicago’s pension bills are piling up and there are lots of takers but not enough makers?
Margaret Thatcher already told us the answer to that question.
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Image credit: Allen McGregor | CC BY 2.0.
