By David Fladeboe, Deputy State Director
The City of Detroit, with it’s bankruptcy, is an unmitigated disaster. The stories coming out of the Motor City are freighting to say the least. The number of creditors and size of the debt are unimaginable, more like a large U.S. state instead of a mid-sized city.
But the real tragedy in this whole debacle is the over-promised and under-delivered pension payments. With 20% of the city’s debts contributed to unfunded pension liabilities, many retired employees could see their pensions reduced or eliminated.
Too often, warnings of these unfunded plans go ignored. The same politicians that are quick to provide these benefits are unwilling to address the problems that are predicted down the road. The losers end up being the folks that believed the political promises and are counting on these dollars.
A similar story is playing out across the country as states grapple with the problem of Medicaid expansion. The Obama Administration is pushing every state to expand an already bloated Medicaid program to cover millions of new Americans. And what is the plan for paying for this expansion? The feds promise to pick up the costs for four years (with borrowed money), and then the states are on their own to figure it out.
This is why Wisconsin chose to fight the expansion. It is irresponsible to promise government health care coverage to tens of thousands of people without a plan to pay for it. Governor Walker’s opponents called his plan cruel, but isn’t it more cruel to promise a service only to take it away once the money runs out?
Detroit is teaching us that no unit of government is immune from bankruptcy. The false hope that government is forever and will cover its promises in perpetuity came crashing down a couple of weeks ago when Detroit went to bankruptcy court.
Conservatives are attacked for being realistic and only offering to provide services that we can realistically pay the bills.
The ones that should be attacked are those that make short-sighted promises that can’t possibly be kept. Then, when the writing is on the wall, do nothing to prevent the oncoming disaster.
The worst part is that Detroit isn’t alone. Federally, Social Security and Medicare/Medicaid are on a path to insolvency. States and cities across the country have trillions in unfunded pensions. These are all time bombs just waiting to go off, often times we know the exact date.
With any luck this tragedy can be used as a lesson for the rest of the nation. Bold, responsible actions are needed right now to prevent the next Detroit. A little dose of reality now is better than the pain that is inevitably down the road.
Hopefully it’s not too late.