It’s not just GM, United Airlines and the Federal government who have made unsustainable promises to current and future retirees. State and local governments have also been irresponsible, to the tune of perhaps a trillion dollars in unfunded liabilities.
For years, governments have been promising generous medical
benefits to millions of schoolteachers, firefighters and other
employees when they retire, yet experts say that virtually none of
these governments have kept track of the mounting price tag. The usual
practice is to budget for health care a year at a time, and to leave
the rest for the future.
Off the government balance sheets – out
of sight and out of mind – those obligations have been ballooning as
health care costs have spiraled and as the baby-boom generation has
…most states and cities have set aside no money to pay for retiree
medical benefits. Instead, they use the pay-as-you-go system – paying
for former employees out of current revenue.