I'm not as hard on the 4.31 million other Federal employees as I am on Congress. No, really, there couldn't be that many, could there? Yup.
But I ain't exactly soft, either.
Did anyone other than me ever notice the people with the best pensions always seem to be … public sector employees? Like military (20 and out), postal service (20 and out), firemen (20 and out), police (20 and out), garbage men (in Detroit, 20 and out). Now why is this? Why do we poor private sector employees have to suffer with crappy pension plans and those public sector gals get so much gravy per scoop of mashed potatoes?
There's a relatively simple explanation. The government doesn't have to account for their pension costs in the same manner as the private sector does. Huh? He says …
OK let's not get into it much. Just a little. And if it interests you, just about every college in America offers a class called Accounting 101. If you take it at a local community college you'll use the same book as Harvard, but you won't have to take out a second mortgage on your Porsche.
The private sector has to put down on their financial statements the value of all those future promises they have made. You know – I promise to give you a pension of this much for this long twenty years from today.
The public sector doesn't. They get to pretend it's free!
So what do you think a politician likes to do – raise taxes today, to pay cash salaries today, or lie about raising taxes tomorrow, to pay cash retirement benefits tomorrow?
It may not surprise you, assuming you didn't just drink half a bottle of Nyquil Severe, to discover politicians love, absolutely love, absolutely adore to the point of giddiness, bills that don't come due until tomorrow. When more than likely they won't be pacing the halls of Congress trying to look senatorial, but instead pacing the halls of Congress picking up million dollar checks for lobbying their colleagues for just one more helping from the public trough promise, cross my heart and hope to die stick a needle in my eye this is all we need and I won't be back asking for more … (fingers crossed fingers crossed).
Do not, I repeat do not, give any of these characters your credit card to hold while you slip in to the steam room for a minute.
Anyway I might have lost the thread there for a moment but I'm pretty sure you get the point. Congress hands out deferred payments, like pensions, like candy, because they don't have to be paid for today, therefore taxes do not have to be raised today, therefore voters may just send them back to Washington for yet another term of living high and spending large.
The answer is simple. Let public sector employees have 401(k) plans, but never a defined benefit pension. That way at least the accounting will be right, even when the lawyers figure out a loophole or three. And that's a step in the right direction.