Labor groups will be invited to the U.S. Chamber of Commerce to talk
about an alarming shortfall in state employee pension plans that some
believe could lead to a new government bailout.
Randy Johnson, the Chamberfs senior vice president for
Labor, Immigration and Employee Benefits, told The Hill the total
shortfall for state pension funds could run as high as $3 trillion.
A Chamber spokesperson said the event is in
the early stages of development, and it is unclear which unions would be
invited to participate or when the session would be held.
While the faltering economy has kept the dire state of
pensions from grabbing many headlines, several experts agree that absent
drastic measures these funds could be the next financial calamity that
receives a government bailout.
An August report by the Kellogg Graduate School of
Management at Northwestern University found government pension programs in
as many as 31 states are headed for financial disaster by 2030, and
taxpayers will likely wind up paying for unfunded liabilities.
gEven if states uniformly eliminated generous early
retirement deals and raised the retirement age to 74, the unfunded
liability for promises already made would still be more than $1 trillion,h
Kellogg associate professor Joshua Rauh said in prepared remarks.
gAssuming states donft start defaulting on their bonds
and other debts, it seems that taxpayers will be footing most of the
multi-trillion dollar bill for the pension promises that states have
already made to workers,h he added.
Pension funds suffered when markets fell during the
financial crisis that began in 2008, and many cannot pay promised benefits
to retirees. As a result, experts believe drastic cuts will be required
unless the federal government steps in.
Stephen Rohleder, Accenturefs group chief executive of
health and public service, told The Hill: gI think the
next shoe to drop is going to be the pension funds.h
gI think youfre going to see wholesale cuts in terms of
whatfs being given to pensioners and to the recipients of pensions,h said
Rohleder. gAnd this will trigger another round of fiscal crisis.h
The Chamber hosted a similar conference in July in
which union members complained about not having a seat at the debate
table.
gThey said, eYoufre not giving us a fair debate,fh
Johnson said. gSo I think what wefre going to do is have another
conference and give them their debate.h
The July conference looked at pension plans for state
government employees that are underfunded. Johnson said that because
nearly half of all union members work in the public sector, they will
likely have a vested interest in the fate of these funds.
Business groups are worried the problems with the
pension funds will lead to higher taxes on businesses.
gBecause paying the piper is so far off, people arenft
paying attention to it; but itfs coming,h Johnson said. gItfs an alarming
trend where our members are going to be facing higher taxes. And workers
are not going to be immune.h
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