S&P says pension plan for Fed employees underfunded by $4.5 Trillion!

[Up2Late]

I'm having trouble finding the actual Standard & Poor report, but last night the Public Radio (APM) show "Marketplace" reported on the under funding of Government Pensions, and our FEDERAL Government has underfunded the pension plan for federal employees by $4.5 TRILLION DOLLARS!

Let's see, add 4.5 TRILLION to the 8.4 Trillion National Debt, Hey! That's a 12.9 Trillion Dollar Federal Debt! Should we add in the 4.6 Trillion Dollar Social Security short fall too? If we did, that would add up to

$17.5 TRILLION DOLLARS! :wow:

Too bad wages keep falling, I guess your kids should quit school now and get jobs to start paying for all this Debt. (I say "your" kid, because I have none)

Here's a May 30, 2006 that pretty much says the same thing at his link: <http://www2.standardandpoors.com/servlet/Satellite?pagename=sp/Page/PressSpecialCoveragePg&c=sp_speccoverage&cid=1136997407033&r=1&l=EN&b=5#1145743118610>

but I think the S&P CreditWeek report is supposed to come out today.

Scroll down to the Java links that say this:

CreditWeek Special Report Articles

The Pension Storm Bearing Down On The Markets May 30, 2006 11:58 AM EDT HTML

The Pension Storm Bearing Down On The Markets

Credit Market Services:
David Wyss, New York (1) 212-438-4952;
[e-mail]

Publication date: 30-May-06, 11:58:48 EST
Reprinted from RatingsDirect

The baby boom generation's progression through the labor force has been described as a pig going through a python. Now that the pig is getting close to the end of the python it's becoming painfully obvious that inadequate provisions have been made for the emergence of baby boomers into retirement. A majority of them will leave the workforce with insufficient savings and will face uncertainties created by poorly financed Social Security and Medicare trust funds and by underfunded corporate and government pensions plans. Boomers had better hope that their kids really like them, since many of them will need some help to get through their golden years.

This scenario will also create nasty problems for corporate profits, credit health, and the financial markets. For starters, remedying the underfunding of corporate and other pension funds will cause individual companies great hardship, making those with high legacy costs uncompetitive with rivals that have younger workforces. Beyond that, underfunding at the state, local, and federal government levels will lead to tax hikes, which, if they're large enough, will alter the worldwide competitive positions of U.S. companies. Standard & Poor's Ratings Services currently estimates that corporate pension plans are underfunded by about $140 billion-with other postemployment benefits (OPEBs) underfunded by more than twice that amount--and state pension funds underfunded by $284 billion.

These shortfalls are dwarfed by federal underfunding. Social Security has a $4.6 trillion shortfall (based on the present discounted value of benefits due over the next 75 years). And federal civilian and military employee programs are underfunded by $4.5 trillion.

(more at link above)

Here's a link to the Marketplace Report, if anyone here has a paid subscription to CreditWeek, maybe they'll post it: <http://marketplace.publicradio.org/shows/2006/06/06/PM200606062.html>

Olivia Mitchell is executive director of the Pension Research Council.

MITCHELL: The government, as an employment sector, it represents an enormous part of the US economy and the US workforce. That's why these pensions are so important.

A report out today from Standard & Poor's says the pension plan for federal employees is underfunded by $4.5 trillion. At the state and local level pensions are underfunded by $284 billion. That's twice the shortfall of corporate pensions. S&P chief economist David Wyss says it's easier for politicians to make promises about the future.

DAVID WYSS: Because then it doesn't affect your budget this year. So if you're trying to tell teachers, "Hey, we're gonna look out for you, well it's easier to promise them we're going to pay you after you retire than that we're going to pay you today.

(more at link below)

<http://marketplace.publicradio.org/shows/2006/06/06/PM200606062.html>

[opihimoimoi]

1. DOW is down, Crap is up....Damn.

[acmejack]

2. well this should shake it up good today...

[FloridaPat]

3. More crap on SS blamed on the baby boomers. It's not underfunded

by the baby boomers. We've been paying extra for the last 20 years. SS is not going bust under the baby boomers. It's suppose to go broke in 40 years. The baby boomers were be in their 90's and 100's. After the baby boomers the next group is large. It's the group after them that will be the problem. That group is way smaller leaving generation X with more people on SS that supporting them.

As for the federal pensions - I bet the congressional ones aren't underfunded.

[Up2Late]

10. It's not that WE have under funded it, it's that the Congress has been...

...barrowing from the SS Surplus (diverting funds) for years now, to hide the actual amount of Debt they have run up.

I'm fairly sure that's what S&P is referring too, but I'm no expert and the S&P reports and press releases are very difficult to understand w/o an advanced degree.

[Lasher]

4. National Debt Clocks

Here's where we stand right now:

http://zfacts.com/p/461.html

Unfunded future liabilities are not part of this view.

