COTW: Old Age Insecurity

One of the major contributors to Detroit's bankruptcy is the increasing cost of its municipal pensions. Detroit's predicament is merely symptomatic of a larger problem in the United States of underfunded pension schemes. Look at the chart:

States cannot create money with a computer entry like the federal government. But decades of insufficient funding and unrealistic projections of investment performance have created a huge overhang of benefit obligations over income. Illinois at the bottom of the chart has accrued liabilities of $146 billion but has only set aside $63 billion to cover it.. One solution of a limited range of options is to reduce public employee retirement benefits. Detroit's bankruptcy referee is already asking for larger cuts than retirees objected to a few years ago. But states shown in red cannot constitutionally reduce public employee pension plans, including Illinois. There lies the rub. It is only a matter of time before radical Repugnants in Congress get around to demanding cuts in Social Security before they allow the federal government to borrow more money. The sixty-four-thousand-dollar question is: will the Current Occupant cave?