[Up2Late]

7. Thanks for the link, I have another, but I don't think the site owner...

...has updated it with new data for a while.

Here's the link: <http://www.toptips.com/debtclock.html>

[Lasher]

9. Oooooo, too cool!

The two clocks are pretty close. What's a measley $20 billion or so, one way or the other?

I like the zfacts.com site. There's lots of scoop there that can be used to make a point or refute a Repuke claim (AKA lie, but I don't want to be redundant). Here is one of my favorite graphics from that site, which I have shared here at DU more than once:



How 'bout that trickle down theory, huh? Guess we can't argue with them supply siders no more, 'cause once and fer all here's the results!

Hey, what tha...? Saint Ronnie of Reagan and his followers (Poppy & King George II) promised the tax cuts for their wealthy elite backers would generate more revenue, not less! What's with this?

[Up2Late]

12. I hate to tell you but that site uses numbers from the White House OMB.

Trusting the White House numbers on this issue (or any issue) is like trusting the Enron Accountants to tell the truth: <http://zfacts.com/p/318.html>

"...Whose National-Debt Numbers?
The data plotted here were taken directly from the White House web site and plotted without modification. For details, see..."

There is a LOT of "fuzzy math" going on at that site.

Like this graph, for example. From this graph, you might think the price of oil only got down to about $18 dollars per barrel in the late 1990's, and it also has that "...well in today's Dollars, Oil was still more expensive in 1980..." BS too: <http://zfacts.com/p/196.html>



But it actually went below $10 Dollars per Barrel in December 1998 and February 1999: <http://tonto.eia.doe.gov/dnav/pet/hist/wtotworldw.htm>

[Lasher]

13. Knew that

That is, I knew they use White House data. It says so on the last graph I furnished, and they make this quite clear at their web site. In that graph I was skeptical of the section that shows Dubya's contribution to the national debt, because some of that is based on White House projections. You might have noticed that his damage tapers off somewhat after his debt increases change from actuals into forecasts. Who knows, they might be accurate in this but I trust them about as far as I can throw a bull elephant.

But still, there is a strength in this weakness: when I shove one of these charts up the nose of a right winger, they can not offer any challenge to the source of my data. It's kind of like when I use a Fox News article to help make a point.

There is another advantage to these graphs. Their message can be received with little more than a glance. People often glaze over when they see a whole bunch of numbers on a spreadheet.

FYI, I recently sent out an email to some Repuke friends. It was titled, Are the tax cuts working yet? and it included the national debt graph, and also the following (from a DU stock market update):

AT THE CLOSING BELL WHEN BUSH TOOK OFFICE on January 22, 2001
Dow - 10,578.24
Nasdaq - 2,757.91
S&P 500 - 1,342.90

AT THE CLOSING BELL on June 5, 2006

Dow... 11,048.72
Nasdaq... 2,169.62
S&P 500... 1,265.29

I got no replies. It was fun.

[papau]

5. EXTREMELY STUPID AND MEANINGLESS - and true of all programs without

a dedicated source of funds other than annual appropriations from the general funds, or with a source of funds that is ignored in the calculation of the net liabilty - meaning if the benefit liability is present as the "net" unfunded liability..

Perhaps the source could publish the present value of the next 75 years projected GDP so that we could get a feel for the real cost as a likely tax rate.

Is the S&P stupid - or just a tool of the far right GOP - or run by folks that want to destroy pensions - or all three?

Funny thing is the "trillion dollar underfunding" stupidity is made more obvious if the RW alternative to defined benefit pension plans was put through the same logic - estimate the liability that must be paid out and when it is paid out over the next 75 years for savings accounts such as 401k or money purchase plans, and present that number without any subtraction for likely deposits that will be made over that 75 year period.

[Up2Late]

6. Don't blame S&P, they are just reporting on what they found...

...probably because they know this is a very bad way to run a Government and are pissed off.

It's the Congress that is diverting the money that should be in the Federal Budget now, to hide the actual value of the National Debt.

[papau]

8. GOP screws up gov-but this is not part of that-it is just an illogical

presentation.

your "unfunded liability" is always net of the revenue stream. All items funded by the general account of the United States can either be thought of as having an annual appropriations revenue stream, or as having no revenue stream at all.

If we use the latter approach for the pentagon as was used for federal pensions, the pentagon has a liability of many 10's of thousands of TRILLIONS" over the next 75 years. - a ridiculous way to present the drain on the economy caused by pentagon spending,

Presenting the cost as a percentage of payroll, or as a percentage of GDP, might convey some info that can be acted on - but this presentation is just a scare tactic to convince folks to drop defined benefit pensions - the only type of pensions that actually work to protect the retirement years when you take into consideration human inability to not spend money.

[OzarkDem]

11. Fear we need to exploit

GOP can only win these days with wedge issues that induce fear among voters. We need to do the same.